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by Randy Hughes on July 28, 2008
We all know that Illinois is the Granddaddy of Land Trust law. There is over 100 years of case law on the Illinois books supporting the validity of using a Land Trust to hold title to your real estate (and real estate related assets). However, because Illinois is "ahead of the curve" with their land trust laws, the benefits of using a Land Trust can be limited in Illinois. Case-in-point:One of the biggest reasons why people began using Land Trusts in Illinois was to avoid the Transfer Tax. By transferring the beneficial interest in the trust and not the title holders name (the Trustee), a seller was able to avoid paying Transfer Taxes AND the buyer avoided a reassessment due to the title change.Illinois got smart to this ploy and in 1986 passed a law (765 ILCS 420/3) requiring Trustees to notify the taxing bodies if a transfer of beneficial interest occurred within the trust. However, there was a loop hole. The actual statute reads that this requirement holds true for all Land Trusts, "....other than trust documents relating to land situated in counties with a population of 2,000,000 or less....."Obviously, the Illinois legislature was thinking (as they usually do) that Cook County (the county in which Chicago is located) is the only county in Illinois. I suspect that Cook County is the only county in Illinois that has a population in excess of 2,000,000!Note: If the Trustee fails to comply with the requirement, he will be PERSONALLY liable for the unpaid tax.
