In the event of a lawsuit in which you are named as a defendant, the most important first step is to protect yourself. As a defendant you may be found liable and may be required to pay damages to the party bringing suit. Sometimes, however, your assets may be found and targeted before you are even aware that you are being sued.

Parties bringing suit will target those individual defendants with deep pockets. Real estate, in particular, becomes a target for the plaintiff seeking damages against you. If you or your business entity’s name appears on the title to a parcel of land, available to anyone as public record, you may find yourself fighting to hold onto your own house. In such an instance, real estate becomes a huge bargaining chip for parties in settlement negotiations. How can you keep this bargaining chip “off the table?” The answer is to set up and use a land trust to take title of real estate.

A land trust is an agreement that allows real property to be held privately. The trust itself owns the parcel of land. The land trust is not filed in public records. Your actual ownership of the land itself remains private to any outside parties, including potential plaintiffs in a lawsuit. By using a land trust, you will effectively hide your ownership from a future plaintiff looking to see just how deep your pockets are.
A land trust has four components; a Settlor, a Trustee, a Beneficiary, and a Trust Corpus. A brief discussion of each will prove helpful to you in setting up your own land trust.

• A Settlor is the person who creates the trust. Usually this will be you, the person or entity that seeks to purchase or hold the parcel of land in question.
• A Trustee is someone you trust (simple enough), someone that will control the parcel of land. A close friend, a spouse, a family member or trusted business partner can serve as your trustee. Try to find someone that you trust who has a different last name from yours. This will further increase your privacy and ultimately bolster your protection under the land trust. When creating the trust, you will be able to define how the Trustee may act by carefully and narrowly defining the terms of the trust.
• A Beneficiary is the person who receives the benefits of the trust. You can establish yourself as the beneficiary to your land trust, but to further bolster your protection and privacy, use a company that you own.
• A Trust Corpus is the actual parcel of land held by the trust.

Land trusts are available to residents of all 50 states, and have been used in each state before. Most states do not have explicit statutes that provide for land trusts. In such an instance, the land trust is simply a contract between the settlor, the beneficiary, and the trustee. As is the case in most ventures, being informed and knowledgeable is critical to protecting you and your assets. Land trusts are simple to set up and offer strong protection to you against parties bringing suit.