THE “SINGLE-BENEFICIARY” GRANTOR’S EQUITY-HOLDING TRUST™
Shielding Real Estate Ownership from Public Disclosure For Privacy, Asset Protection, and In Rem Litigation Defense
Brief Overview
The single-beneficiary Equity Holding Trust™ (EHTrust™), modeled on the Illinois-type title-holding land trust, allows a real estate owner to transfer legal and equitable title to a neutral third-party trustee. Only the trustee appears in the public record, while the trust agreement identifying the beneficiary remains unrecorded and confidential. This structure ensures a high level of privacy, shielding ownership from public scrutiny and potential litigation.
Under this structure, title is vested temporarily in a bonded, licensed, nonprofit corporate trustee. This inter vivos trust structure complies with federal due-on-sale protections under 12 USC §1701j-3. Although generally accepted in all U.S. jurisdictions, some states such as Louisiana and Tennessee treat the beneficiary’s interest as real estate, which may require foreclosure to remove a defaulting occupant. However, beneficiaries in those states still retain full deductibility of mortgage interest and property tax under IRC §163(h)(4)(D).
Use Cases and Legal Alignment
The EHTrust™ complies with legal frameworks governing title-holding trusts and is well-suited for owners seeking anonymity, asset shielding, or estate planning advantages. A well-known example is the 1965 acquisition of 27,000 acres in Florida by a trust formed for the benefit of the Walt Disney Company. The anonymity provided by the trust prevented price inflation and speculation.
Individual homeowners and real estate investors can apply the same principles to protect privacy, avoid exposure, and control property direction without public disclosure. In all cases, the settlor retains full power of direction, sale, lease, and reconveyance. Legal and equitable title remains with the trustee for a specified term (commonly 2 to 21 years), while the Settlor Beneficiary maintains all economic control.
Control and Direction Rights
Even though legal title is held by the trustee, the Settlor Beneficiary retains all management authority, including the power of direction, power of sale, and trust termination. Transfers into this type of trust remain compliant with federal law, specifically the Garn-St. Germain Act, which allows transfers into inter vivos trusts without triggering lender enforcement.
Privacy and Title Searches
Once title is transferred to the trustee, public searches based on the settlor’s name or the property address reveal only the trustee’s name. The trust agreement is not recorded. The trustee, if properly selected and appointed, is legally obligated to maintain confidentiality and cannot disclose beneficiary identity or trust details absent a valid court order and formal deposition.
Trustee Selection Considerations
A non-professional trustee (such as an individual or unregulated entity) may undermine the asset protection goals of the EHTrust™. Proper trusteeship requires knowledge of fiduciary duties, insurance, bonding, and independence. A well-structured trust using a neutral third-party corporate trustee mitigates the risk of coercion or breach of confidentiality.
The Illinois Land Trust Fiduciary Duties Act (765 ILCS 435) and similar statutes in other states underscore the need for corporate trustees with professional infrastructure and fee structures that meet industry standards.
Asset Protection via Personal Property Classification
When a property is vested in a third-party trustee, the real estate owner’s public ownership is eliminated. The trust interest becomes a form of personal property (personalty), much like owning shares in a corporation that owns real estate. This reclassification enhances protection from in rem litigation because personalty is non-partitionable and cannot be easily seized.
However, trustees must still comply with legal process. A trustee compelled to testify under deposition could reveal information if proper questions are asked. The best defense includes using unrelated co-beneficiaries and adhering to legal formalities to prevent the trust from being disregarded.
The Value of Naming an Unrelated Co-Beneficiary
Adding an unrelated, non-participating co-beneficiary to a single-beneficiary trust creates additional legal insulation. Shared ownership of personalty is non-partitionable, meaning that even governmental agencies or judgment creditors may be unable to force sale or seizure of the underlying property without proving fraud or improper intent.
This strategy enhances resistance to in rem claims and shields property from predatory litigation, provided the structure is not used for creditor fraud or tax evasion.
Final Notes
This structure is not a sale, financing, option, or joint venture. It does not transfer ownership to a buyer or confer equity rights through occupancy. Rather, it temporarily vests title in a neutral trustee while the Settlor Beneficiary retains control and privacy.
This overview is for informational purposes only and does not constitute legal or tax advice. Always consult qualified legal counsel before executing or relying on a land trust structure for asset protection or transaction planning.