In California, general trust law is found in Probate Code §§15000-19403. There is no specific statute for land trusts in California, unlike Illinois Land Trust Law (765 ILCS 405/410/415/420), Massachusetts Business Trust Law (MBT) (MGLc182, §2 ) and Virginia land trust law (Va. Code Section 55-17.1).
Therefore, land trusts created in California for California property are based on the general trust law in the aforementioned California Probate Code. But an out-of-state land trust that would have title can be formed through the trustee of a California property, to take advantage of the more beneficial statute and jurisprudence of another state. In fact, the Virginia Supreme Court in Air Power, Inc v. Thompson, 244 Va. 534, 422 SE 2nd 786 (1992), has confirmed that Va. Code section. 55-17.1 gives the trustee of a land trust legal and equitable power of real property, which protects the privacy of the beneficiaries.
In fact, since California does not have a specific land trust statute, there is no legislative background or developed jurisprudence on it in this state, only general trust law and California jurisprudence. But a general trust law may have some advantages over a specific land trust statute with more requirements. In fact, the Illinois land trust statute (75 ILCS 435) requires that holders of directing power owe fiduciary obligations to holders of beneficial interests. California general trust law does not have a similar requirement.
In any case, avoiding the legalization of real property in a land trust overcomes all the difficulties in its creation.
California General Trust Law:
A. Building trust:
California Probate § 15000 states that “(l) this division (Division 9 of the Probate Code) shall be known and may be cited as the Trusts Act.” And section 15001 (a) states that “(e) unless the statute provides otherwise: this division applies to all trusts regardless of whether they were created before, on or after July 1, 1987.”
Among other methods of creating a trust, a trust can be created by: “(b) (a) transfer of ownership by the owner during the life of the owner to another person as trustee,” according to § 15200 (b) of the Succession Code Of California. And “a trust is created only if there is fiduciary property”, according to § 15202 thereof.
“A trust may be created for any purpose that is not illegal or contrary to public order,” according to § 15203 thereof. A land trust does not serve an illegal purpose, nor is it against public policy in California, although it is not widely used in this state.
And “a trust, other than a charitable trust, is created only if there is a beneficiary,” according to § 15205 thereof.
B. Real estate and personal property trust:
In order not to violate the Statute of Fraud, which requires a written instrument to be enforceable, §15206 states that “a trust is a relationship with real property is not valid unless it is demonstrated by one of the following methods: (b) By a written instrument transmitting the trust duly signed by the settlor, or by the settlor’s agent if authorized in writing to do so “.
And by virtue of section 15207 (a) thereof, “