A Florida land trust is a device by which Florida real estate is conveyed to a trustee under an arrangement that gives full management and control of the property to its beneficiaries.
The trustee can execute deeds, mortgages or other deals related to the property at the written direction of the beneficiaries, while the beneficiaries can collect rent, improve, and operate the property without holding legal title. The beneficiary of a trust can be you, a corporation, a limited liability company (LLC), a partnership or any other legal entity and there can be one or more beneficiaries.
If you are the beneficiary of the trust, you can name any other person or entity as the successor beneficiary upon your death. If your company is the beneficiary, you can name a successor in the company papers. In addition to having beneficiaries, you can designate a director to makes all the decisions regarding the property.
Two instruments create the land trust arrangement. A publicly recorded “deed in trust” which conveys the property to the trustee, the beneficiaries are not named in this instrument, and a contemporaneously executed “trust agreement” that is usually signed by everyone and spells out the trustee’s duties.
What are the benefits of a Florida land trust?
Increased Privacy - One of the main benefits of a land trust is the privacy it provides its beneficiaries.
As long as the trustee is not also the beneficiary, the beneficiaries can remain anonymous, absent a court order. In order to keep land trust information confidential, the only reporting that is required is with the Internal Revenue Service.
Land trust agreements are not recorded publicly so no one has to know what real estate you own, while you are alive or after your death. Tax bills are sent to the trustee, who then forwards them to you for payment, and the returns are filed like you would a property in your own name.
Reduced Reporting Costs - A land trust is not burdened with the added expense of governmental reporting or its associated cost.
Probate Avoidance - The trust agreement can specify successor beneficiaries in the event of your death, thereby avoiding probate, attorney fees, and delays in the distribution of the property to your heirs.
Non-Florida residents can avoid probate administration by transferring real estate into a trust. Probate avoidance is one reason many non-residents establish Florida land trusts.
Retained Tax Advantages – All the tax advantages of individual ownership are retained.
Deductions for taxes, depreciation, and other expenses flow directly through the land trust to the beneficiaries and placing land into a trust does not disturb the beneficiary’s homestead qualification.
Transferring a home that is encumbered by a mortgage to a Florida land trust will not trigger the “due on sale” clause contained in most mortgages.
Simplifies Co-Ownership - In cases where there are multiple owners, a trust agreement can offer provisions for arbitration and alternative dispute-resolution venues can be clearly outlined in the trust agreement before a dispute ever arises.
Additionally, the trustee can be empowered to execute deeds on behalf of all of the beneficiaries, thus eliminating the need for multiple signatures of the beneficiaries on a deed of conveyance.
Ease of Conveyance - Beneficial interests can be easily transferred without publicly recording a deed, thereby saving money and preserving privacy.
Ease of Continuity - The death of the trustee or a beneficiary does not terminate the trust. Successor beneficiaries and successor trustees are appointed in advance.
Merger Doctrine Does Not Apply - A land trust will remain valid regardless of whether the trustee is the sole beneficiary of the trust.
Asset Protection - Beneficiaries of a land trust are not, by virtue of being beneficiaries, liable under a judgment, decree, court order or in any other debt, obligation or liability of the land trust and a judgment against one beneficiary will not attach to land held in the trust.
For many property owners, especially those who seek privacy, a land trust is a valuable alternative to traditional ownership. That said, many of the same benefits of land trusts are available through other legal entities such as LLCs and corporations.
If you think a Florida Land Trust might be right for you, contact Parker & Associates at 941-952-0600.