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Florida Land Trusts: What You Should Know

By: Barry E. Haimo, Esq.
March 7, 2019

Florida Land Trusts: What You Should Know

Land trusts are legal in seven US states, including Florida, and are a desirable way to hold title to Florida real estate. In fact, the Florida legislature recently amended the Florida Land Trust Act to improve existing law and encourage the use of land trusts.

But what, exactly, is a land trust, and what benefits might one hold in Florida estate planning?

This article explains how land trusts work in Florida, and discusses how they could benefit you.

What Exactly Is a Land Trust?

A land trust is essentially holding real estate by contract. The land trust document (contract) is created by the trustee, who must be a third person or entity, and holds the property for the beneficiary, who is another individual or entity. Because only the name of the land trust appears on the property’s deed, the beneficiary remains anonymous.

Components of a Florida Land Trust

A Florida land trust is comprised of the Deed in Trust and the Trust Agreement. The Deed in Trust is the document in which the legal title of the property is transferred to the trust. The Trust Agreement outlines the abilities of the trustee to act.

There are a few important terms to understand in relation to Florida land trusts:

  • Trustee: The individual or entity who holds the legal title of the real estate placed into the trust.
  • Beneficiary: The individual or entity identified in the trust as receiving the benefit of the trust. The beneficiary has the power to direct how the land trust is used and managed.
  • Power of Direction: This refers to the trustee’s ability to transfer, execute a mortgage, or encumber any property contained in the trust.
  • Deed in Trust: The document in which the legal title of the property is transferred to the trust.
  • Trustee’s Deed: The document under which the trust property can be transferred to another party.

Benefits of a Florida Land Trust

A land trust agreement holds significant benefits over other means to hold legal title to real estate for your estate’s beneficiaries, or as a real estate investor.

Benefits of Florida land trusts include:

  • Elimination of transfer taxes: In Florida, when encumbered properties (for example, a property with a mortgage) are transferred into a business entity (like a limited liability company), it incurs taxes. The use of land trusts avoids these taxes by creating a land trust to hold title to the property, while assigning the beneficial interest to the business entity.
  • Privacy of beneficiaries: In a land trust, the interests of beneficiaries are private, and details such as the sales price and terms of the transfer cannot be disclosed without a court order.
  • Avoiding Probate by Non-Residents: If a non-resident of Florida dies, land trusts ensure that the beneficiary will avoid Florida ancillary probate administration. In this case, the probate named in the will be sufficient to pass the land trust as personal property.
  • Security: The land in a land trust cannot be split, sold, or partitioned in any way.

A Florida estate planning attorney can help evaluate whether a land trust would be beneficial for your estate, and help establish the land trust such that everything is put into place smoothly.

Author:
Barry E. Haimo, Esq.
Haimo Law
Strategic Planning With Purpose®
Email: barry@haimolaw.com 
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