Through the Florida Land Trust, residents and non-residents can buy or own a property in the State. Typically, the state laws to manage the land trust vary, but Florida has introduced specific legislation for land trust management. It includes the Deed in Trust and Trust Agreement; the former deals with the legalities of land transference to the trust while the former gives the trustee the power to act.
Are you still confused? Here, we have answered a few of the most common queries you can have about the topic.
What is a Florida Land Trust?
Florida Land Trust allows your entitlement for your personal property but owners often misunderstand it as a law to protect the asset within the trust jurisdiction. However, it is beyond that s beneficiaries often create greater liabilities attached to the trust property.
There are numerous benefits of using Florida Land Trust, out of which the two primary advantages are asset protection and privacy of ownership. However, it is not easy to set up Florida Land Trust for your real estate and thus, you'll require professional assistance.
The second most vital concern is:
Who is Eligible to Create Florida Land Trust?
Typically, any entity can form Florida Land Trust, including an individual, group, organization and partnership. The partnership registration includes Limited Partnership (LP) and Limited Liability Limited Partnership (LLLP), whereas the organization should be a Limited Liability Company, also known as LLC or a corporation (Inc.).
Moreover, it can also be revocable, living, irrevocable or Florida Asset Protection Trust. The creation body is also known as a Grantor and often the beneficiary of the trust. But if the Land Trust's purpose is asset protection, then the beneficiary is Florida Asset Protection Trust.
Next, you may be considering the legalities of Florida Land Trust.
What Are the Documents Required For Creating Florida Land Trust?
Typically, you will only require Trust Deed, Trust Agreement and Florida Asset Protection Trust. You can include multiple properties in the same trust; however, experts recommend creating a separate trust for each property while using the same Florida Asset Protection Trust.
Who Owns The Land Trust?
Generally, the Trust Agreement's beneficiaries own the Florida Land Trust, but the trustee has the power to manage the property. Due to this, the name and details of the beneficiary don't appear in public records. It is best to have a separate trustee and beneficiary to maintain privacy.
Who Manages the Property Under the Land Trust?
Typically, the trustee manages and owns the properties under the Florida Land Trust. It is his fiduciary duty to serve the beneficiary. However, when the trustee and beneficiary are different, the beneficiary is entitled to remove the trustee if he doesn't work in the beneficiary's interest.
In general, the beneficiary and owner of the trust (grantor) do not appear in public records unless disclosed by the beneficiary or court order.
Why Should You Use Florida Land Trust?
Common reasons to use Florida Land Trust for property management are:
- Homestead Exemption - protects against property tax, creditors, and circumstances related to the property owner's spouse's death.
- Privacy - no public disclosure about the beneficiary and owner of the properties; thus, their interests remain intact within the trustee
- Asset Protection - when the court order is against one beneficiary, the interest of the beneficiaries doesn't suffer
- Continuity - the beneficiary's death doesn't end the trust; rather, it passes down the hierarchy.
Common Terms Used in Florida Land Trust
Trustee: the person who has legal control over the properties under the trust
Beneficiary: he is the person on whose behalf the trustee acts
Deed in trust: document entailing the transfer of legal title for property holdings
Trust Agreement: document trustee uses to transfer the property to the third person, but it can be limiting in the power of direction, according to which a trustee can't retain or transfer real properties.
Benefits of Having a Florida Land Trust
Avoid Taxes and Fees
Typically, Florida Land Trust is exempt from homestead charges, including property tax, and thus, it can help residents with cost savings. Moreover, a property owner can also save money by transferring property through a trust assignment instead of a deed to avoid title insurance.
In general, successors need to go through a probate proceeding after the owner's death, but that is not the case when it comes to Florida Land Trust properties. Besides, non-residents can avoid ancillary probate by transferring real estate in the trust.
Under the Trust Agreement, Grantor can clarify the arbitrations and other co-owner disputes in detail to prevent the possibility of gridlock. Also, the trustee is empowered to act on behalf of all beneficiaries, thus reducing any chance of disagreement.
Anyone can set up Florida Land Trust, such as
- Single person
- Business Organizations
Easy to Transfer/Assign
The beneficiary interest can easily transfer through a land trust without deed requirements or public disclosure of title transference.
Merger is Inapplicable
The terms of the land trust remain valid even if the trustee is the property's sole beneficiary.
The downside of Florida Land Trust
Although Florida Land Trust offers a wide array of benefits, it also has its downside. You should look at those drawbacks before deciding to put your property into a land trust.
First and foremost are the issues with the tenants, especially when they refuse to pay rentals. You can't directly carry out eviction and may require an attorney to deal with the situation.
Secondly, you'll need your trustee whenever you decide on your real estate property. It includes property transactions, signing a rental agreement, preparing land contracts, property listing or any other engagement.
It is because your trustee handles and manages your property; if he is an attorney as well, then you've to pay for his time he is investing in your property dealings.
Thirdly, Florida Land Trust doesn't protect you against judgment debtors or creditors. Therefore, it is important to work with an attorney before setting up a land trust for your real or personal assets. This will help you build a better understanding of the process and assist you in decision-making.