Even though the term “land trust” is often utilized in the real estate jargon, most people do not know the concept behind the term and all the execution requirements involved in the process.
In this article, you will find out what you must know about the Florida land trust execution requirements.
What Is a Florida Land Trust? – In Layman’s Terms
In essence, a trust is a legal way to hold real property by contract. A land trust is a legal relationship in which a trustor (original owner of the property) transfers the title of real property to a second party (trustee) to benefit a third party (beneficiary).
In Florida, real estate investors can structure and arrange land trusts in several manners.
What Are the Main Advantages of a Florida Land Trust?
The main advantage of a Florida land trust is privacy. All beneficiaries in a land trust can remain anonymous, as only the trustee’s name appears in the public records.
Land trusts allow for easy transfers of interests by document assignment, which is a huge advantage when compared with the formalities required by deed transfers.
Plus, the owner of a property held in a land trust can use the land trust agreement to specify his/her successor beneficiaries in case the original beneficiary dies— consequently, avoiding probate.
Is a Florida Land Trust the Best Option in Terms of Asset Protection for Real Property?
Undoubtedly, a land trust in Florida is a valuable way to purchase, hold, own, and manage real property.
However, this type of legal arrangement is often misunderstood, which may lead to unexpected issues in the future (e.g., a beneficiary can create a liability attached to the property in a land trust).
While land trusts provide a valid solution in terms of asset protection in Florida, they are far from being the ultimate way to do it.
Who Is Allowed to Create a Land Trust in Florida?
In Florida, both individual persons and entities can create land trusts. For example:
- A single person
- A group
- Limited partnerships
- Limited liability companies
- Limited liability limited partnerships
In many cases, the person/entity who creates the land trust is its trustor and its beneficiary at the same time.
What Are the Florida Land Trust Execution Requirements?
Typically, setting up a land trust in Florida requires three main documents – the deed of trust, the trust agreement, and a memorandum of the trust agreement.
The deed of trust is the document issued when the real property is being transferred to the land trust by its owner(s). This document needs to be recorded in the records of the county where the real property is established.
Second, there is the trust agreement, which is a document that identifies the beneficiaries under a land trust, specifying each beneficiary’s interest in the property held in the trust. This document is kept confidential, which means it is never recorded in public records.
The memorandum of the trust agreement is a document that identifies the trustee and details the type of powers he/she is granted to manage the property in the trust. This document must be recorded in public records as well.
Who Is the Owner of a Land Trust in Florida?
In Florida, a land trust is owned by its beneficiaries, as provided in the land trust agreement. All the rights and obligations involved in the legal relationship must be displayed in the land trust agreement.
Unless the power to manage the trust is delegated to the trustee, the beneficiaries are also responsible for the management.
As the beneficiaries are not publicly revealed in the records, only the trustee’s name appears. Hence, a trustor (original owner of the property) can keep its beneficiaries’ names safe and out of public records.
Who Is the Owner of the Real Property Held in a Land Trust in Florida?
The trustee of the trust is the legal owner of the property held in a Florida land trust. In this sense, the trustee has a fiduciary duty to the beneficiaries in the trust, which means he/she must act in their best interest.
Plus, the trustee will be the “face” of the land trust, as beneficiaries will not show up in any public records unless disclosed by either themselves or court order.
We Can Help You to Execute a Land Trust in Florida
When structuring a land trust in Florida, the best approach is to seek guidance from an expert lawyer. Attorney Romy B. Jurado Esq. will assess your situation and tailor a strategy to help you.