Trusts are legal arrangements used by a trust maker (also known as “grantor” or “settlor”) to transfer ownership of property to a trustee to benefit one or several beneficiaries. Considering these arrangements are inherently versatile, it is possible to tailor distinct trusts to suit different circumstances.
In this article, you will find out the purpose, benefits, and limitations of land trusts in Florida.
What is the Purpose of a Florida Land Trust? – Explaining the Term
Similar to other types of trusts, land trusts are meant to protect property owners against liability and identity exposure. In Florida, several individuals like real estate investors, limited liability companies, and individuals use land trusts to separate between personal finances and property.
Usually, land trusts are established as revocable trusts, which permit property owners to change, amend or cancel terms in their agreement at any time. Although irrevocable trusts have interesting tax benefits, their rigid structure may be an issue for property owners.
The most common advantage associated with land trusts is to own interest in Florida real estate while maintaining full anonymity. In a land trust, only the trustee’s name appears in public records, which maintains the identity of the grantor and beneficiaries confidential.
Besides, owning property in a Florida land trust mitigates the liabilities associated with real property ownership while permitting the grantor to retain control of the assets held within it. Also, it allows for flexibility when transferring or managing real estate, waiving the need for a formal deed of property.
How to Create a Florida Land Trust – The Basics
In a land trust, the trustee holds the legal and equitable titles to the property held in the trust. Hence, the property’s deed will not expose the identity of any of the beneficiaries in the trust.
To create a land trust in Florida, a property owner needs to prepare a trust agreement, along with a deed of trust and a memorandum of the trust agreement. The trust agreement is the fundamental document to establish a land trust.
This document outlines the trust’s essentials, including the beneficiaries, their interest in the trust, and the individual/entity appointed as the trust’s trustee. The trustee has the authority to convey trust property, convey interests in trust property, and distribute proceeds of a sale or financing involving trust property.
As a confidential document, a land trust agreement is never recorded in public records. Then, the grantor will issue a deed of trust for the property being transferred to the land trust. The deed of trust is recorded in the property’s county official records.
Another document is the memorandum of the trust agreement, also to be recorded in the official records. This document is crucial, as it identifies the trustee to the land trust and details the authority granted by the grantor to manage property held in the trust.
Limitations of Florida Land Trusts
Although establishing a land trust in Florida has several benefits, it will not allow trust makers to circumvent any type of income taxes, as well as transfer taxes and gift taxes. Also, it will not avoid any type of property assessment that would otherwise be due and payable if the property was not held in a land trust.
Land trusts are not recommendable tools for those who want to circumvent “due on sale” clauses associated with promissory notes or mortgages. To find a feasible solution, seek guidance from an expert estate planning attorney as soon as possible.
Are You Interested in Establishing a Land Trust in Florida? – Work with an Experienced Attorney Today
Attorney Romy B. Jurado Esq. is an estate planning lawyer with a decade of experience helping clients preserve their estate and legacy. Waste no time – contact us today by calling (305) 921-0976 or emailing Romy@juradolawfirm.com to schedule a consultation.