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September 15, 2020

Florida Land Trust

A Florida Land Trust is a great instrument when it comes to Estate Planning and Asset Protection. The Florida Land Trust, also known as the Florida Land Trust Act under Fla. Stat. §689.071 is a private agreement among several people to operate, manage, and hold legal title to Florida real property for the benefit of the trustee or beneficiaries. The real property is conveyed to a trustee under an arrangement reserving for the beneficiaries the management and control of the property. The beneficiaries may collect rent, improve, operate, use and sell the property without holding legal title. In essence, the Land Trust divides the property ownership between the property’s legal ownership in the trustee’s name and the property’s beneficial ownership which is owned by the beneficiaries appointed by the land trust agreement.

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How it Works

Two major documents required to establish a Florida Land Trust are a Trust Agreement and a Deed in Trust. The Trust Agreement is a private document identifying trustee powers, trustee liability, and the rights of the beneficiaries. The Deed in Trust is the instrument that transfers the land to the Trust and is recorded in the public records. However, a search of the property in the public records shows only the trustee and trust as the property owner, the trust beneficiaries are not disclosed.

Florida Land Trust Benefits

The primary benefit of a Florida Land Trust is to provide confidentiality over your ownership of real estate. Whereas an adverse party or creditor that searches the public record will not find properties that you own through a land trust.

Additional benefits of the land trust include:

Homestead Qualification. The beneficiaries of a Florida Land Trust can still qualify for homestead exemption, both for tax purposes and for prospection from forced sale by a judgement creditor. However, the beneficiary has to be ordinarily eligible for homestead protection.

Private Transfer of Ownership Interest. Transfer of ownership interest is typically accomplished only by a person transferring real estate title by a publicly recorded deed or mortgage. However, with a Florida Land trust, a person may convey their interest in a land trust property by privately assigning, by sale or by gift, their beneficial interest to another person. The public will not be made aware of this transaction and, in the case of a sale, no one will know the transfer price or the buyer’s name.

Taxes and Fees. Transferring interest by way of assignment may avoid the expense of new title insurance and other deed transfer expenses.

Probate Avoidance. Probate proceedings must be administered after of the death of the owner of real property that is owned in the individuals name. However, real property owned by a Florida Land Trust enjoys the benefits of the interest passing immediately to the successor beneficiaries named in the land trust agreement without the need of probate and unnecessary expenses.

Lien Avoidance. A beneficiary’s interest in a Florida Land Trust is considered to be personal property and not real property. Therefore, a creditor’s recorded judgment will not acquire a judgment lien on the property owned in a land trust.

Continuity. The death of a beneficiary or trustee does not result in the termination of the trust. Successor beneficiaries and trustees can be assigned and appointed in advance within the Trust Agreement thereby avoiding interest and management issues later on.

Doctrine of Merger Does Not Apply. Unlike an ordinary Trust, a Florida Land Trust will not terminate when the trustee is the sole beneficiary of the land trust.

Land Trust Disadvantage

Florida Land Trust may not be the most reliable asset protection tool Although a land trust hides ownership quite well from the public record, a judgment debtor is required to disclose to a judgment creditor their beneficial interest in any trust agreement thereby allowing the judgment creditor to attach to the beneficiary’s interest in the land trust. However, a spendthrift provision in the Trust Agreement can limit the recovery of certain judgment creditors and thus protect the property contained therein.