What is a Florida Land Trust?
A Florida Land Trust is a private legal agreement between one or more parties for the purpose of holding title to real estate. The legal rights and obligations of the parties to the land trust are governed by the provisions of the Florida Land Trust Act. The land trust separates property ownership between the property’s legal ownership in the trustee’s name and the property’s beneficial ownership by the trust beneficiaries. The beneficiaries completely control the use and conveyance of the real estate while legal record title is held in the name of the trustee. A Florida Land Trust can be used in connection with an estate plan, real estate transaction, or as part of a business deal.
Benefits of a Land Trust
Privacy: Record title to the real estate is held in the name of the trustee while the beneficiaries (a/k/a owners) remain anonymous. Under Florida law, the trust document does not need to be recorded, so the trust terms are also hidden. Moreover, this makes it very difficult for creditors to discover the true owners of the property and attach their interest.
Creditor Liens: Normally, a creditor's judgment recorded with a county's official records becomes a lien on all real property titled in the debtor’s individual name. When title to real property is held in a land trust, a judgment creditor will not acquire a judgment lien on the property owned in a land trust merely by recording the judgment in the county where the property is located. However, judgment creditors can still reach the beneficial interest of a trust beneficiary, but it requires a more difficult and expensive legal process.
Probate Avoidance: If the trust agreement is drafted carefully and correctly, the ownership interest of a deceased land trust beneficiary will automatically pass to his or her heirs or beneficiaries, thereby avoiding a costly and time consuming probate administration process.
Alternative to Business Entity: A land trust can be used as an alternative to the formation of a business entity, such as an LLC or partnership, to hold title to real estate. Business entities must file with the Florida Secretary of State and pay annual filing fees. Conversely, a land trust is not filed with the Florida Secretary of State and there are no annual filing fees.
Homestead Exemption: The beneficiaries of a Florida Land Trust qualify for Florida's Homestead Exemption for tax purposes and for protection from forced sale by a judgment creditor.
How to Create a Land Trust
You should always consult with and retain an attorney if you want to create a land trust and not try to create one on your own. The experienced attorneys at Loshak Leach LLP routinely help their clients establish land trusts for various purposes. Call our office today at 954-334-1122 or contact us online to schedule your free consultation.