Florida Land Trusts
Florida Land Trusts are a great vehicle to hold legal title to Florida real estate for both foreigners and U.S. citizens. Because land trusts are governed pursuant to each state’s unique laws, land trusts vary from state to state. Thus, what is legally binding in a land trust in one state may have no legal affect in another state. In fact, Florida is one of only two states in the nation that has passed specific Land Trust legislation. That specific legislation is located in Chapter 689 of the Florida Statutes.
The two primary instruments used in establishing a Florida Land Trust are a Deed in Trust, whereby land is transferred into the trust and the Trust Agreement, under which the Trustee is given the power and direction to act. Other important terminology that relates to Florida Land Trusts includes:Important Land Trust Terminology
- Trustee. The Trustee is the individual designated in the trust agreement as the holder of legal title to the real property placed into the Trust.
- Beneficiary. The Beneficiary is the individual identified in the trust who has the power to direct the Trustee and who can otherwise manage and control the real property in the Trust. The beneficiary receives the benefits of the trust and retains the rights to all of the Trust’s earnings.
- Power of Direction. The Power of Direction is the power to control the Trustee’s ability to transfer and/or encumber any of the real property held in the Trust.
- Deed in Trust. The Deed in Trust is the document which transfers legal title to the real property held in the Trust.
- Trustee’s Deed. A Trustee’s Deed is the document under which the Trustee can transfer the Trust’s property to another party, subject to the Power of Direction.
- Homestead Protection. Florida Land Trusts qualify for the homestead exemption, provided that the beneficiary also qualifies for the homestead protection.
- Security. Interest in a land trust cannot be partitioned (i.e. split and/or sold), and transferring beneficial interests is relatively easy.
- Privacy to Beneficiaries. The interests of beneficiaries of a land trust are private and may not be disclosed without order of court. The beneficiaries of a land trust are not listed in any public records.
- Asset Protection. A judgment entered against one beneficiary of a land trust will not affect the legal title to the real property held in a land trust by other co-beneficiaries.
- Debt Avoidance. The beneficiaries are not personally liable for the obligations or debt of the land trust.
- Continuity. The death of a beneficiary does not terminate the trust and testamentary dispositions can be made in the trust agreement.
- Financial. Where mortgage financing is used in connection with a land trust, personal liability of the beneficiary can be avoided if the lender does not require personal guarantees.
- Ease of Ownership. In cases where there are multiple owners, a well drafted land trust can avoid deadlocks among the beneficial owners.
- Probate Avoidance by Non Residents. Non-residents can avoid Florida ancillary probate administration in the event of death. Because the probate of a beneficiary’s will in his or her home state will suffice to pass his or her Florida land trust interest as personal property.
If you have any questions about establishing a Florida Land Trust or are looking to speak with experienced real estate attorneys in Miami-Dade or Broward County on another matter, please contact us at 305-501-2836 for a free consultation.