What are the Benefits of a Florida Land Trust?

Daniel PascaleBy: Daniel T. Pascale, Esq.

Offices located in Delray Beach and Coral Gables, FL

Florida Statute 689.071 creates an entity known as a Florida Land Trust. A Florida Land Trust is a device by which real estate is conveyed to a trustee under an arrangement reserving for the beneficiaries the full management and control of the property.  The trustee executes deeds, mortgages, or otherwise deals with the property at the written direction of the beneficiaries.  The beneficiaries collect, rent, improve and operate the property without holding legal title.  Two instruments create the land trust arrangement.  The “deed in trust” conveys the realty to the trustee.  Contemporaneously with the deed in trust, a trust agreement is executed.

As discussed in our prior post (here), although the Florida Land Trust is a relatively unknown legal entity, it can offer a wide variety of benefits. Land trusts created under Florida Statute 689.071 are useful tools for many purposes, such as:

Privacy

By operation of law, the beneficial interests in a land trust remain entirely private.  Thus, as long as the Trustee is also not the beneficiary of the land trust, the beneficiary(ies) will remain anonymous absent order of a court.  Moreover, land trust agreements are not recorded in the public records.  Thus, the specific provisions of the trust are never disclosed to the public.

Tax Advantages / Homestead Qualification

All of the tax advantages of individual ownership are retained.  As such, deductions for taxes, depreciation, and other expenses will flow directly through the land trust to the beneficial owners.

Moreover, in cases where residential property is transferred into a trust, if a beneficiary meets the homestead requirements, placing land into the trust does not disturb the beneficiary’s homestead qualification.

Non-Residents/Foreign Nationals Avoid Ancillary Probate Administration

Non-residents of Florida can avoid ancillary probate administration by transferring real estate into the trust.  Avoidance of probate is a key reason why many non-residents elect to establish a Florida land trust.

Flexibility for Multiple Co-Owners.

In multiple ownership situations, the possibility of gridlock exists.  A well-drafted trust agreement can be a vital tool in cases where co-owners cannot agree.  Provisions for arbitration or other alternative dispute resolution venues can be clearly spelled out in the Trust Agreement well in advance of any dispute.

Further, because the statute provides that all persons dealing with the Trustee do not have any obligation to look beyond the Trustee’s deed to verify the Trustee’s authority to act, the Trustee can be empowered to execute deeds on behalf of all of the beneficiaries, thus eliminating the need for multiple signatures of the beneficiaries on a deed of conveyance.

Ease of Conveyance

Beneficial interests in a land trust can be easily assigned to other parties.  The assignments need only be executed by the Beneficiary, presented to the Trustee, and accepted by the new beneficial owner.   No deeds need to be recorded into the public, saving money and preserving privacy.

Continuity / Stability

The death of a beneficiary does not result in the termination of the trust.  Successor beneficiaries can be assigned in advance.  Likewise, the death of the trustee also does not result in the termination of the trust.  Rather, successor trustees are appointed in advance thereby avoiding management issues upon the death of the trustee.

The Doctrine of Merger is Not Applicable

A land trust remains valid and will not terminate regardless of whether the trustee is the sole beneficiary of the land trust.

Asset Protection

The beneficiaries of a land trust are not liable, solely by being beneficiaries, under a judgment, decree, or order of court or in any other manner for a debt, obligation, or liability of the land trust.  Moreover, a judgment against one beneficiary will not attach to the underlying land held in the trust.

Each of the above referenced benefits is highly dependent upon your unique situation. For a complimentary and confidential consultation with an experienced Florida real estate lawyer, please call our office at: 305-501-2836 or visit us at www.jordanpascale.com.