Although Florida land trusts are a relatively unknown legal entity (even to many lawyers), they are a great vehicle to hold legal title to real estate in Florida for both foreigners and U.S. citizens. The law concerning land trusts varies from state to state and so it is important to understand the background of this vehicle for the ownership of real estate. In fact, Florida is one of only two states in the nation that has a specific statute governing land trusts. The specific statute governing land trusts in Florida can be found at Florida Statutes Chapter 689.
There are two essential instruments to a Florida land trust, the deed that conveys property into the land trust and the land trust agreement. Other terminology that is important to familiarize yourself with includes:
Trust Agreement: The Trust Agreement is the agreement entered into between the trustee and the beneficiary which establishes the trust
Trustee: The Trustee is the party designated in the trust agreement to hold legal title and equitable title to the land trust property.
Beneficiary: The Beneficiary is the party designated in the trust agreement as having the power to direct the trustee with regard to the trust property, the control of the management, operation, rental and sale of the trust property and the right to the earnings, avails and proceeds of the trust property.
Power of Direction: The Power of Direction is the right to control the trustee’s disposition of tile to the trust power and the execution of trust documents affecting the trust property
Deed in Trust: The Deed in Trust is the instrument which conveys title to the real property into the land trust.
Trustee’s Deed: An instrument by which a land trustee conveys title to the trust real property to another party is a Trustee’s Deed.
Benefits of a Florida Land Trust
Homestead Protection: Florida land trusts qualify for the homestead exemption.
Privacy: The interests of all beneficiaries are private unless disclosed by order of the court.
Asset Protection: Judgments against land trust beneficiaries do not affect the legal title to the real property held in a land trust. Thus, the land held in trust can be freely sold, conveyed, or otherwise pledged without problems.
Certainty: Interest in a land trust cannot be partitioned (i.e. divided and sold pursuant to a court order).
Favorable Tax Treatment: The beneficial interest in a land trust is personal property. As such, the beneficial owners of a land trust including foreign nationals are only taxed at the favorable individual capital gain rate (presently 15%).
Continuity: The death of a beneficiary does not terminate the trust.
Ease of Management With Multiple Owners: The trust agreement establishes a management plan, can set forth buy-out provisions, and should anticipate and resolve potential disputes before they become a problem.
Avoidance of Probate: Property held in a land trust is not subject to costly and time consuming probate.
If you would like to establish a Florida land trust or are simply looking to speak with an experienced real estate lawyer in Miami-Dade or Broward County, contact Jordan + Pascale, P.L. at 305-501-2836. Or, feel free to visit our website at www.JordanPascale.com for more information.