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FLORIDA LAND TRUSTS- Florida Statute Section 689.071
What is a Florida Land Trust?
A Land Trust is an estate planning and asset protection tool that is used for purposes of owning, transferring and managing real property. Florida and Illinois are the only two states in the United States to have created this particular device for holding property. It was originally devised to protect large family farms from being broken up or sold at death due to income taxes or increased property taxes. The Land Trust may be used in relation to all types of real property, including but not limited to farms, commercial properties and single family homes.
There are many more useful aspects of a Florida Land Trust for commercial and residential property. A Land Trust might be recommended by a realtor to their clients at the time of purchase or prior to the sale to facilitate a transfer of the property.
How is a Land Trust created?
To establish a land trust under Florida law, the property is transferred by a deed from the owners of the property to the trustee of the land trust. This deed is recorded in the public records of the county where the property is located.
Next, a trust agreement is prepared that identifies the beneficiaries of the land trust and each beneficiary's interest in the land trust. This document is kept private and is not recorded in the public records. The trust agreement identifies the person that has the authority to direct the trustee to convey property or interests in the property, execute a mortgage, distribute proceeds of a sale or financing, and execute documents incidental to the administration of a land trust.
Last, a memorandum of the trust agreement is prepared and recorded in the public records. This memorandum identifies the trustee and the type of powers that they are given to manage the property.
From this point forward ownership in the property is held by the trustee of the land trust. And, the beneficiaries have a certain interest and rights in the property that are identified in the land trust agreement.
Can you keep your Homestead Exemption if you put your residence in a Land Trust?
Yes. The Attorney General of Florida issued an opinion in August 2008 that provides that the following persons are entitled to claim the Florida homestead exemption:
i. The trustee of a Land Trust, who also satisfies the residence and other requirements under Florida law.
ii. The beneficiary of a Land Trust, who has a life estate and also satisfies the residence and other requirements under Florida law.
iii. A person who is both the trustee and beneficiary of a Land Trust and satisfies the residence and other requirements under Florida law.
What are some of the benefits of a Land Trust?
The most important benefits of the land trust are: i. avoidance of probate and ii. avoidance of increased real property taxes upon transfer of ownership in property. With a land trust, no one needs to know what real estate you own during your lifetime or at your death, and by avoiding probate you avoid attorney fees and months delay in distribution of your property to your heirs.
Facilitates multiple ownership. When there are several owners of a piece of property or when land is being developed into many lots for a subdivision, a Land Trust provides the convenience of having one titleholder to sign the mortgages and deeds and other matters governing the legal title. It also avoids dividing land among multiple owners. Each owner can be assured that no partition lawsuit can be filed against a Land Trust to split or divide the land among the multiple owners.
Allows for gifting: A Land Trust is an acceptable way to make gifts by the assignment of a percentage of the beneficial interest in and power of direction over the real estate held by the trustee.
Avoids additional probate administration: If you are a resident of another state and own real estate, a Land Trust will avoid additional probate administration in the state of Florida. Because you will own the property via the trust, which is considered a personal property interest, rather than a real property interest, the probate administration may take place in the state or country in which you are a primary resident.
Please feel free to contact attorney Lisa Wilcox at 727-821-1707 or at email@example.com for additional information.