What You Should Know About Florida Land Trusts
Land trusts are a good way to hold legal title to real estate for both US citizens and foreigners who own properties in the US. Land trusts are currently legal in seven states, including Florida, and the conditions for them are unique from one state to another.
Components of Florida Land TrustThere are two main components of Land Trusts in the State of Florida: The Deed in Trust and the Trust Agreement. The Deed in Trust is the document where the legal title of the property is transferred to the trust. While the Trust agreement is the tool that gives the trustee the power to act.
Florida Land Trust TerminologyLet*s consider other important terminology as they relate to Florida Land Trusts
1. Trustee: A trustee is the individual who holds the legal title of the real property that is placed into the trust.
2. Beneficiary: This is the person identified in the trust as getting the benefit from the trust. He has the power to direct how the land trust is to be used and managed.
3. Power of Direction: This refers to the authority to control the trustee*s ability to transfer, execute a mortgage, and/or encumber any of the property contained in the trust.
4. The Deed in Trust: This is a document where the legal title of the property is transferred to the real property held trust.
5. The Trustee*s Deed: This is a document under which the trust property can be transferred to another party, subject to the provisions of the Power of Direction.
Benefits of a Florida Land TrustLand trust agreements have so many benefits, some of which include:
Elimination of transfer taxes: In the State of Florida, when encumbered properties (such as one with a mortgage) are transferred into a business entity (such as a limited liability company), it attracts taxes. A way to avoid it would be the use of land trusts. By creating a land trust to hold title to the property then assigning the beneficial interest to the business entity.
Privacy to beneficiaries: In a land trust agreement, beneficiaries* interests are private, and as such, details such as sales price and details of transfer cannot be disclosed without a court order. Also, the identity of beneficiaries of a land trust are not listed in public records.
Avoidance of Probate by Non-Residents: If a non-resident of the State of Florida dies, Land Trust agreements make sure that the beneficiary would avoid Florida ancillary probate administration. In this case, the probate in the will in the beneficiary*s home state will be sufficient to pass his or her Florida land trust interest as personal property.
Security: the interest in a land trust cannot be split or sold (or partitioned in any way). There is also a relative ease in the transfer of beneficial interests