How does a land trust in Florida work? This guide has everything you need to know.
- A land trust in Florida is one of the best ways of owning property
- A Florida land trust has many benefits
- Any willing and qualified investor can set up a land trust
- You need an expert legal team to help you set up a land trust in Florida
Do you want to own property in Florida and keep it private and confidential? Fortunately, you can do so using a Florida land trust. But what is a land trust, and how does it work? Who can establish a land trust, and what are its benefits? This post answers all these questions. Keep reading to learn how working with an experienced Florida property attorney can help you set up a land trust.
What is a land trust, and how does it work?
Let's define a land trust before examining other relevant details: In Florida, a land trust is a private agreement between persons who wish to manage, operate, and hold legal title to a property. This form of property ownership operates under section 689.071 of Florida's law, aka the Florida Land Trust Act.
In this ownership format, a trust maker or grantor designates a trustee that holds a property's legal title for the beneficiary's benefit. A skilled real estate lawyer in Florida can help a willing party or parties set up this trust at any time. Its establishment requires the execution of two documents, namely:
- A Deed in Trust that conveys the property into the trustee's name in their fiduciary capacity as trustees
- A Land Trust Agreement under which the trustee administers the trust's terms
Individuals, groups of persons, general partnerships, limited partnerships, limited liability companies, corporations, and revocable or irrevocable trustees can establish land trusts. Also, any other type of business may set up a land trust in Florida.
This ownership arrangement's nature is dynamic, allowing its establishers to modify, update, or terminate it at any time they wish. Trustors or grantors authorize their trustees to execute grant deeds, deeds of trust, leases, or promissory notes for them. The authorization must be specific, documented, and under the grantors' direction.
Types of land trusts
Land trusts come in two main types: title-holding and conservation.
- Title-holding trusts: These land trusts allow individuals to hold properties anonymously.
- Conservation trusts: Under this arrangement, owners must give up some land use and development rights.
Parties to a land trust
A land trust has three parties, namely the beneficiary, grantor/trustor, and trustee. Let's explore them in detail below.
- The grantor/trustor: The grantor creates the trust and transfers the property under it. This party sets the trust's governing terms and conditions. Mostly, the grantor is also the trust's beneficiary. The grantor may also appoint one or several other successor beneficiaries, most often the grantor's children.
- The trustee: This party handles the property's confidential details and manages the trust for the trustor. The trustee holds legal and equitable title to a property held in a land trust as per the grantor's written authorization. For example, they can oversee the maintenance and rent payment of residential properties under land trusts.
- The beneficiary: This party has the final say over a trust's affairs and direction. However, they can choose to delegate that power of final direction to another trusted person or entity. A beneficiary may opt to manage the property held under this trust or appoint an agent.
Additionally, a beneficiary may reside in land trust properties or rent them to enjoy additional income. They also retain the right to receive income and proceeds arising from their property's mortgage or sale.
Benefits of setting up a land trust
Buying and owning property under a land trust has many benefits. Below are some of the advantages beneficiaries enjoy if they own property using this method.
Setting up a land trust ensures that you own your property confidentially and privately. Under this setting, your name doesn't appear in public records or databases as the property's legal owner. Therefore, people can't know that you own these properties. Anyone wishing to know the property's real owners can only do so if:
- You give express approval
- Local laws demand it
- A court issues an order to disclose the property's owners
2. Easy property transfer
You can easily transfer a land trust's beneficial interests using simple assignment documents without following lengthy deed formalities.
3. Avoid liens
Owning properties under land trusts avoids liens because a creditor's judgment doesn't affect properties that aren't titled in your name. Further, Florida Statutes protect land trust property from judgments and liens issued against individual beneficiaries.
4. Reduced taxes and fees
Land trusts may avoid the expenses of new title insurance if properties are transferred by assignment of trust interests instead of deeds. Additionally, owning property under a land trust in Florida limits most of the liabilities that property ownership causes property owners. Meanwhile, you retain most of your ownership rights, like legally claiming a homestead exemption if the property is your primary residence.
5. Secure joint ownership
Bankruptcies and judgments don't affect joint owners of beneficiary interests in land trusts.
6. Confidential ownership transfer
Legally, you can transfer property to real estate by publicly recorded deeds or mortgages. However, you may also transfer your stake in properties under land trusts by privately assigning, selling, or gifting it. Under this arrangement, the public can't know about the transfer, and if you sell it, people won't know the selling price or the buyer's identity.
Closing remarks on Florida land trust
Investing in Florida property using a land trust is a smart way to own property while keeping it private and confidential. This ownership form also has numerous advantages investors may not enjoy when owning properties using other methods.
Fortunately, teaming up with an expert property lawyer makes setting up a land trust easy for anyone willing to do so. You can collaborate with our PeytonBolin legal team to help navigate your trust successfully. So, do you want to have a safe and sure deal when setting up your next land trust? Don't hesitate to contact our office today for that much-needed legal help.