A Florida land trust can be an effective tool for holding and managing real estate in Florida. Here’s an overview of what a Florida land trust is, how it works, the advantages it offers, the challenges to consider, and who can benefit most from using a land trust.
What is a Florida Land Trust?
A Florida land trust is a legal arrangement that allows real estate to be transferred to and held by a trustee on behalf of the trust’s beneficiaries. The trustee has legal title to the property but the beneficiaries retain all rights to control and benefit from the property. The trust agreement lays out the terms and remains private.
How a Florida Land Trust Works
To set up a land trust, a written trust agreement is created naming a trustee and beneficiaries. Real estate is transferred into the trust via a deed. The trustee’s name is listed on the deed as the legal owner but they have no rights to the property. Beneficiaries are not publicly disclosed. The trustee manages the property as directed by the beneficiaries.
Advantages of Using a Land Trust
There are several potential advantages of using a Florida land trust:
Privacy – Beneficiaries are not publicly recorded so their identities can remain anonymous.
Liability protection – If the property is sued or creditors come after beneficiaries, the trust assets may be shielded.
Avoid probate – Assets in the trust can pass directly to beneficiaries upon death without going through probate.
Smooth transfer of ownership – Beneficial interests can be easily transferred without recording new deeds.
Unified management – A single trustee can manage assets on behalf of many beneficiaries.
Challenges of Land Trusts
There are also some potential drawbacks to consider:
Upfront costs – Legal and recording fees to create the trust and transfer property.
Trustee oversight – The trustee has full control over managing the property so selecting an honest, reliable trustee is crucial.
No step-up tax basis – Assets don’t get a stepped-up cost basis when transferred into or out of the trust.
Limited liability protection – Protection can be lost if trust formalities aren’t strictly followed.
Who Benefits from a Florida Land Trust?
Florida land trusts can benefit:
Real estate investors – Allows consolidated management of multiple investment properties.
Families – Can hold assets long-term across generations.
Privacy seekers – Keeps ownership interests and identities private.
Estate planning – Avoids probate and provides smooth transfer of real estate at death.
Asset protection – Shields property from potential lawsuits and creditors.
The laws governing Florida land trusts are found in the Florida Statutes Chapter 689. They can be an advantageous way to hold real estate but professional legal and tax advice is crucial when establishing a land trust. Proper setup and administration is key to realizing the benefits.
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Author: Marlon O. Brammer
Marlon is the Founder and Managing Partner of Brammer, PLLC, where he helps small business owners, real estate investors, and families in Florida, protect their assets and grow generational wealth.