FLORIDA LAND TRUSTS

Florida Land Trusts are simple to create and are an excellent planning tool for residents and non residents alike.
FLORIDA LAND TRUSTS
FLORIDA LAND TRUSTS

Florida Land Trusts are simple to create and are an excellent planning tool for residents and non residents alike. In fact, I submit they are the best solution for foreign buyers. One reason they are seldom used is that few people are familiar with Florida Land Trusts including Realtors, title companies and ironically many attorneys. Most states do not have a land trust statue. In fact, only Florida and Illinois are the exception. Initially, land trusts limited trustees of a land trust to banks or specifically licensed trust companies. Subsequently, the Florida legislature, expanded this role to individuals, corporations, partnerships and Limited Liability Companies. Furthermore, anyone can be the beneficiary and owner of the land trust.

There are countless reasons to hold property in a land trust. Some of the benefits include but are not limited to:

  1. PRIVACY AND ANONYMITY OF OWNERSHIP – Unlike a corporation or limited liability company there is no public record of beneficiaries. Title appears in the name of the Trustee and there are no requirements to register the trust.
  2. EASE OF BUYING FORECLOSURE OR SHORT SALE PROPERTIES – Many times banks will approve short sales or foreclosure purchases but prohibit the substitution of buyers on the subsequent transfer of title for a time certain. A Land Trust may keep the same Trustee, yet allow the beneficial interest to be sold without violating the bank approval.
  3. EASE OF AVOIDING JUDGEMENTS & LIENS ON THE PROPERTY – Land Trusts allow individuals with judgments or tax liens to buy and sell freely without having judgment liens attach to their property.
  4. EASE OF CONTROL BY MULTIPLE OWNERS – Rather than requiring multiple signatures, only the Trustee is required to sign contracts and related paperwork.
  5. EASE OF AVOIDING TWO SETS OF CLOSING COSTS – Documentary stamps as well as title insurance may be avoided whenever there is a simultaneous closing.
  6. EASE OF MANAGEMENT IN THE EVENT OF CONFLICT – Land Trust Agreements can provide buy out provisions in the event of death or conflict among property owners.
  7. EASE OF MAINTENANCE – Unlike corporations or Limited Liability Companies, land trusts do not have annual filing fees with the state. Additionally, they do not require a seperate tax I.D. or an additional tax return to be filed.
  8. EASE OF PROBATE AVOIDANCE – Unlike owning property in one’s individual name contingent beneficiaries are listed in the trust document similar to a beneficiary designation on an insurance policy thereby avoiding probate.
  9. EASE OF MANAGING THE DISABILITY OF TRUSTEE OR BENEFICIAL OWNER – Contingent Trustees may be listed in the event the Trustee becomes incapacitated mentally or physically thereby avoiding court proceedings.
  10. EASE OF CHANGING CONTINGENT BENEFICIARES – Since Land Trusts avoid probate they often serve as a Will substitute and can be amended at any time without having to change the deed.
  11. EASE AND SIMPLICATION OF MAKING GIFTS – Land Trusts, if desired, can be excellent estate planning tools to gift assets out of an estate to minimize or reduce estate tax without sacrificing or giving up cash.
  12. FAVORABLE TAX RATES – Unlike a “corporation” or a foreign corporation, beneficial owners of a land trust including foreign nationals are only taxed at the favorable individual capital gain rate which is presently 15%.
  13. HOMESTEAD QUALIFICATION - Previously, there was a debate of whether Florida Land Trusts qualify for the homestead exemption. However, Section 689.071 was recently amended to reflect that the principle residence of a beneficiary which is held in a Land Trust qualifies for the Homestead Tax Exemption. In short, a Florida Land Trust has great flexibility and depending upon the circumstances is most often the best method to purchase and title real estate in the State of Florida.
ABOUT THE AUTHOR
Ronald S. Webster has practiced Law in Collier County with a principle office on Marco Island since 1986.
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