We can hold Florida real property in a Florida land trust. So if it’s land in Florida, we can handle it for you. We recommend having each property in its own separate trust rather than placing all your properties in the same trust (i.e. putting all your eggs in the same basket).

The land trust provides confidentiality of ownership since the only owner’s name that appears on the public records is the name of the trustee. It also provides segregation of liability by separating the ownership of the property from the current owner as well as that owner’s other properties and their liabilities. Think of it as putting one egg (piece of property) in one basket (trust). If one basket falls, only that egg breaks. It also separates the property away from you, so that – when someone searches the public records to see what real property you own – your name will not appear on the records; only the trustee’s name appears. Therefore, if someone should feel the need to sue you for a breach of contract, negligence, or other cause of action, their asset search prior to litigation will make it appear that you have no assets from which to satisfy a judgment, making you look like a less valuable target. The Florida LLC can’t provide this anonymity of ownership, because your name typically appears on the Division of Corporation’s www.Sunbiz.org website as either a manager or member of the company. The LLC also typically costs more to establish and maintain than a land trust.

Before moving property from your individual name and into a trust (or an LLC), however, we always point out the “downfalls” of putting property into an entity or trust:

1. You can no longer prosecute evictions pro se (without an attorney). You can file it with the owner’s (trustee’s) written authorization, but if the tenant responds, or a hearing is required for any reason, you must engage an attorney to appear in court on the owner’s behalf.
2. You will have to obtain a new hazard insurance policy, since the insured’s name is changed. You will no longer be able to obtain liability insurance coverage that is coupled with hazard insurance coverage. If you want separate liability coverage, you would need to purchase a more expensive separate premises liability policy.
3. If the properties are moving from one owner to multiple LLC’s, directly or as beneficiaries within the trusts, there is a chance that this could increase the annual tax return preparation fees substantially, depending on how it is structured. You would want to discuss it with your tax adviser before doing so.
4. With the land trust, you will lose day-to-day control over the management of the property. You will no longer sign the listing agreements, leases, permit applications, or contracts for work to be conducted on the property. All of that will be signed instead by the trustee. This means that all documents regarding the property must be sent to the trustee with written direction as to what to do with them before they can be executed and returned to the recipient. Also, this could lead to a trust issue with potential tenants who are reluctant to enter into a lease and pay rents to a person whose name does not appear on the public records of the property;.
5. If the property is subject to a mortgage, the transfer to an LLC would require the payment of “assumption” documentary taxes. Transfer to a land trust typically will not trigger this tax payment.
6. If the property is subject to a mortgage, the property’s transfer to a land trust or an LLC will trigger the “due on sale” clause of the mortgage. This means that, once the lender discovers that the property is no longer in their borrower’s name, they have the right to first demand that you put it back into your name, and – if you refuse or fail to do so within 30 days – they may then accelerate your loan and require that you pay off the entire amount secured at that time by the mortgage. If you fail to do so, they can then foreclose the mortgage.
7. Moving property into a land trust or even an LLC in one of the “secret” jurisdictions like Nevada, New Mexico, Wyoming, or Delaware, is not a foolproof way to maintain your confidentiality to the extent that the IRS is concerned. The Service must be alerted to your ownership in the property, whether that is through a Form 56 filed with the Service upon formation of the trust, or filing your subsequent person tax returns where income, losses, and expenses of the property are reported.
8. Moving your homestead property into a land trust is NOT advised. To be able to take advantage of the homestead exemption for real property taxes, one must hold at least an equitable interest in the property for their life. However, a land trust conveys all equitable and legal title to the third party trustee. In that case, the person living in the home no longer has an equitable interest in the property and will therefore lose the right to the homestead tax exemptions. While you may retain a life estate in the property, with the remainder going to the land trust, this will retain the homestead tax exemption; but there will be not anonymity since the life tenant’s name will still appear on tax records. Further, the Florida homestead protections against judgment creditors are powerful, so we don’t recommend putting those protections in jeopardy by placing the property into a land trust.

We always point these issues out to clients when they’re thinking of moving properties into trusts or LLC’s. Most still do it, because the segregation of liabilities or anonymity of ownership (in the case of land trusts) is more important to them than these issues.