The Florida land trust is a unique relationship between the trustee and beneficiary that protects the identity of the property’s true owner. When used properly, the land trust provides privacy of ownership, ease of management, isolation of liabilities, and easier transferability of ownership. Contact us today to discuss how the land trust could work for you.
A land trust is created when the beneficiary or beneficiaries decide to purchase a property or make a mortgage loan to someone. They choose someone to act as their trustee. The trustee will hold the legal title to the property, meaning that the trustee’s name is the one that will appear on the deed and in the public records. The trustee will also hold equitable title to the property, meaning that the trustee has the complete authority — as far as third parties know — to lease, sell, encumber and convey the real property without anyone else’s involvement. The beneficiaries enter into an agreement (the trust agreement) with the trustee. The trust agreement spells out exactly what the trustee is permitted to do with the property, and when and how he can do those things. It is a very important document that gives the trustee extremely powerful authority to do anything with the property. Therefore, it is imperative to choose a trustworthy trustee. The parties then direct that the real estate or the mortgage shall be taken in the name of the trustee, and special statutory language is included in the deed or mortgage to give public notice of the trustee’s authority over the property. The trustee executes all purchase and sales contracts, leases, permit applications, notices of commencement and termination, and any other document related to the management and disposition of the property so long as the trust exists. The beneficiaries’ names are never made public except in rare circumstances that usually require a court order.
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:
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.