Florida Land Trusts are easy to create and are an excellent Life Plan planning tool. One reason they are seldom mentioned is that few people are familiar with the Florida Land Trusts including Realtors, title companies and ironically many attorneys.
Most states do not have a land trust statutes. Florida is an exception. Initially, land trusts limited trustees of a land trust to banks or licensed trust companies. Subsequently, the Florida legislature expanded this role to individuals, corporations, partnerships and LLCs. Additionally, anyone can be the beneficiary and owner of the land trust.
There are countless reasons to hold property in a land trust:
Florida has perhaps the most expensive as well as time consuming probate process in the country. Land Trusts avoid probate. Contingent beneficiaries are listed in the trust document similar to a beneficiary designation on an insurance policy thereby avoiding the long, complicated and costly probate process.
Contingent Trustees are listed to act on behalf of the trust in the event an individual becomes incapacitated mentally or physically thereby avoiding court proceedings.
Unlike a corporation or limited liability company there is no public record of beneficiaries. Title appears solely in the name of the Trustee and there are no requirements to register the trust. An owner is only required to be disclosed at the time of sale.
Since the beneficial owners are not disclosed until the time of sale, Land Trusts may allow individuals with judgments or tax liens to buy and sell freely without having judgment liens attached to the property.
Rather than requiring multiple signatures, only the Trustee is required to sign contracts and related paperwork. This is particularly beneficial to foreign buyers who often have difficulties finding notaries within their country.
Land Trust Agreements can provide buy out provisions in the event of death or conflict among partners or successor beneficiaries.
Unlike corporations or limited liability companies, land trusts do not require annual filing fees with the state. Additionally, they do not require a separate tax I.D. or an additional tax return to be filed.
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. Additionally, any transfers among beneficiaries does not trigger the Florida documentary transfer tax.
Land Trusts, can be an excellent estate planning tool to gift assets out of an estate to minimize or reduce estate tax without sacrificing or giving up cash.
Unlike a “corporation” or 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% or 20% depending upon income level.
Florida Land Trusts also qualify for the homestead exemption provided the beneficiary is a Florida resident. Section 689.071 was recently amended to reflect that the principal residence of a beneficiary held in a Land Trust qualifies for the Homestead Tax Exemption.
In short, a Florida Land Trust offers great flexibility and is often the best method to purchase and title real estate in the State of Florida.