Land trusts are used by investors that wish to keep their real estate investments private. It is a method that allows an investor to own a piece of real estate, which is then placed in the trust, while then listing the trust’s name on the property’s title. This allows the investor to keep his or her information private while also maintaining control of their asset. Land trusts are revocable trusts, which mean they can be amended or terminated at any time by the grantor. In a sense, the land trust creator serves as both grantor and beneficiary, as the creator has control over the use and sale of the property. There are many benefits to owning real estate in a Florida land trust, especially for those seeking privacy and ownership advantages.
HOW LAND TRUSTS WORK
If a prospective purchaser of real estate wanted to own the property through a trust, rather than in his or her own name, that purchaser could create a land trust agreement. A land trust agreement would appoint the purchaser as the creator and beneficiary of the trust. The purchaser must also appoint an independent trustee to oversee and administer the trust. For privacy matters, be mindful that the trustee’s name must appear in public ownership records. The trustee does not have to have any financial investment in the trust or have any right to benefit from the property. Any investment or benefit is determined by the creator of the trust. Also, the beneficiaries have the right to replace a trustee if they determine so. Once a land trust agreement is prepared and agreed upon, the real estate purchase can move forward. The seller of the property will list the name of the land trust on the deed. The land trust beneficiaries contribute money to the trust for use of payment for the property.
BENEFITS OF FLORIDA LAND TRUSTS
When a land trust is executed properly, it offers its beneficiaries several advantages:
With a land trust, any trust beneficiaries can remain anonymous. It is only the trustee’s name that must appear in public records. Anyone searching the beneficiary’s name would not find any associated property purchases. Additionally, the beneficiary’s ownership interest in a land trust is hidden from creditors or any other claims on your wealth. There are also practical business reasons for wanting to maintain a level of privacy, such as an owner wanting to conceal their private contact information from tenants, preferring instead that they contact a property manager. Also, when conducting business transactions, a seller may seek a higher price if the prospective buyer is known to be wealthy or is trying to obtain land for a particular purpose.
Transfer of Ownership
A land trust offers the option to sell any of your interests easily and privately by simply assigning beneficiaries. This is not an option when the property is in your name. When you own property in your own name, the only way to transfer title is by deed or mortgage. Both are publicly recorded transactions. With a land trust, however, a third party will be unable to search the transaction.
When two or more individuals or parties wish to invest in real estate, they need written agreement that clearly outlines their arrangement. In some cases, these parties may form a partnership agreement. Alternatively, a land trust can be formed that dictates the terms of their partnership and any necessary obligations or benefit assignment. While a partnership must file with the State of Florida and pay a filing fee, a land trust has no such obligation or filing fee. Also, while the interests of the land trust can be owned by several people, still only one trustee is necessary when signing official documents on the land trust’s behalf.
A land trust agreement can determine beneficiary successors in the event of the original creator or beneficiary’s passing. When real estate is held in your own name, it must be administered through court in a probate proceeding. If your Florida land trust is drafted correctly, the property can pass directly to the named beneficiaries without any need for court proceedings.
These are some of the many benefits that Florida land trusts offer property owners. However, because of the variety found in property ownership and land trust creation, it is best to consult with an attorney before you make your Florida real estate purchase. An expert can help you determine and implement the best approach that maximizes your opportunity and protects your assets and privacy.
HOW IRREVOCABLE TRUSTS WORK
There are three main components to a trust: the grantor, the trustee, and the beneficiary. When the grantor puts assets in the irrevocable trust, he or she can determine the conditions and uses of those assets but can no longer revoke them. The trustee administers the trust in accordance to its specified purpose. And the beneficiary is the recipient of the trust’s assets.
There are several applications for trusts in estate planning and distribution:
Prevent the misuse of assets by a beneficiary by setting conditions.
Gift assets while retaining income from those assets.
Reduce tax liability of an estate through property transfer.
Gift a residence to family under better tax conditions.
Protect assets against potential lawsuits.
Because of its complex structuring and legal and tax implications (both current and future), enlisting the service of an attorney is the best practice when creating an irrevocable trust. An expert can ensure that your assets are managed and transferred according to your wishes and that you don’t run into any legal or tax pitfalls. Additionally, an attorney will know the most current estate-planning advice and practice.