The Florida Land Trust is a unique legal structure that allows individuals or entities to own real estate or personal property in a confidential and flexible manner. This type of trust is governed by the Florida Land Trust Act, which was adopted by the Florida legislature in 2006. Originally pioneered in Illinois, this concept is now widely recognized and utilized in various states, including Florida.

What is a Florida Land Trust?

A Florida Land Trust is a revocable grantor trust specifically designed to hold title to real estate or personal property. This structure provides a straightforward and cost-effective method for managing property ownership, while offering significant privacy and liability benefits. The trust operates under the terms of an unrecorded Florida Land Trust Agreement, ensuring that the details of property ownership remain confidential.

Key Features of a Florida Land Trust

  1. Confidentiality: One of the primary advantages of a Florida Land Trust is the ability to keep property ownership private. The trustee’s name appears in the public record, while the beneficiaries’ identities remain confidential. This can be particularly beneficial for individuals or entities seeking to maintain privacy in their real estate transactions.
  2. Ownership Rights: Beneficiaries of a Florida Land Trust retain full control over the property. They can manage, buy, sell, or finance the property as if they held the title directly. Additionally, beneficiaries can claim a homestead exemption if the property serves as their primary residence.
  3. Liability Protection: Holding property in a Florida Land Trust can limit personal liability for the beneficiaries. Generally, property held in trust is not subject to civil judgments or liens against individual beneficiaries, reducing the likelihood of being targeted in lawsuits.
  4. Flexibility: Florida Land Trusts offer great flexibility in terms of who can establish and benefit from them. Trusts can be set up by individuals, groups, business entities, or other trusts. This flexibility makes them an attractive option for a wide range of property owners and investors.
  5. Tax Deferral: A Florida Land Trust can be utilized in a 1031 exchange to defer taxes. According to Ruling 92-105, the owner of a beneficial interest in a land trust is eligible to participate in a 1031 exchange. This ruling is applicable in the states of Illinois, Hawaii, Florida, Indiana, North Dakota, and Virginia.

How to Establish a Florida Land Trust

Establishing a Florida Land Trust typically requires two key documents:

  1. Deed in Trust: This document transfers the real property into the name of the trustee, who holds the property in a fiduciary capacity.
  2. Florida Land Trust Agreement: This unrecorded document outlines the terms under which the trustee will administer the trust.

Once these documents are executed, the trustee, such as Exeter Trust Company, acquires and holds legal and equitable title to the property.

Who Can Benefit from a Florida Land Trust?

A Florida Land Trust can be beneficial for various parties, including:

  • Individuals: Single or multiple individuals looking to maintain privacy and limit liability.
  • Groups: Families or investment groups seeking a collective ownership structure.
  • Business Entities: Limited liability companies (LLCs), corporations, and partnerships aiming to manage property with reduced personal exposure.
  • Other Trusts: Revocable or irrevocable trusts looking to diversify their holdings or manage specific properties separately.

Conclusion

The Florida Land Trust offers a simple, flexible, and private method for holding and managing real estate or personal property. By keeping ownership details out of public records and limiting liability for beneficiaries, it provides significant advantages for property owners. Whether you are an individual seeking privacy or a business entity looking for flexible property management, a Florida Land Trust could be an ideal solution.

For more information on establishing a Florida Land Trust and to explore how it can benefit your specific situation, contact our team.