One of the ways to take title to real estate in Florida is through a land trust. In general, a land trust has some benefits worth considering.
Benefits of a Land Trust
The primary benefit of a land trust in Florida is to provide confidentiality over your ownership of real estate. The county public records will show only the name of the trustee of the land trust–not the name of the beneficiary.
An additional benefit of a land trust is to shield yourself from liability stemming from the property. A tenant or party to a real estate transaction that has a cause of action against you stemming from the real estate would likely only be able to sue the land trust itself, not you as beneficiary of the trust.
Have multiple properties? Each property should be held in a separate land trust or LLC. If there is an issue with a tenant or a real estate transaction concerning the property, only the property in the specific land trust would be exposed to collection on a monetary judgment.
A small benefit to the confidentiality of ownership is that a potential creditor will not, at first glance, see that you own a beneficiary interest in the property. If someone is deciding whether it is worth filing a lawsuit against you, then they may not be able to account for your real estate ownership in their decision-making.
That being said, if someone obtains a monetary judgment against you, you will be required to disclose your beneficial interest in all trusts, including the land trust. And at that point, a land trust itself will not shield the asset.
Downsides to a Land Trust
Before you decide on putting your property into a land trust in Florida, you should consider the downsides.
First, if you have a tenant that doesn’t pay, you won’t be able to handle the eviction yourself. You’ll usually have to hire an eviction attorney to take care of it.
Secondly, you’ll need the trustee any time you engage in a real estate transaction, whether that be a rental agreement, property listing, permit applications, contracts, and so on. After all, it is the trustee of the land trust that owns the property. If the trustee is an attorney or CPA, then for each of those transactions you are paying for their time.
Some people mistakenly believe that a land trust provides personal asset protection. A land trust is a “self-settled” trust meaning that the person who establishes the trust is also the beneficiary of the trust. A beneficiary’s interest in a self-settled trusts, even if made irrevocable, are not protected from creditors. A land trust is not a good way to protect real estate from monetary judgment creditors.
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