We have previously touched on various types of trusts in this space, and what some potential advantages of their use may be in the service of a comprehensive Florida Estate plan. This week, we are going to briefly discuss a type of trust instrument that is almost exclusive to Florida. Only two states in the U.S. have created a statutory form of trust called a land trust.
The Florida Land Trust Act, also known as FL Statute 689.071, governs the creation and properties of land trusts. As the name might imply, land trusts are a form of structure created specifically to hold real property as the trust's assets. Under the statute, the owner of the real estate can convey the property to the land trust, which will hold the property and make the named trustee the legal owner of the land in the eyes of the law. Like all trusts, there will also be beneficiaries who hold an interest in the property governed by the trust. In a Florida land trust, it is possible to give these beneficiaries the power to direct the trustee with regard to executing various actions on the property held in trust, including mortgaging, conveying and distributing the proceeds of any sale.
The advantages of land trusts are varied. Like most trusts, they help avoid the expense of probate and may also save on property taxes. Because beneficiaries' interests are considered personal property, they are generally only subject to the capital gains tax rate. Further, those who have an interest in the land trust are not disclosed in public records, which can lead to advantages in avoiding certain liens and other encumbrances on the property. Florida residents may also retain homestead exemptions on the property. Because the trustee is able to execute all legal documents with regard to the property, a land trust may help simplify multiple ownership situations.
As always, every situation is different, and one's specific circumstances may dictate whether it makes sense to utilize a land trust as part of one's estate plan. Those with questions may want to consider consulting an experienced estate attorney to determine if they may be able to take advantage of this somewhat unique Florida tool.