If you own real estate in Florida, you may be interested in learning more about Florida’s Land Trusts.
Although a comprehensive explanation of land trusts is beyond the scope of this post, here are some of the basics regarding land trusts in Florida.
A Real Estate Solution.
Florida’s Land Trust Act allows you to buy, sell, finance, hold, or simply own real estate in Florida.
When you create a land trust for real property, you separate the legal ownership of the property (held by the land trust trustee) from the beneficial ownership of the property (held by the beneficiaries of the land trust).
The effect of dividing legal ownership from beneficial ownership does a few things.
One of them is that it allows the beneficiaries to retain control of the property and to receive all the benefits of it (for example, tax benefits)—yet they are not connected to the property’s ownership. Because legal title is held in the name of the trust and the trustee, (not the beneficiaries) the identity of the beneficiaries is not a matter of public record.
This gives the land trust its first major advantage: privacy of ownership.
Converting Real Property to Personal Property
That same division of legal vs. beneficial ownership of the real property provides the land trust with its second major advantage: beneficiary protection from creditors.
A land trust is basically a title-holding vehicle. By splitting up the legal from the beneficial interests in the land, the land trust essentially converts a beneficiary’s interest in real property to personal property.
This, in turn, is a game changer when it comes to placing a lien on real property to satisfy a judgment against a beneficiary.
Because the legal owner of a land trust is the trustee, and not the beneficiary, a judgment creditor of a beneficiary can no longer simply place a lien on the real property by recording a judgment in the county where the property is located.
Another major benefit of a land trust is that the land trust agreement can avoid probate by naming successor beneficiaries in the event of your death.
There is a lot more to know about land trusts, so if protecting your Florida real property is of concern to you, be certain to speak with experienced estate and probate counsel.
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