Asset Protection

Florida Land Trust: Is it Worth it?

Concept art of an article that talks about Florida Land Trusts: a sunset in a lush wetland (AI Art)

Have you heard about a Florida Land Trust and are wondering if it’s right for you?

If done properly, it offers privacy and the ability to pass real estate to your heirs without going through an expensive and public probate process.

But it also has some notable drawbacks. In this article, we’ll help you decide whether such a trust is right for you… or whether something else might be a better fit.

What is a Florida Land Trust?

A Florida Land Trust, also known as a Florida Title-Holding Trust, is a confidential legal arrangement that allows individuals or entities to hold real estate or personal property privately. It is governed by the Florida Land Trust Act.

The trust is a written agreement between the beneficiary (i.e. you) and trustee (usually a lawyer), with the trustee holding legal title on behalf of the beneficiary. Your identity is kept confidential, while the trustee’s name is publicly known.

It provides privacy, simplifies estate planning, and may qualify for Florida’s unlimited Homestead exemption.

Who Needs This?

This sort of trust is really for people who want privacy in their real estate dealings. Some groups might include:

  1. Public figures: Celebrities and other notable figures who value privacy and want to keep their real estate ownership confidential.
  2. Real estate investors: Who are purchasing property strategically and don’t want to signal to competitors what they’re doing.
  3. Individuals: Who want a simple way to leave property to their heirs without the probate process.

Pros and Cons of a Florida Land Trust

Advantages

  1. Privacy benefits for property owners, ensuring their personal information remains private.
  2. Private transfers of ownership, making it easy to pass property to beneficiaries without probate.
  3. You might qualify for the Homestead exemption if the property is your primary residence.

Disadvantages

  1. No personal asset protection. A land trust does not provide personal asset protection. If you lose in court, your personal assets both inside and outside the trust are at risk.
  2. Possible difficulty in obtaining financing. Many lenders don’t like land trusts because it makes financing more complicated. You may find it harder to get a mortgage.
  3. Can complicate property sales or refinancing. Selling or refinancing a property held in a land trust may be harder compared to a traditional property sale or refinance. There will be more steps involved, which will increase legal costs.
  4. The trustee’s name is publicly known. This defeats the purpose if you serve as your own trustee. You will need to have a third party serve this purpose, which will increase costs.
  5. It can be hard to maintain absolute privacy without ongoing fees. If you want maximum privacy, you will need to have a third-party trustee do everything needed to maintain the property (utility services, housekeeping, on site services, etc). Fees for such a person can add up quickly.

Alternatives to a Florida Land Trust

Florida Land Trust vs Florida LLC

They are similar in what they do, but they also have distinct differences.

Both provide privacy benefits for property owners.

A Florida Land Trust offers confidentiality to beneficiaries. So does a Florida Living Trust. The names of beneficiaries need not be declared to any government authority.

A Florida LLC can also offer confidentiality to beneficiaries, but in a different way. The only information that can be retrieved online about a Florida LLC are the names and addresses of its registered agent and manager.

The identities of the owners (called “members” in this case) are not disclosed. Each member can then prepare an estate plan to shield the identity of their beneficiaries.

Florida Land Trust vs Florida Living Trust

Both are legal arrangements and both offer privacy and control over real estate ownership. But there are some key differences between the two.

A Florida Land Trust is a privacy tool that hides your identity from the public. You still control it, but so long as you don’t serve as a trustee, your name won’t be a matter of public record. Nor will the names of your beneficiaries.

A Florida Living Trust, also called a revocable trust or a living revocable trust, is used for estate planning. It lets you transfer your assets, including real estate, into the trust during your lifetime. You can also have a say on how those assets will be managed and distributed after you pass.

In most cases, you’ll serve as the initial trustee of a Florida Living Trust. Any accounts or other arrangements you set up involving the trust will be in your name. But the names and arrangements made for your beneficiaries remain private.

By the way, neither of these tools offer any asset protection.

How Much Does it Cost?

The cost of setting up a Florida Land Trust can range from $1,000 to $5,000. It really depends on how complex the trust needs to be and the fees the lawyer will charge you to write it up.

There may also be additional ongoing costs like annual trustee fees. And there may also be attorney fees for any legal matters that arise.

Other fees may apply for extra services like amendments, assignments, and trust termination.

It’s important to consult with a professional to understand all potential costs.

Florida Land Trust Taxes

A Florida Land Trust is not taxed as a separate entity. Instead, the tax liability is passed through to you the beneficiary.

This means that you are responsible for reporting any income or losses from the trust on your personal tax return. The trust itself does not file a separate tax return.

Common Questions:

Do Florida Land Trusts offer asset protection?

You will sometimes hear claims the Florida Land Trusts offer asset protection. However, we have not found any evidence of this.

If asset protection and/or wealth protection is a priority, there are better structures out there.

Is there such a thing as a “North Florida Land Trust?”

Yes, there is such a thing as a ‘North Florida Land Trust’. A North Florida Land Trust is a legal arrangement that lets property owners privately hold real estate in North Florida.

The trust is governed by the Florida Land Trust Act — the same rules as a regular Florida Land Trust. It provides the same benefits and advantages as a regular Florida Land Trust as well. That includes privacy and avoidance of probate.

What is the difference between a Florida Living Trust and a Florida Land Trust?

Both are legal arrangements and both offer privacy and control over real estate ownership. However, there are important differences between the two.

A Florida Land Trust is a privacy tool that allows you to hide your identity from the public. You maintain control over the trust, but by not serving as a trustee, your name remains confidential and is not a matter of public record.

On the other hand, a Florida Living Trust, also known as a revocable trust or a living revocable trust, is used more often for estate planning purposes. You transfer your assets, which can include real estate, into the trust. You can say how these assets will be managed and distributed after you pass.

In most cases, you serve as the initial trustee of a Florida Living Trust. Accounts and other arrangements involving the trust will be in your name. But the names and arrangements made for your beneficiaries remain private.

And lastly, please note that a land trust and a living trust provide no asset protection.

Does a Florida Land Trust qualify for Homestead Exemption protection?

Yes, a Florida Land Trust can qualify for homestead protection if you are the beneficiary and the property is your primary residence.

Do I need to register a land trust in Florida?

No, you do not need to register a Florida land trust in Florida. The trust is established through a written agreement between the beneficiary and trustee.

Where can I find a Land Trust Lawyer in my Area?

Our firm, the Nestmann Group, helps build complete plans for clients interested in wealth protection. A big part of that is helping you protect your privacy — something a Florida Land Trust offers.

However, a proper wealth protection plan is more than that. A good one will look at other factors like asset protection, tax strategies, insurance, and available government protections.

If you’re interested in seeing what’s right for you, please schedule a free no-obligation consultation with one of our wealth protection associates. You can do that here.

On another note, many clients first get to know us by accessing some of our free publications, courses and reports on important topics that affect you.

Like How to Go Offshore in 2024, for example. It tells the story of John and Kathy, a couple we helped from the heartland of America. You’ll learn how we helped them go offshore and protect their nestegg from ambulance chasers, government fiat and the decline of the US Dollar… and access a whole new world of opportunities not available in the US. Simply click the button below to register for this free program.

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