The Florida land trust is a legal way to protect the identity of a property’s true owner by creating a unique legal relationship between a trustee and a beneficiary. Property owners with large property holdings or who have name recognition with the public often seek ways to protect their anonymity. A land trust provides privacy of ownership, ease of management, isolation of liabilities, and easier transferability of ownership.
Contact us today to discuss how the land trust could work for you.
Once a land trust trustee is selected by the property holding beneficiary, the trustee will arrange to hold the legal title to the property. The legal document that makes this possible is the trust agreement between the trustee and the beneficiary.
The trust agreement spells out exactly what the trustee is permitted to do with the property, and when and how he can do those things. It is a very important document that gives the trustee extremely powerful, but well defined, authority to do what is necessary for the property. This is why it’s really important to choose a trustworthy trustee.
The trust agreement then allows the property ownership to be transferred to the trustee, and special state statutory language is included in the deed or mortgage to give public notice of the trustee’s authority over the property.
From this point forward, the trustee executes all purchase and sales contracts, leases, permit applications, notices of commencement and termination, and any other document related to the management and disposition of the property so long as the trust exists. The beneficiaries’ names are never made public except in rare circumstances that usually require a court order.
My Land Trustee replaces the owner’s name on the deed and in public records.
Receives, filters and forwards all communications related to the property to the beneficiaries.
Contact us today to discuss how a land trust could work for you.
Florida land trusts provide confidentiality of ownership because the only owner’s name that appears on the public records is the name of the trustee. It also provides segregation of liability by separating the ownership of the property from the current owner as well as that owner’s other properties and their liabilities. When someone searches the public records to see what real property you own, your name will not appear on the records. Only the trustee’s name appears. Therefore, if someone with an intent to sue you for a breach of contract, negligence, or other cause of action, their asset search prior to litigation will make it appear that you have no assets from which to satisfy a judgment, making you look like a less valuable target.
Each property should be held in an individual trust instead of holding every property owned in one umbrella trust. Think of it as putting one egg (piece of property) in one basket (trust). If one trust is breached, only that “egg” breaks.
And a note about holding property in an LLCs as opposed to a trust. A Florida LLC doesn’t provide anonymity of ownership, because the owner’s name typically appears on the Division of Corporation’s www.Sunbiz.org website as either a manager or member of the company. And, often, LLCs cost more to establish and maintain than a land trust.
There are several important considerations to make before moving property from an individual’s name into a trust or an LLC. We feel it is our job to educate property owners on these considerations before they decide a trust is right for them:
You can no longer prosecute evictions pro se (without an attorney). You can file it with the owner’s (trustee’s) written authorization, but if the tenant responds, or a hearing is required for any reason, you must engage an attorney to appear in court on the owner’s behalf.
You will have to obtain a new hazard insurance policy, since the insured’s name is changed. You will no longer be able to obtain liability insurance coverage that is coupled with hazard insurance coverage. If you want separate liability coverage, you would need to purchase a more expensive separate premises liability policy.
If the properties are moving from one owner to multiple LLC’s, directly or as beneficiaries within the trusts, there is a chance that this could increase the annual tax return preparation fees substantially, depending on how it is structured. You would want to discuss it with your tax adviser before doing so.
With the land trust, you will lose day-to-day control over the management of the property. You will no longer sign the listing agreements, leases, permit applications, or contracts for work to be conducted on the property. All of that will be signed instead by the trustee. This means that all documents regarding the property must be sent to the trustee with written direction as to what to do with them before they can be executed and returned to the recipient. Also, this could lead to a trust issue with potential tenants who are reluctant to enter into a lease and pay rent to a person whose name does not appear on the public records of the property.
Moving property into a land trust or even an LLC in one of the “secret” jurisdictions like Nevada, New Mexico, Wyoming, or Delaware, is not a foolproof way to maintain your confidentiality to the extent that the IRS is concerned. The Service must be alerted to your ownership in the property, whether that is through a Form 56 filed with the Service upon formation of the trust, or filing your subsequent person tax returns where income, losses, and expenses of the property are reported.
The land trust is intended to keep the beneficiary’s name out of Public Records (as defined in Florida Statutes). It is not intended to keep your name out of private records such as the IRS, utility companies, HOA bookkeeping records, insurance company records, etc. The beneficiary will pay those bills directly, so — yes – there may be an internal record in those companies and government agencies regarding who paid their bill. For this reason, if a beneficiary doesn’t want their name to appear even in these otherwise non-public records, they can set up an “operating company” with its own bank account and use checks from that company’s account to pay bills. The same operating company can be used to receive rents from tenants on rental properties or other income from properties held in the trust. We can set up that LLC for a beneficiary in one of the “secret” jurisdictions like Wyoming or Delaware, or we can set up a Florida LLC with a manager trust so their name doesn’t appear on Sunbiz. However, even then, the beneficiary’s bank (under the Federal Know-Your-Customer rules), FinCEN (under the BOI report requirements), and the IRS (under Form 56) will all know the identity of the ultimate beneficial owner of the trust. There is no legal way to prevent that from happening.
While we make a point of bringing these considerations to our clients when they’re thinking of moving properties into trusts or LLC’s, most still do it. The segregation of liabilities or anonymity of ownership (in the case of land trusts) is more important than these issues.
