Do you need a low-cost solution that allows you to maintain legal title to your real estate and personal property, while holding and protecting it for the benefit of beneficiaries in a way that will avoid the expensive Florida Probate process?
If you answered "yes" to this question, then you should consider creating a Florida Land Trust.
THE BENEFITS OF A FLORIDA LAND TRUST
I. An Overview of the Florida Land Trust
The Florida Land Trust Act permits the creation of Land Trusts, which are private written agreements between different entities that agree to operate, manage, buy, hold, and sell the title to the real or personal property on behalf of the Land Trusts’ beneficiary(ies).
A Land Trust may be created by either (i) one or more individuals, (ii) a limited or general partnership, (iii) a limited liability company, or (iv) a title company.
II. Benefits of a Land Trust
The two main benefits of a Land Trust are (i) privacy and (ii) avoidance of probate administration. As to the first benefit, if you create a Land Trust, no one will ever know what real and personal property you own during your lifetime or at your death (unless, of course, you volunteer that information to them or you have to disclose it in a lawsuit). As to the second benefit, by creating a Land Trust, you can avoid probate administration, which in some situations can save your beneficiaries thousands of dollars in fees. Furthermore, your heirs will not have to endure the months (or maybe even years) of delay in the distribution of real and personal property.
III. Common Terms and Definitions
The following are some common terms and definitions used in a Land Trust:
Beneficiary - Any person or entity having a beneficial interest in a land trust. A trustee may be a beneficiary of the land trust for which such trustee serves as trustee. (Florida Statutes 689.071)
Deed - A legal document used to convey an interest in real estate property from one person or entity to another. (For more details on Deeds, refer to our article, Understanding Property Deeds and Protecting Your Ownership Rights).
Fiduciary - A person holding the character of a trustee. . . who is invested with rights and powers to be exercised for the benefit of another person. (Black Law’s Dictionary: Fiduciary)
Grantor - The person conveying an interest in a property to another person.
Personal Property - The belongings of an individual, excluding any real estate property or other buildings. Generally includes tangible and intangible assets of an individual. (Black Law’s Dictionary: Personal Property)
Probate Administration - Under Florida law, there are two types of probate administration:
Formal Probate Administration: typically used when the value of the estate exceeds $75,000 in value. If legal claims involving debt against the estate are higher than the value of the estate, a Formal Probate Administration may also be necessary.
Summary Probate Administration: is typically used when the value of the estate is less than $75,000. A Summary Probate Administration may also be used if the owner of the estate has passed away more than 2 years before the estate has entered Probate.
Real Property - a term that is applied to land and immovable property on land such as buildings. (Black Law’s Dictionary: Real Property)
Trustee - The person appointed, or required by law, to execute a trust; one in whom an estate, interest, or power is vested, under an express or implied agreement to administer or exercise it for the benefit or to the use of another. (Black Law’s Dictionary: Trustee)
IV. Fiduciary Duties and Responsibilities of the Trustee
The Trustee of a Land Trust can either be you, another individual, or a company. While at times a grantor, trustee, and beneficiary may all be one and the same person, for the purposes of a Trust, it is permitted to treat them as three separate entities.
A Trustee must carry out all of the fiduciary responsibilities designated within the Land Trust per Florida law. He or she is also responsible for answering to the beneficiary(ies) of the Trust.
The Florida Bar Journal, Volume 84, No. 3, indicates that:
“[t]he most basic duty of a fiduciary is the duty of loyalty, which obligates the fiduciary to put the interests of the beneficiary first, ahead of the fiduciary’s self- interest, and to refrain from exploiting the relationship for the fiduciary’s personal benefit.”
In other words, a fiduciary should never take advantage of the authority entrusted to him or her for their own benefit; they must always place the interests of the beneficiary(ies) first.
The most general duties of a Trustee include:
“act[ing] impartially. . . giving due regard to [each] beneficiaries’ respective interests” (Fla. Stat. § 736.0803);
taking practical steps to shield and protect the trust property and assets (Fla. Stat.
keeping all beneficiaries informed about all of the property, funds, and assets in Trustee’s care, providing accurate records accounting for all income, expenses, liabilities, gains, losses, and distributions of the Trust, on an annual basis, on the termination of the trust, or on change of the Trustee ( Fla. Stat. §§ 736.0810, 736.0813 and 736.08135); and,
It is imperative that you select a trustworthy person to act as Trustee to judiciously administer, protect, and distribute the Land Trust property on behalf of the intended beneficiary(ies) It is just as important that you nominate a Trustee who is competent and understands that they must abide by the fiduciary duties and terms of the Trust.
If you are a Florida property owner or real estate investor using an entity such as an LLC or corporation to hold your real property assets, you should seek a Land Trust attorney before purchasing or transferring any real estate asset in Florida.
Additionally, if you are a Trustee, it is essential to confer with an attorney that specializes in trusts and estates law to ensure that you fully understand your fiduciary duties and responsibilities as a Trustee so that you properly administer the Trust by following Florida law.
Finally, if you need assistance with the preparation of a Florida Land Trust, would like to find out if there are alternative options available to protect your real and personal property, or need a competent trusts and estate attorney to prepare or review a Trust document, call Attorney Kimberly M. Soto at 321.972.2279 today to schedule your consultation.
The Soto Law Office, P.A. is conveniently located in Altamonte Springs, Florida near I-4, and proudly serves the residents of Altamonte Springs, Apopka, Casselberry, Longwood, Ocoee, Orlando,Brevard, Lake, Orange, Osceola, Seminole, and Volusia Counties.