Florida Land Trusts with Common Wealth Trust Services
Florida land trusts are a very popular and effective tool for real estate investors to hold title to their properties. CPC Law works with Common Wealth Trust Services to provide land trust services to the investor community. Our law firm handles the document preparation and closing services through our affiliated title agency, Esquire Title Company. Common Wealth serves as the corporate trustee.
Trusts of different kinds have served various purposes as been part of our legal system for centuries. A land trust in Florida is a narrow and specific kind of trust that applies only to real estate.
There are many benefits to using land trusts. A land trust is a vehicle for holding title to real estate in Florida. Though property in any state may be owned through a land trust, Florida is one of several states with statutes governing land trusts. Instead of an individual or corporate entity being the owner, title is held by the trustee of the land trust. The trustee is effectively the representative of the party with full legal control of the property—the beneficiary.
Here’s the essence and simplicity of a Florida land trust. It’s a way to keep all the benefits of complete legal control of real estate while avoiding the bad things that come from legal title ownership of the property. In a land trust, the trustee is the legal title owner, but can only act at the direction of the beneficiary.
What do we mean by this? To start, we provide asset protection benefits to our investor clients. The land trust achieves this in various ways, but mainly through privacy. The reason investors should be concerned with asset protection is there are many lawsuits and lawyers in Florida and nationwide. There is no shortage of reasons why someone may be sued. The reasons include, but are not limited to, contract or business disputes, personal injury accidents and financial misfortune leading to debt collection.
The most important consideration for any potential plaintiff thinking about suing someone and their attorney, is whether they’ll be able to actually collect damages if they win. It’s easy when there are obvious “deep pockets” to pursue, but a harder call if the plaintiff isn’t sure what the defendant may own.
Real estate is the most public and easily-found asset. You’d be hard-pressed to find through a pre-suit investigation how much money anyone has in the bank, the securities they may own and anything else that can be taken in collection.
Real estate, however, is a much different story. A quick internet name search in any county’s public records reveals all real estate a person owns. Another quick search will reveal whether there are any mortgages or other liens on the property, and thus, the available equity to go after.
Our investor clients achieve privacy for asset protection purposes because the name of the legal title owner found in the public records is the Trustee. When you take title of real estate through a land trust, only the Trustee’s name appears on the deed that’s recorded.
The Beneficiary’s identity is buried in a private land trust agreement between the Trustee and Beneficiary. As such, an investor can effectively “own” title to many properties through legal control as a Beneficiary, without being the legal title owner advertised to the world in the public records.
Are there other benefits to Florida Land Trusts? Absolutely. Land trusts effectively serve estate planning purposes. Like other types of trusts, they eliminate the need for probate to pass control of the property to the Beneficiary’s successors. Probate is the legal process by which title of a deceased person’s assets are passed to successors, among other things.
The estate planning purpose is achieved by using the Trust Agreement to name successor beneficiaries. A beneficiary can decide who’ll get that interest upon death and the transfer of beneficial interest is a private transaction that avoids the costs and delays of probate while maintaining that important privacy consideration.
There are many other benefits to using land trusts in Florida. Attorney Charles Castellon has delivered a full-day workshop on Florida land trusts to investors and the benefits are too numerous to list here. Further research into land trusts will reveal that they also help in the following ways, among others:
- Keeping property taxes from increasing from transfers of interest
- Preventing “cross-contamination” resulting from Code Enforcement liens on one property creating liens on all others owned by the same title owner in the same county
- Avoiding legal partition actions to force the sale of jointly-owned properties
- Ease in joint venture agreements among investors working on the same property
- Foreign-national investors avoiding “ancillary probate” actions when the property owner dies leaving real estate in Florida
- Judgments against the Beneficiary don’t attach to real property owned by the land trust