Privacy in Ownership: Florida Land Trusts

Today, privacy can be hard to come by. It is a rather valuable commodity, particularly when considering all the ways a person’s information is, or can be made, public. People have, unsurprisingly, been searching for ways to reduce the ever-increasing likelihood that their actions – including their estate-related activities – will be made public. An example of a good privacy-preserving tool comes from the use of a Florida Land Trust. Chapter 689, Florida Statutes (2015), is the statute that allows for the use of land trusts in Florida.

At its core, the concept of a land trust is relatively simple: the owner of real property (the Settlor) transfers title to a third-person (the Trustee) who holds that title for the benefit of another person or group of people (the Beneficiaries). At the same time, the Trustee files a Deed of Trust at the local recording office to officially designate himself as the title-holder, albeit subject to the terms and conditions listed in the Trust Agreement, the document that governs the relationship between the Settlor, Trustee, and Beneficiaries.

Usually, the Beneficiaries hold the power to direct the Trustee’s actions, as the Trustee, by virtue of Florida law, is only delegated a limited set of powers. However, it is possible to have one person be a Beneficiary and another, separate person have the power to direct the Trustee, even if that other person is not otherwise involved in the trust in any capacity. Regardless of who has the power to direct the Trustee, the Trustee generally can only act at the direction of the person who has such power.

The main benefit of using a land trust is privacy. Although the Deed of Trust will list the owner who transferred title to the Trustee, it does not list the Beneficiaries for whom the Trustee must act. Thus, it is entirely possible for the Settlor to create a land trust with the Settlor as the Beneficiary, and the only way anyone would find out is if the Settlor disclosed that fact. Another benefit can be the avoidance of probate, as a land trust can list what happens with the property at the death of one or more Beneficiaries. There are even judgment protection benefits associated with land trusts, as well.

One word of caution, however: if the property transferred to a land trust is encumbered by a mortgage that includes a “due-on-sale”or similar clause, you must be careful when using a land trust. Transfer of the property can sometimes trigger that clause and allow the mortgage-holder to call the entirety of the loan due. It is for this reason, among others, that you should consult with an attorney if you are considering a land trust. An attorney will generally know how to handle your situation or will otherwise be able to find out for you what the best course of action should be.

If you have any questions regarding land trusts, feel free to send a question or request a free, confidential consultation.

George