Florida Land Trusts and How They Differ From Standard Revocable and Irrevocable Trusts
Trusts are a popular estate planning tool for individuals who wish to transfer assets to their loved ones in a tax-efficient and streamlined manner. While revocable and irrevocable trusts are the most common types of trusts used in estate planning, there is third type of trust that is lesser known: the Florida Land Trust. This article explores what a Florida Land Trust is and how it differs from both standard revocable and irrevocable trusts.
What is a Florida Land Trust?
A Florida Land Trust is a type of trust that is used to hold title to real estate. The trust agreement specifies that the real estate is held for the benefit of the beneficiaries of the trust, who may include the settlor (the person who creates the trust), their family members, or other individuals or entities designated by the settlor. Unlike a standard revocable or irrevocable trust, a Florida Land Trust is specifically designed to hold title to real estate and is subject to the Florida Land Trust Act, §689.071, Fla. stat.
How is a Florida Land Trust Different from a Standard Revocable Trust?
A standard revocable trust is a type of trust that is created during the lifetime of the settlor and can be amended or revoked at any time by the settlor. The trust agreement specifies that the assets held in the trust are for the benefit of the beneficiaries of the trust, who may include the settlor, their family members, or other individuals or entities designated by the settlor. A revocable trust can be an effective estate planning tool, as it allows for the transfer of assets outside of probate and provides flexibility in the event of changes to the settlor's circumstances or wishes.
However, a standard revocable trust does not offer the same level of asset protection as a Florida Land Trust. While assets held in a revocable trust are protected from probate, they are still considered part of the settlor's estate for tax and creditor protection purposes. This means that creditors may be able to access the assets held in the trust, and the assets may be subject to estate taxes upon the settlor's death.
In contrast, a Florida Land Trust offers greater asset protection, as the real estate held in the trust is considered separate from the settlor's estate and is therefore protected from creditors and estate taxes. Additionally, a Florida Land Trust can also offer significant tax benefits, as it allows for the cost basis of the property to be adjusted to reflect its value at the time of the original owner's death, which can result in significant tax savings for the trust beneficiaries.
How is a Florida Land Trust Different from an Irrevocable Trust?
An irrevocable trust is a type of trust that is created during the lifetime of the settlor and cannot be amended or revoked in most circumstances. The assets held in the trust are typically protected from creditors and estate taxes, and the trust may be used to achieve a variety of estate planning goals, such as providing for the settlor's family members, minimizing estate taxes, or making charitable donations.
While a Florida Land Trust is also irrevocable, it differs from a standard irrevocable trust in that it is specifically designed to hold title to real estate. This can be particularly advantageous for individuals who wish to protect their real estate holdings from creditors or estate taxes, as the Florida Land Trust provides a clear mechanism for holding and distributing the real estate.
Additionally, a Florida Land Trust offers greater flexibility than a standard irrevocable trust, as the beneficiaries of the trust can be changed or added to over time. This can be particularly useful in situations where the settlor's circumstances or wishes may change over time, such as in the case of divorce, remarriage, or the birth of new family members.
Conclusion
Overall, a Florida Land Trust offers several advantages over standard revocable and irrevocable trusts, particularly when it comes to protecting real estate assets and achieving tax savings for beneficiaries. However, it is important to note that a Florida Land Trust is a specialized type of trust that is subject to the Florida Land Trust Act, and should only be created with the assistance of an experienced estate planning attorney.
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This article is provided for informational purposes only and is not intended as legal advice. For further inquiry, please feel free to contact me at the email or telephone listed below.