In recent weeks and months, we’ve been diving into the many benefits of a Florida land trust. These trusts provide great flexibility and privacy to those involved, but they also add an extra layer of protection for the beneficiary of the land trust.
We’ve talked extensively about how you’re able to name yourself as the beneficiary of a land trust even if you own and/or live in the home. Because of this, Florida land trusts provide significant power to beneficiaries – but what many real estate investors don’t recognize is the liability protection that also comes along with this.
Part of this comes from the fact that the trusts protect the identities of beneficiaries which makes it more challenging for anyone to file a lawsuit directly against beneficiaries. For instance, if a resident of a property held under a Florida land trust suffers an injury and wants to sue the land trust owner they would be suing the trustee but not the beneficiary. In some states, the beneficiary of a land trust can still be sued directly and face liability but Florida Statute 689.071(8) prevents this from happening here.
If the resident files and wins a lawsuit against the trust the liability protection stands, and the beneficiary (you) will not face any additional personal liability. Of course, if you’re sued separately for an issue unrelated to the property itself then this liability protection does not apply. In this scenario, you may be forced to reveal to the court that you are the beneficiary of a land trust and may ultimately lose the property in the process. You would only have to do this if you aren’t able to otherwise pay for the judgment from the lawsuit.
Additionally, Florida Statute 689.071(8)(d) details that the “trustee’s legal and equitable title to the trust property of a land trust is separate and distinct from the beneficial interest of a beneficiary in the land trust and in the trust property.” This means any lien, judgment, mortgage, security interest, “or other encumbrance” attached to the trustee’s interest in the trust does not extend to the beneficiary’s interest in the trust. Trustees and beneficiaries of Florida land trusts do not attach to each other which ensures the protection of you, the beneficiary.
Our team here at Bryant Taylor Law has been extensively covering the many benefits of these land trusts because they’re a great tool for investors looking to protect themselves and keep their business moving forward without risk. Schedule a consultation with our team and see if a Florida land trust is right for you.
