Specialized Financial Services
Land Trusts
Florida permits the use of a Land Trust for the ownership of land. The land trust is a legal device by which real estate is conveyed to a trustee under an agreement reserving to the beneficiaries, or true owners, full management and control of the property. It is especially useful to protect the owners’ identity, and to expedite transactions when there are multiple owners. A land trust has these characteristics and benefits.
- The ownership interest can be transferred relatively easy.
- With multiple owners hold title to real property, the potential exists for judgments, divorce, death, bankruptcy or incompetency of a single beneficiary to cloud the title to all or part of the real property. The use of a trust prevents this situation.
- In a well-drafted trust agreement, provision can be made to avoid deadlocks.
- Where real estate projects have multiple owners, the use of a land trust can reduce delays for signatures.
- Interest of the beneficiaries may not be disclosed without a court order.
- Judgment against a beneficiary does not affect the legal title.
- The tax benefits of the ownership of real property are preserved.
Whether or not a land trust is the best vehicle for ownership of property should be discussed with a qualified accountant and U.S. attorney who is familiar with land trusts.
Internal Revenue Code §1031
Exchange of Property Held for Productive Use of Investment
There is a provision of the United States Internal Revenue Code that in general states that no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment. In other words, investors can avoid paying capital gains tax on the sale of an investment property, if the money from the sale is re-invested in a similar replacement property, within a specified time period.
Examples of Situations where a 1031 Exchange might be advantageous:
- Diversification – exchanging several parcels for one larger parcel, or exchanging one high-value property for multiple less-expensive properties.
- Appreciation – exchanging a property in a slow-growth area for a property in a quickly appreciating area.
- Income Generation – exchanging raw land to rental income producing property.
The actual exchange should be conducted by an Intermediary specializing in 1031 Exchanges. Universal Trust Properties will coordinate the real estate activities, including terms and conditions for sale and purchase of replacement property, as well refer prospective clients to qualified legal advisors.
The tax benefits of this program could be substantial. Contact us for further information. Because of time limits, it is essential that this strategy be explored before selling a property.
Estate Planning
It is generally advantageous for owners or prospective owners of real property in the United States to have an estate plan, or Last Will and Testament.
It is also helpful for landowners to supplement their own plans from their country with an estate plan that deals only with property in the United States. This may have some estate tax saving advantages. It is usual to have prepared a codicil (“amendment”) to the estate plan in place where the owner resides. This would only apply to property in the United States and only for property within the United States.
Another item that is of tremendous use is a Durable Power of Attorney. This document permits husbands and wives to transact business on behalf of their spouse in the event of the spouses absence or incapacity. It is used for banking, real estate and other business purposes. In a perfect world its use will not be necessary; however, when the need arises having such a Power of Attorney in place will save a great amount of expense and worry.
In Florida, the health care system is very different than in other countries. It is often necessary for the providers of health care services to consult with others in the case of the patient being incapacitated. The use of a Health Care Surrogate Designation Form is very helpful. With this document, the health care providers can consult with the designated party for advice and consent on treatment and other medical decisions.
Finally, some parties wish to have certain decisions made in anticipation of their final demise, such as whether or not life-prolonging procedures through mechanical means should be implemented in the event there is no prognosis for recovery. This is generally called a “Living Will.”
Universal Trust Group will refer you to a competent attorney in the United States, who can provide all these services at a reasonable cost.