Part 2 - Land Trusts & Lending: Who Should Be The Beneficiary

[00:00:00] Speaker A: Other lawyers are talking about topics in other states where they're not primarily practicing, they have to give very general advice. And in this case, the advice was never ever be an individual as a beneficiary of your land trust, always hold it inside your LLC. And there are times when, yes, that is actually really good advice, but there are also times when it's horrible advice. I recently saw a video by another attorney who practices in multiple jurisdictions all over the country, and they're always talking about land trust. And unfortunately, when other lawyers are talking about topics in other states where they're not primarily practicing, they have to give very general advice. In this case, the advice was never ever be an individual. As a beneficiary of your land trust, always hold it inside your LLC. And there are times when, yes, that is actually really good advice, but there are also times when it's horrible advice. For instance, in the state of Florida, if you are an individual and you are the beneficiary of your land trust, then if you also live in that property, you can get homestead exemptions on your taxes, you can get homestead protections in other ways and homestead savings. So there's a very important reason why if it is your primary residence that is inside the land trust with a third party trustee like us, you are absolutely 100% going to want to hold the beneficial interest in your individual name. You do not ever want to put that into an LLC, because as soon as you do, you are going to lose your homestead exemptions, your homestead, save our homes, caps, and everything else that goes along with that property being your homestead, all the protections. So that would be one instance, another instance where you never, ever want to hold the property. The beneficial interest inside of an LLC is if you intend to take out a conventional Fannie Mae or Freddie Mac mortgage against that property. That is because if you ever intend to do that, the Fannie Mae and Freddie Mac guidelines require that the borrower of their loan also be the beneficiary of that trust and their borrower, and the beneficiary shall be an individual. If that beneficiary is an LLC, you cannot get a Fannie Mae or Freddie Mac conventional mortgage on that property. You would have to take it out of trust into your LLC and then go get a commercial mortgage through a lender that's a bank that's going to do a portfolio loan or something like that. So don't just take for face value what you hear on the Internet or from what you hear from lawyers who are not primarily practicing in Florida under the Florida Land Trust statute and only speaking about the Florida Land trust. If they are talking about land trust, land trust, and they're only talking in general, and they are going around their elbow to come back around to come up with some solution for you that is not necessary in the state of Florida. Florida has a statute. We have case law. We have professional trustees like us who will serve as your trustee to maintain your anonymity, but not too much anonymity for you so that people can still verify who really owns the property and who's allowed to sign documents, us. So just keep that in mind anytime you're seeing all these people out there saying, always, only do this. Nothing in the law is ever, always, only do this. There's always shades of gray, there's always a little bit of nuance, and there are exceptions to every rule. And this is one of those times that you're definitely not going to always want to have an LLC as a beneficiary of your land trust. There will be situations where it's extremely advantageous and absolutely required that the beneficial interest in the land trust be held solely in your name, individually rather than inside your llc. And with that, I'll sign off and trust this. [00:04:36] Speaker B: Thanks for listening to this edition of Trust this. If you got something out of it, please press like and subscribe and give us a five star review to help us reach others who can benefit from this series. Until next time, keep aspiring to a better life.