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Medicaid Planning with Overstreet Law

Florida Medicaid planning is a critical issue for the aging population in Florida. Planning for long-term medical care costs is not as simple as it may sound due to the exponentially rising cost of long-term medical care for seniors. At an average cost range of at least $5,000 per month, life savings can be wiped out in a relatively short period of time.

What is Medicaid Planning?

  • Medicaid Pre-Planning prepares for long-term care. It applies to a nursing home, assisted living facility, or special home health care services. Pre-planning is essential to prevent financial devastation.
  • Crisis Medicaid Planning is when an individual enters a nursing home within a short period of time. Or they are already in a nursing facility and needs to qualify for Medicaid immediately.

In Florida, three categories are utilized for Medicaid eligibility:

  • Institutional or Nursing Home Medicaid
  • Home and Community-Based Services (HCBS)
  • Regular Medicaid

Institutional or Nursing Home Medicaid is available to all those who are eligible and in need of nursing home care.

Home and Community-Based Services (HCBS) support long-term care services that are provided in the home, at assisted living residences that have a managed care system, adult foster care, or adult day care homes. This Florida program utilizes one agency that takes care of all these types of long-term care needs. 

In the past, Florida offered “HCBS Medicaid waivers” but those are no longer available. Like those waivers, this managed care program limits the number of participants to space that is available to them and, therefore, there could be a long waiting list for these services.

Regular Medicaid in Florida is described as for the “Aged and Disabled (MEDS-AD)” and is available to all those who are eligible for the services. With this program, benefits are either provided in a home or adult daycare setting. 

Why Is Medicaid Planning Important?

Medicaid planning usually involves considering the welfare of both senior partners. One spouse may be attempting to qualify for Medicaid so that the cost of long-term nursing care is paid, and the other partner may still be healthy and prefers independent living at home. Here are some facts about Medicaid eligibility that may be helpful:

  1. First, the rules and regulations for Medicaid eligibility vary from state to state. Just because one senior may be ineligible for Medicaid does not mean the other will also be ineligible.
  2. Every Medicaid application has to have solid documentation as to why the senior needs Medicaid and has proof that his assets are less than $2000 if single and $3,000 if married.

The eligibility rules for Medicaid can be complex and confusing, and that is why a lawyer is often called upon to help. All seniors who apply for Medicaid benefits to cover the costs of a nursing home are required to complete the Medicaid Long Term application, in addition to the Medicaid application. 

This form will require the senior to disclose all income and assets, and what has been given away over the past five years. For example, if a senior wants to become eligible for Medicaid, he or she simply cannot transfer all the assets to children or a relative. Medicaid does a thorough background check to ensure that no transfers have been made in the past five years.

Florida Medicaid planning requires time and effort. If you are considering applying for Medicaid long-term care benefits and want to make sure things are done the right way, consult with a knowledgeable Florida Medicaid attorney. A lawyer who knows the “ins and outs” of the Medicaid rules in Florida can be an immense help. Contact our office to schedule a Medicaid Planning consultation. 

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Should I Hire A Real Estate Attorney For Closing?

Buying and selling property is a major life event. Will your real estate agent advise you to hire a real estate attorney? Most likely the answer is no.

While Florida law may not require that an attorney is hired to complete a real estate closing, there are several benefits you receive when you bypass a title company and use an experienced real estate attorney like Overstreet Law, PA to handle your closing when buying or selling property.

The most important reason to use a real estate attorney to handle your closing instead of a title company is to protect your interests!

By avoiding costly mistakes, confirming contract compliance, and providing legal guidance a real estate attorney works for YOU whereas a title company works for the title insurer. This is an important distinction because that means your real estate attorney is there specifically to look out for your best interests and help YOU save money!

The contract between a buyer and seller can be complex. With the housing market seemingly on fire these days, homes are selling almost as fast as they are put on the market. Once a contract is signed and accepted by both parties it is legally binding, and neither party can simply change their mind.

One question we receive a lot is how do you know when to hire a real estate attorney if your real estate agent isn’t recommending one?

The answer is simple – you should engage a real estate attorney BEFORE you sign the Contract; buyers and sellers both benefit from having someone double-check all the fine print of the agreement to make sure it has their best interests in mind.

Today’s housing demand can result in contracts that leave out important protections for the buyer or include vague language for non-standard agreements between the parties that could have easily been fixed by having a real estate attorney involved.

Alexander Pope, the poet of enlightenment wrote a line in his poem An Essay on Criticism, Part II ‘To err is human; to forgive divine.’ More simply explained, it is natural for humans to make mistakes but that we should forgive when mistakes are made. This is a far easier concept to believe in and a much more difficult one to put into practice. Especially, when the mistake involves contractual obligations that can cost time and money.

There are many steps in a real estate transaction that can potentially cause delays or cost either the buyer or the seller additional resources. Attorneys can provide legal advice on the best way to handle the issue, as well as prepare necessary documents. When you work with Overstreet Law, P.A, they bring years of experience to the table with them that help avoid these issues before they become costly problems.

By hiring knowledgeable professional real estate attorneys, like the attorneys at Overstreet Law, P.A to protect your interests and investments you receive the added benefit of peace of mind! Call us or contact us online for a confidential consultation, and we’ll let you know what to expect and how we can help!

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If I Apply For Medicaid, Will The State Of Florida Take My Home?

For Medicaid applicants and families, losing their home is perhaps their biggest fear. Will they be forced to sell their home if their loved one goes on Medicaid? Will the proceeds go to the nursing home? If there is a well spouse, where will he/she go? And, what happens to the home after the applicant passes away? As a result, people frequently “quit-claim” their property to relatives in an attempt to gain Medicaid eligibility or to avoid Medicaid “taking” their home only to learn later that they could have kept their primary residence and by transferring it to a relative they triggered a period of Medicaid ineligibility! Read more about the pitfalls of a quit-claim deed here.

It is not surprising that many people are confused and have misconceptions about the rules related to primary residences in Florida and rules for obtaining Florida Medicaid benefits to pay for nursing home costs. The Medicaid program is vast, and its rules are complex and differ from state to state. Before clients seek our help, they have often spent many hours worrying about potentially losing the family home. And, that’s in addition to worrying about the family member who needs care and worrying about losing their life savings to pay for nursing home costs. A primary concern for clients we’ve counseled is that once the Medicaid recipient passes away, the state will take their home and other assets…a process called Medicaid recovery. It is true that federal law requires each state to recover funds expended on behalf of the Medicaid benefits recipient. However, with the guidance of our law firm, there is nothing to fear. To understand why, let’s look at the mechanics of the Medicaid recovery program, and how it actually applies to most people.

Understandably, the possibility of losing one’s house is frightening. The good news is that in Florida, the homestead residence is an exempt asset in most cases when a Medicaid applicant obtains Medicaid. You do not need to and should not transfer a Medicaid applicant’s home to a family member in order to qualify for Medicaid benefits. For Medicaid purposes, your Florida homestead is not counted among your assets so long as you have less than $603,000 in equity in it. Moreover, the home is also exempt from Medicaid recovery so long as the homestead is left to a “constitutional heir-at-law.” A constitutional heir at law could be your spouse, child, grandchild, cousin, niece, nephew or sibling. As long as you do not leave it to a non-relative (note that a charity is also defined as a non-relative), it will not be recovered upon the death of the Medicaid recipient.

Our firm will ensure that the applicant’s estate plan is properly structured to protect the homestead from Medicaid recovery which may include that the applicant’s last will and testament NOT direct the homestead be sold and the proceeds divided among the children. Doing so means that the home is not left to the constitutional heirs at law; it effectively sells the property, which will trigger Medicaid recovery of the sale proceeds upon the Medicaid recipient’s passing.

Don’t worry that you will lose everything if you family member qualifies for Medicaid benefits or after the recipient passes away. Also do not assume that you are not eligible, or that you cannot be made eligible. Your conclusions may be based on incorrect or incomplete information. We are here to help; call our office at 407-847-5151 to schedule a consultation with one of our experienced Elder Law attorneys.

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Recent Changes To Florida Impact Fee Law

In July 2019, House Bill 207 became an effective state law in Florida, and it now provides important protections to property owners and developers, with regard to impact fees. The law is designed to create state-wide consistency for determining and exacting impact fees from property owners and developers who are seeking to start new residential construction projects. The law’s two main provisions will facilitate new home construction and remove potential barriers that local government bodies were, in some cases, placing.

No More Pre-Payment Of Impact Fees

Local jurisdictions are no longer allowed to require payment of impact fees before issuing building permits, platting developments, or prior to the approval of development or subdivision plans. This means that developers and property owners no longer have to front and carry the cost of impact fees. The fees will be payable as part of the initial sale (or when the occupancy permit is issued for private construction of new homes).

Dual Rational Nexus Test

Impact fees are intended to help local governments fund the infrastructure projects made necessary by population growth due to new home construction. Given that both federal and state funding for new infrastructure projects have been reduced, and are not likely to increase significantly in the foreseeable future, there has been a trend in some municipalities toward using impact fees that are no longer allowed, like normal operational, personnel, or maintenance costs, or to cover shortfalls on other infrastructure projects. The new law requires that there be a reasonable connection, called a rational nexus, between impact fees and the actual expenditures required as a result of the new home construction, and that the residents of those new homes receive some benefit from the impact fees they pay.

Further, the impact fees are now required to be a fair and proportionate share of the costs of improvements made necessary by building a new development, and the fees are not allowed to exceed the cost of any improvements, and if outside funds, like local tax, state or federal money, pay for part of the improvements, those contributions now have to be credited and the impact fees reduced accordingly. If a planned improvement project paid for with impact fees is canceled, refunds must now be issued.

Finally, impact fee funds must be spent within a reasonable timeframe or encumbered for future use; they cannot be rolled into a general fund or used to address other infrastructure deficiencies unrelated to the development they were paid in relation to.

Qualified Legal Counsel For Impact Fee Issues

New regulations tend to bring new issues, and changes to impact fee regulations in Florida are no exception. If you need help making sure you’re not paying more than your fair share, or have questions about how this new law is being applied to your specific situation, the experienced real estate attorneys at Overstreet Law, P.A. can help. Give us a call or contact us online to schedule a consultation.

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What’s Eminent Domain And How Does It Work Under Florida Law?

Eminent Domain is a legal concept that gives government entities the right to buy property or to create easements on private property, for the purpose of building or expanding public projects. Within Florida, state, county, and municipal government agencies may exercise eminent domain, as can certain utilities, school districts, and other agencies. Examples of such projects are roads and highways, railroads, or public buildings like schools. While in many cases, the property owners cannot stop the process and have no choice but to sell, they do retain certain rights. If you’ve received notice that your property will or may be affected by eminent domain, or you suspect that it may be in the future, read on for an overview of how the process works under Florida law, and what rights you have throughout the process.

Planning & Project Mapping

When a government agency plans a public project, one of the earliest steps they take is to hire surveyors and engineers to make a project map, so they can determine which specific pieces of land it will need to purchase entirely, or to buy limited use rights, which is called an easement. There are two possible processes the government can use to exercise eminent domain in Florida: fast taking, which is used in rare cases where time is critical, and slow taking, which is most common. In a fast taking situation, the government acquires rights to the property it needs upfront, but they also agree in advance to pay the owners whatever a jury finds fair, if the government and owner aren’t able to negotiate a mutually agreeable price.

In slow taking proceedings, the government does not acquire rights to the property until sale terms are negotiated and agreed upon, or set by a jury. One major difference between fast and slow takings is that in the case of a slow taking, the government can decide to back out of a project if acquiring the property it needs becomes too costly or too slow, by finding an alternative plan or property.

Government Appraisal Of Affected Property

Once the affected properties have been identified, the government entity hires an independent real estate appraiser to determine the value of land and improvements that are to be purchased entirely, and establish a value for the loss or limitation of use of property where an easement is required. The total value of the property includes not only the value of land and improvements (buildings, sheds, fences, etc.), but also things like whether the property owner will be losing rental income or business profits as a result of the sale. In cases where the government needs an easement, the appraiser will consider whether the easement is temporary (contractors need to use a part of the property during construction, for example), or permanent, in which case the appraisal will factor the reduction in size of the property and any reduction in the value of the property as a result of the easement.

Protect Your Rights & Assets With Representation

Florida law requires that the government prove the taking is for a public purpose, pay the property owner fair compensation for the property, and cover the property owners’ attorney fees and other costs in settling eminent domain cases. If you’ve received notification that your property is going to be affected by eminent domain, you have the right to hire a qualified attorney of your choice to make sure your rights and interests are properly protected under the law. It’s important to understand that this doesn’t work the same way as a standard contingency arrangement where the attorney takes a percentage of your settlement as payment for their services. In eminent domain cases, the property owner gets their settlement, and the attorney fees are awarded addition to the property owner’s settlement. You get the benefit of having an experienced attorney to represent you throughout the negotiations and settlement, at no cost to you.

Your eminent domain attorney will work with you to review the government documents explaining the purpose and scope of their proposed project, along with their appraisal report and valuation. One of the costs that Florida law specifically says the government must pay is a second appraisal and report from an independent appraiser chosen by your or your attorney. In some cases, your attorney may also recommend commissioning a traffic study (also paid for by the government) to help demonstrate loss of property value due to the proposed project, or to suggest changes to prevent that kind of loss.

Negotiations & Settlement

Once you and your attorney have credible information as to the overall value of your property and how that might be affected by the government’s proposed project, you’re in a position to negotiate a fair settlement. In some cases, your attorney may determine that the initial offer was fair and advise you to accept it. In other cases, they’ll work with you to make a counter-offer that more fairly and completely covers your potential losses. In some ways, it’s like the closing process when you buy a home, and in most cases, the buyer and seller can come to terms in negotiations. Unlike closing on a regular real estate purchase, though, the seller can’t just walk away. If no agreement is reached, the government entity can file suit for condemnation of the property, which means that a jury will determine the value in a trial. When that happens, the government is required to pay the value their appraiser set for the property at the beginning of the legal proceedings. If a jury determines that the full and fair value of the property is more than that, the property owner will be awarded that additional amount as a judgment.

Take A Deep Breath And Hire An Experienced Attorney

Learning that your property is going to be affected by eminent domain can be a panic-inducing and intimidating situation. Take a deep breath and rest assured that you have rights and legal protection, and hiring an attorney experienced in eminent domain cases will provide your best chances of getting a fair settlement for your property. The attorneys at Overstreet Law, P.A. have successfully handled Florida eminent domain cases for their clients for years. Call or contact us online for a confidential consultation and learn more about how our effective representation can help you protect your rights.

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What To Expect During The Home Closing Process

When you are ready to buy your first (or second, or third) home, it’s important that you know what to expect throughout the home closing process, and how working with an experienced real estate attorney helps keep the process running smoothly and protects your rights and interests at every turn.

Contingency Considerations

Most times, when a purchase agreement is made, there are contingencies involved, and the responsibility to clear many of them falls on the buyer’s side of the equation. For example, an inspector of the buyer’s choosing should do a home inspection. This gives you, as the buyer, a clear picture of the state of the house and property and lets you know whether you need to negotiate with the seller for repairs or credit, or, in some cases, whether you may need to pull out of the sale entirely. These are cases where you’ll benefit from having a real estate attorney already on your team, because they can help you negotiate a fair arrangement with the seller.

Other typical contingencies that are part of the home closing process include:

  • Appraisal Contingencies – A third-party appraiser evaluates the fair market value of the home and property, to verify that the value is in line with the selling price. If the appraised value is lower than the selling price, the buyer has an opportunity to back out of the sale without sacrificing any of the “earnest money” they have put down.
  • Financing Contingency – If, for some reason, your mortgage financing falls through for the sale, the financing contingency offers some protection. The sales agreement specifies a period of time during which you can pull out of the deal without penalty, if your loan falls through and you can’t find another.
  • Settlement Contingency – In cases where the buyer is also under contract to sell their current home, they may arrange for a settlement contingency as part of the sales contract for the home they’re buying. If you’re selling your current home, you already have a buyer under contract, and the home inspection contingency has already been removed, a settlement contingency on the property you’re contracting to buy protects you in case the sale of your current home falls through.

Title Search & Insurance

Your mortgage lender will require that you purchase title insurance, to protect you (and your lender) against legal claims from parties that didn’t turn up in the title search. Even if you’re making a cash purchase, title insurance may be a smart investment. In either case, getting a reliable title search from a reputable party goes a long way toward preventing nasty surprises over the claimed ownership of the property.

Mortgage Matters

Once the title is clear, your lender will process your home loan through a process called underwriting. Essentially, this is where the lender verifies that all of the information you provided in your application is correct, and that your situation hasn’t changed significantly since you made the application.

Once your loan is underwritten, the lender will provide you a closing disclosure, which spells out the terms of the loan, exact payments, and closing costs.

A Real Estate Attorney Is Your Best Advocate

From your offer to your final walk-through and final closing meeting, a real estate attorney from Overstreet Law, P.A. will help you avoid costly mistakes and omissions, and take a proactive role in protecting your interests throughout the home closing process. Call or contact us online for a consultation and to put one of our knowledgeable attorneys to work for you.

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Asset Protection For Married Couples: Tenants By Entireties

Many states have tenants by entireties protection, though the types of property covered and the eligible relationships between tenants vary from state to state. In Florida, tenants by entireties must be married couples (no other relationships qualify), and the property that can be protected includes both real property (real estate) and other tangible or intangible personal property, which is excluded in most other states with entireties protection. There are some other qualifying factors under Florida law:

  • The tenants must have been married at the time the acquired the property
  • The tenants’ interest in the property has to have begun simultaneously and originated with the same instrument
  • Parties must have equal interest in the property
  • The property has to be under joint ownership and control
  • When one spouse dies, the survivor will retain ownership of the property

Great. What Does All That Mean?

 These rules have a lot of potential consequences, both favorable and unfavorable, so it’s important to understand how they could affect your own situation. For example, if you and your spouse open and maintain a joint bank account while you are married, Florida law will assume that it is covered under tenancy by entireties law, unless there is some evidence to contradict this. If, however, one or both of you have bank accounts that you opened before the marriage, these accounts will not meet the qualifications, and will be considered separate property as far as asset protection goes. Closing those accounts and opening new, joint accounts after marriage will create tenants by entirety ownership.

Adding your spouse’s name to the title of a property you owned before you got married will not create tenants by entireties ownership. [Will refinancing such a property in both spouse’s names satisfy the requirements? Following assumes it does] Refinancing real property that one spouse owned before marriage creates a new instrument, simultaneous acquisition, and equal interest, which allows the property to be held by both spouses under tenants by entireties ownership.

What Kind Of Protection Does Tenancy By Entireties Provide?

Property owned by a married couple under tenants by entireties protection cannot be considered when a creditor is trying to collect on a judgment against one of the spouses. This does not apply when the tenants are jointly in debt to a creditor. If the creditor gets a judgment against one spouse as an individual, the property covered under tenants by entireties cannot be seized involuntarily. If a creditor gets a judgment against both spouses, the property can be seized involuntarily to settle the judgment.

In cases of divorce or the death of one spouse, assets that were formerly protected may become vulnerable to judgment creditors, depending on the circumstances. Entireties assets are also treated differently than other assets in bankruptcy; they’re not subject to the 2-year residency requirement for exemption, but they are only considered exempt when one spouse files bankruptcy individually, and there are no joint unsecured debts between the couple.

Reliable Advice On Tenants By Entireties Ownership & Protection

Entireties ownership and protection is a complex matter, and one you want to make sure you have correctly established before you need the protection it can provide. The experienced attorneys at Overstreet Law, P.A. will work with you to ensure that your property is held in the way that provides you and your spouse the best possible asset protection. Call or contact us online to schedule a confidential consultation.

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Buyers’ Counsel Offers Much-Needed Protection For All Buyers

It’s a common misconception that only “rich people” who are involved in high-value real estate transactions need to hire an experienced real estate attorney as buyers’ counsel. After all, there are hundreds of websites online telling you how easy and foolproof it is to do everything yourself, right? In truth, there are a lot of small details that can turn into huge problems as you move forward if you’re not aware of them, or you don’t fully understand what they will mean to your transaction, going forward. Purchasing real estate of any kind, and at any value, is a significant investment, and it’s a wise move to give yourself the best protection possible against avoidable problems.

Get The Answers You Need To Protect Your Own Interests

In any real estate transaction, the lender will have their own attorney, and the seller may, too. The title company/closing attorney is a neutral party, and they’re not allowed to advise either buyer or seller. Hiring buyers’ counsel means that you have a legal advocate to answer your questions about your own interests in the transaction, point out potential issues, and to help you negotiate terms that work for you.

Experienced Help With The Reams Of Paperwork

Real estate transactions involve a daunting amount of paperwork and a dizzying amount of information. Even if you’re an experienced buyer, it’s always a good idea to get a second set of eyes on the details. If you’re a new or less-experienced buyer, you’re going to have questions about the paperwork outlining your rights and responsibilities, and the details of the property you’re buying. For many people, buying real estate is the most substantial investment they’ll ever make, and ensuring that investment is a sound one means going in with a full understanding of everything they’re agreeing to.

Avoid Surprises Like Encumbrances Or Use Restrictions

While the title company will research the property title for liens and encumbrances like easements, they will ultimately issue a title insurance policy that lists those liens or easements as exceptions: Items which will not be covered by your title insurance policy. Your buyers’ counsel will review the title search, and advise you of anything that might affect your financial investment, your planned use of the property, or your enjoyment of that property. In many cases, buyers’ counsel can help you resolve or object to any title issues they find, requiring the Seller to resolve the problems before closing, so you can take ownership with full confidence that you’re not going to get hit with an unwelcome surprise after the deal is done. 

Reassurance on Closing Day

Whether you’re financing your purchase or paying cash, you will have documents to sign on closing day. Your buyers’ counsel will review the closing documents, such as the Deed and Closing Settlement Statement, to confirm all of the information is correct before you get to the closing table. Not only will they ensure the documents are correct, your buyers’ counsel will ensure the closing fees are accurate and discuss vesting options for holding title to the property.

Buyers’ Counsel On Your Side In Kissimmee

If you’re buying property in Kissimmee, St. Cloud, Celebration or the surrounding area, the experienced real estate attorneys at Overstreet Law, P.A. can help you manage the details of your purchase and protect you from pitfalls. Give us a call or contact us online for a consultation, and learn more about how hiring buyers’ counsel protects your investment and your peace of mind.

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Don’t Be Surprised By Exceptions; Have Your Title Commitment Reviewed By A Real Estate Lawyer

The title commitment is one of the most important documents in a real estate transaction. However, most buyers have no idea what the title commitment means or what title insurance covers. The title commitment is a document issued by the closing attorney or title company that will be issuing title insurance to the after closing. The title commitment gives a detailed account of the ownership of, and liabilities associated with, that property, and it explains precisely what the title insurance policy will and will not cover, once it’s issued. Having your title commitment reviewed by an experienced real estate lawyer protects your interests and investment by making sure no surprises are lurking in the text of your title commitment.

Overview Of The Title Commitment

In addition to spelling out the requirements necessary to provide title insurance, the title commitment provides a detailed listed of any liens, obligations, or other burdens that may be attached to the title for the property, and limitations on the use of the property, like easements; existing leases; CC&Rs (covenants, conditions & restrictions, such as the rules of a homeowners’ association). The title commitment document addresses all of this information in three sections, called Schedules.

  • Schedule A – Schedule A contains basic information about the real property and transaction: The purchaser and mortgage lender, legal description of the property, the effective date of proposed title insurance policy, along with the type of policy, coverage amounts and current title vesting (ownership).
  • Schedule B-I – Schedule B-I lists all of the requirements that need to be met before the property title is considered marketable, and the insurance policy can be issued to the buyer (proposed insured). This might include things like the deed from seller to buyer, mortgage documentation between buyer and lender, satisfaction or release of any liens, corrective deeds from prior owners, or probate for a deceased owner.
  • Schedule B-II – Schedule B-II specifies items that the title insurance policy will not cover: The exceptions. There are standard exceptions for issues like unrecorded easements, encroachment, rights of tenants who occupy the property, and municipal liens. There may also be property-specific exceptions for things like CC&Rs, recorded easements, or agreements with utilities.

Real Estate Lawyers Help You Deal With Those Requirements and Exceptions 

An experienced real estate lawyer can help ensure you are aware of any issues in your title commitment that may delay closing and receive a title policy that best protects your interests.

Often they can also help you exercise your rights under the sales contract to require the Seller to resolve the title issues or have some of the listed exceptions covered by the title insurance policy. The real estate lawyers at Overstreet, Miles, Cumbie & Finkenbinder help buyers and sellers in Kissimmee, St. Cloud, and throughout Osceola County make fully informed choices for successful transactions. Give us a call at 407-847-5151 or contact us online to schedule a consultation and we’ll let you know how we can help you get what to expect from your real estate transaction, without unwelcome surprises.

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Holding Title To A Property In The Name Of An LLC Or Land Trust

One question most often asked of those who practice real estate law is whether a limited liability company (LLC) or a Land Trust offers better protection for our clients’ Florida real property investments. If you’re wondering whether you need this type of asset protection, or which type of entity structure offers the best benefits for your specific situation, you’ll get invaluable answers and advice by consulting a real estate attorney before you make your decisions.

Do I Even Need To Form A Business Entity To Protect My Real Property Investment?

In a word: Yes. There are many reasons to hold title to your investment property under a separate entity like an LLC or Land Trust, but the simplest way to sum them all up is the concept of liability. Generally, unless you form a separate entity to hold title to your property, you are personally liable for it, which means your personal assets like your home, savings, and wages are fair game in the event of a judgment against you for an incident related to that property. Some property owners choose to purchase liability insurance because it’s relatively affordable and simpler than forming a separate entity, but too often, those owners discover too late that their policy limits were not sufficient, and their personal assets are still on the table.

Florida Limited Liability Company (LLC)

For some real property investors, forming an LLC is the right call. Placing the property title under the ownership of an LLC removes the risk to the owner’s personal assets, because the LLC is the legally liable entity, instead of the owner as an individual. An LLC also offers some tax advantages over a Land Trust. In the case of a single-member LLC (one owner), the IRS treats the income from the LLC the same way it would a sole proprietorship, which means that the owner pays the income and capital gains taxes as an individual. This is called pass-through taxation. Multi-member LLCs file informational tax returns, but the actual payment of the taxes are made by the individual owners, each paying the tax for the portion of the LLC they own at their individual tax rates. There is no additional taxation for the business entity.

Florida Land Trust

A Land Trust, not to be confused with a living trust, works much differently; essentially, it’s a way to hold the title for real property by means of a contract known as a Land Trust Agreement. Because the Land Trust Agreement is not required to be filed with the state as an LLC would, and the public records show the name of the trustee as the property owner, a Land Trust offers more privacy and anonymity than an LLC. In some cases, property held by the trustee of a Land Trust may be eligible for homestead exemption, where land held in an LLC is not. Land Trusts also offer the ability to avoid probate and other debt obligations.

While Land Trusts may appeal to many investors, they are complex and must comply with the Florida Land Trust Act. Failure to comply with the Act may create unintentional title issues.

Consult an Experienced Real Estate Attorney

The attorneys at Overstreet Law, P.A. serve the needs of property owners and real estate investors throughout Kissimmee, St. Cloud, and Osceola County. If you’re new to real estate investing or need advice before you select a business entity to best protect you real property investment and personal assets, call or contact us online for a consultation. Our experienced real estate attorneys will explain your options and help you set up the right entity structure for your specific situation and goals.

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