A Guide to Transferring Property to a Trust in Florida

By: Rima Suleiman, Esq.

Transferring property to a trust can be a strategic and beneficial estate planning move, providing a
seamless transition of assets and ensuring a smoother distribution of your estate. Understanding the
process of transferring property to a trust is crucial for effective estate management. This blog aims to
shed light on the key aspects of transferring property to a trust in Florida.

1. Why Transfer Property to a Trust?:
   Before delving into the specifics of transferring property to a trust in Florida, it’s essential to grasp
   the advantages of utilizing this estate planning tool. A trust offers several benefits, including:
   • Probate Avoidance: Transferring property to a trust helps your heirs avoid the often time-
     consuming and costly probate process. This means that your assets can be distributed to
     beneficiaries without court intervention, providing a more efficient transfer of wealth.
   • Privacy Protection: Unlike a will, which becomes public record during probate, a trust allows for
     a private transfer of assets. This confidentiality can be crucial for individuals who value their
     privacy and wish to keep their financial matters confidential.
   • Incapacity Planning: Trusts can be designed to manage your assets in the event of your
     incapacity. By appointing a successor trustee, you ensure that your financial affairs are handled
     seamlessly without the need for court-appointed guardianship.
2. How to Transfer Property to a Trust:
   The first thing a person will need to do to transfer property into a trust in Florida is to prepare and
   sign a new deed. The two most common kinds of deeds are warranty deeds and quitclaim deeds.
   Warranty Deeds vs. Quitclaim Deeds:
   Warranty deeds provide a warranty against liens on the property and third-party claims to the property, while quitclaim deeds offer a simple transfer of ownership interest without the same title insurance.
   Deed Preparation:
   When preparing a deed, accuracy is paramount. The property owner must use the exact name from the trust agreement and the original deed transferring the property to them. Furthermore, the property owner must include the property’s current owner(s) name(s), the new owner(s) name(s), and a proper legal description of the property. Trustee names should align with the trust document, and the date of trust document signing must be included. The legal description on the deed should match the original, and if co-owned, specify the transfer of a specific share.
   Notarization and Recording:
   After preparation, the deed must be signed and dated in front of a Florida notary and two witnesses.
   Subsequently, the deed should be recorded in the county office responsible for property records.

3. Unique Considerations and Challenges: Handling Multiple Properties through LLCs:
For those owning several commercial investment properties under individual LLCs, transferring 100%
ownership of each LLC to the trust simplifies the inheritance process for beneficiaries.
Documentary Stamp Tax:
When transferring real estate, a documentary stamp tax is applicable in Florida, excluding Miami-Dade
County. This fee, payable to the county clerk’s office, is $0.70 per $100 of property value.
Mortgage Considerations:
Property owners must be cautious when transferring properties with mortgages into trusts, as it may
trigger due-on-sale or due-on-transfer clauses. Lenders should be consulted beforehand, and
notification is necessary even if no accelerated repayment is required.
Title Insurance and Endorsements:
Checking with the title insurance company is crucial before transferring property into a trust. Depending
on the location and company, an endorsement on the title insurance policy or even the purchase of a
new policy may be required.
Insurance and Taxes:
Transferring property into a trust generally does not necessitate changes to property taxes or insurance.
However, communication with insurance carriers is vital to update ownership status in policies.
Step-Up on Basis and Property Taxes:
Retaining documentation of the ownership change is vital for tax purposes. With a revocable trust, the
benefit of a step-up in basis is preserved upon the property owner’s death. Property tax assessments
remain unchanged when transferring 100% ownership to one’s trust.