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The other day, a Venezuelan friend who lives in Buenos Aires, Argentina disclosed to me that her Florida property is owned under her name. I was flabbergasted to learn that, and angry at whatever real estate broker and/or attorney allowed that to happen when she is not a U.S. citizen or resident. What if someone was looking to uncover her assets? The person searching would easily be able to find the value of her Florida property and where it is located. That might not raise a concern to someone living in the United States, but if you are living in Latin America the appearance of wealth can make you a target for kidnappings, robberies, etc. Further, what if her tenant has a guest over and that person slip and falls on her property? The plaintiff will likely sue her personally and her personal assets will be exposed to liability. And what if my friend dies while the property is in her name? Her heirs will pay a hefty inheritance tax of 40% on any amount over $60,000 in contrast to U.S. citizens having a $11.18M “exemption” per person.
If she had formed a Florida limited liability company ("LLC") and then purchased the property through the LLC, she could conceal herself as the ultimate beneficiary of the property by designating another individual or corporation to be the company’s manager and only disclose the name of the manager and registered agent to the Florida Department of State, Division of Corporations. That is probably one of the biggest benefits of forming an LLC to own property.
Further, the LLC, if properly held by a foreign vehicle, can continue after her death without the other members having to pay a 40% tax on the property or needing to begin a Florida probate proceeding to sell or continue managing the property.
If a legal issue with the property arises and the LLC has been properly formed and operated, my dear friend will not be part of the lawsuit and will protect her own personal assets.
Every situation is different, and there are yearly costs associated with a Florida LLC. However, those costs are often minimal in comparison to the value of the property.
If you would like to discuss establishing an LLC to own and/or manage property in Florida, please do not hesitate to contact McKellar Poursine, PLLC. This blog post is not intended to constitute legal advice and does not cover all issues relevant to determining which corporate structure or other legal mechanism is best suited to the reader’s needs.
