Did Florida trustees, beneficiaries, a ministerial service company, or a Florida investment account give an out-of-state trust taxable Florida situs?

Subject

Taxable Situs - Trustee - Beneficiary

Plain-English summary

The trust assets did not acquire taxable Florida situs, and none of the trustees, beneficiaries, service company, or Florida investment advisor had intangible-tax liability arising from the trust.

The trust was created and governed outside Florida, kept its original records there, and accounted to an out-of-state probate court. Three of seven trustees lived in Florida, but the Florida company performed only ministerial, bookkeeping, review, and monitoring functions without discretionary authority.

A small Florida investment account also did not change the result because the advisor could invest only within strict guidelines. The beneficiaries lacked the current beneficial rights described in the ruling's statute.

What this means for you

The historical situs analysis depended on where the trust was governed and controlled, and on the limited authority of the Florida participants, not simply their presence in Florida.

Common questions

Q: Did having three Florida trustees create situs? No, on the full stated facts.

Q: Did the Florida service company create situs? No. It lacked discretionary authority.

Q: Did the Florida investment account create tax liability? No, under its strict investment limits.

Citations and references

• Fla. Stat. § 199.052(5), (6) — trust and beneficiary filing duties
• Fla. Stat. § 199.175(1) — taxable situs of intangible property
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93C2-016

Original ruling text

Jun 02, 1993

Re: Technical Assistance Advisement No. 93(C)2-016
Florida Intangible Tax - Taxable Situs of Trust Assets
Sections 199.052(5), (6), and 199.175, F.S.
XXX (Trust)
XXX (Company)

Dear :

This is in response to your request for a technical
assistance advisement dated May 10, 1993.

Facts

The Trust is a testamentary trust created, governed and
construed under the laws of the State of XXX (State X). None of
the beneficiaries of the Trust have a current right to income
coupled with: the right to invade the corpus of the Trust, or
the right to appoint successive beneficiaries without
limitation. The Trust has seven trustees, three of which are
residents of Florida and four of which are non-residents.

The Trust maintains its original books and records
pertaining to its activities in State X, and is required to file
an accounting of its assets with a probate court in State X.
The Trust has contracted with the Company to perform certain
ministerial duties and processing functions for the Trust.
Copies of the Trust's books and records are maintained by the
Company to enable it to perform the ministerial and processing
duties on behalf of the Trust. In general, the duties of the
Company consist of providing bookkeeping and recordkeeping for
the Trust, together with recommending, reviewing and monitoring
the Trust. However, the Company has no discretionary authority
to act or incur obligations on behalf of the Trust.

In addition, the Trust has also established an investment
account with a Florida investment advisor in which a small
portion of it assets are placed. Under the terms of the Trust's

agreement with the advisor, the advisor is authorized to invest
only in accordance with strict guidelines which specify what
types of securities may be purchased for the investment account.

Requested advisement

1. The Trust is not domiciled in Florida nor do the
   activities of the Company, on behalf of the Trust,
   cause the Trust to be domiciled in Florida or managed
   by a Florida resident. Accordingly, none of the
   Trust's intangible assets will be subject to the
   Florida intangible tax, and none of the Trustees will
   have an obligation to file a Florida intangible tax
   return with regard to such assets.
2. Florida beneficiaries of the Trust do not own an
   interest in the Trust subject to the Florida
   intangible tax.
3. The intangible assets held in investment accounts with
   the Florida advisors are not subject to the Florida
   intangible tax.

Discussion and Law

Section 199.175(1), F.S., provides that intangible personal
property shall have a taxable situs in this state when it is
owned, managed, or controlled by any person domiciled in this
state on January 1 of the tax year. Such intangibles shall be
subject to annual taxation under this chapter, unless the person
who owns, manages, or controls them is specifically exempt.

In accordance with s. 199.052(6), F.S., a Florida resident
with a beneficial interest, as defined in s. 199.023(7), F.S.,
in a foreign-situs trust, that is, a trust with situs outside of
this state, is primarily responsible for returning the
resident's equitable share of the trust's intangible personal
property and paying the annual tax on it.

Conclusion

Based on the statutory provisions and the information
contained in your request, the three positions as stated under

"Requested Advisement" are confirmed. Neither the Trustees, the
beneficiaries, the Company, nor the Florida investment advisor
have any intangible tax liability which arises from the Trust.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Nadine C. Posey
Technical Assistant
Technical Assistance

NCP/mh