Did a nonresident decedent's estate owe Florida estate tax on a Florida trust holding only intangible property?

Subject

Reciprocal Agreements Between States

Plain-English summary

The nonresident estate owed no Florida estate tax on the Florida trust's intangible property. The decedent had established residence in another state before death, the estate owned no Florida real or tangible personal property, and that residence state did not tax nonresident estates owning only intangible property.

Florida applied the reciprocal-exemption rule: when the other state gave Florida residents the corresponding protection, Florida did not tax that state's residents on intangible personal property alone.

What this means for you

The result depended on both states' law and the exact asset mix. Florida real estate or tangible personal property would have taken the estate outside the facts approved here.

Common questions

Q: Did keeping intangible assets in a Florida trust create Florida estate tax? No, on the stated reciprocal and nonresident facts.

Q: What Florida assets would have changed the analysis? Real property or tangible personal property.

Q: Was reciprocity required? Yes. The ruling relied on the residence state's similar exemption for Florida nonresidents.

Citations and references

• Fla. Stat. § 198.44 — reciprocal estate-tax exemptions
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93C3-001

Original ruling text

Jan 21, 1993

RE: Technical Assistance Advisement 93(C)3-001
Estate Tax Reciprocal Agreements Between States
Section 198.44, F.S.
Estate of XXX
Date of Death XX
Social Security Number XXX
Resident of XXX

Dear :

This is in answer to your recent request for a technical
assistance advisement regarding substantially the following
question:

Is the estate of a resident of XXX (Florida nonresident)
owning only intangible personal property in the State of Florida
subject to Florida state death taxes if XXX has a reciprocal
exemption provision under which residents of Florida are
exempted from the payment of estate taxes to XXX (except on
tangible personal property having an actual situs in XXX)?

DISCUSSION AND LAW

According to the information provided to the Department,
decedent was a Florida resident until XXX at which time he
established a residency in the State of XXX. On XXX decedent
died leaving a trust in the State of Florida containing only
intangible personal property.

Section 198.44, Florida Statutes provides in part:

"(1) If the transferor at the time of his death was a
resident of a state or territory of the United States, or
the District of Columbia, which at the time of his death
did not impose a death tax of any character in respect to
property of residents of this state (except tangible
personal property having an actual situs in such state,

territory or district); or
"(2) If the laws of the state, territory or district of the
residence of the transferor at the time of his death
contained a reciprocal exemption provision under which
nonresidents were exempted from said death taxes of every
character in respect to personal property (except tangible
personal property having an actual situs therein), and
provided that the state, territory, or district of the
residence of such nonresident decedent allowed a similar
exemption to residents of the state, territory or district
of residence of such decedent."

The estate would not owe Florida estate tax if the
following conditions are correct:

1. The decedent had established XXX residency prior to
   death.
2. The estate does not own real property or tangible
   personal property in Florida.
3. XXX does not impose estate taxes on nonresidents of
   XXX who do not own real property or tangible personal
   property in XXX.

The State of XXX does not tax the estates of nonresident
decedents owning only intangible property in XXX. Section
198.44(2), Florida Statutes, does not impose a tax on XXX
nonresidents owning only intangible property where their state
of residency does not tax nonresidents owning only intangible
property.

The CCH publication State Tax Reporter states that XXX does
not tax the intangible personal property of nonresidents who do
not own real property or tangible personal property in XXX:

"Sec. XXX. Tax on nonresidents' estates. -- A tax in an
amount computed as provided in this section is imposed on
the transfer of the XXX estate, determined pursuant to
subsection C, included in the gross estate of every
nonresident.

"... The tax shall be an amount computed by multiplying the

federal credit by a fraction, the numerator of which is the
value of the XXX estate and the denominator of which is the
value of the decedent's gross estate.

"... The XXX estate of a nonresident includes:

1. Real property situated in this state.
2. Tangible personal property having actual situs in
   this state."

DEPARTMENT'S POSITION

The estate of the XXX resident decedent not owning real
property or tangible personal property in Florida and owning
only intangible personal property in Florida does not owe estate
taxes to Florida if the State of XXX also exempts nonresidents
who own only intangible personal property XXX.

Therefore, the estate of XXX filing as a nonresident of
Florida does not owe the State of Florida estate taxes.

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,

M.E. Clemons
Technical Assistant
Technical Assistance

MEC/mh