Did a Florida trustee have to file or pay historical intangible tax when an out-of-state co-trustee held all trust management and control?

Subject

Trust

Plain-English summary

The trust was not subject to Florida intangible personal property tax, and the Florida taxpayer did not have to file a return for it. Although named as a trustee, the taxpayer was trustee in name only and had formally delegated all management and control of the trust assets to an out-of-state co-trustee.

The co-trustee made investment and distribution decisions and handled administration, accounting, and income-tax returns. The cited rule provided that a Florida trustee need not file when resident and nonresident trustees serve together and management and control rests with the out-of-state trustee.

What this means for you

For this historical rule, the location of actual trust management and control mattered more than a Florida resident's nominal trustee title. The ruling depended on both the formal delegation and the described administration in practice.

Common questions

Was the taxpayer's Florida residence alone enough to require a return? No, not where the out-of-state co-trustee held management and control.

What functions did the co-trustee perform? Investments, distributions, administration, accounting, and preparation of income-tax returns.

Did the ruling address a trustee who still exercised authority? No. It described the taxpayer as trustee in name only after delegating all management and control.

Citations and references

• Fla. Stat. §§ 199.023(7), 199.052(6), and 213.22
• Fla. Admin. Code r. 12C-2.006(3)(d)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94C2-008

Original ruling text

Mar 30, 1994

Re: Technical Assistance Advisement No. 94(C)2-008
Intangible Personal Property Tax; Trust
Sections 199.023(7) & 199.052(6), F.S.
Rule 12C-2.006(3)(d), F.A.C.
XXX (Taxpayer)
XXX (Trustee)
XXX (Taxpayer's Father)
XXX (Co-Trustee)

Dear :

This is in response to your letter of February 3, 1994, in
which the Taxpayer is requesting a technical assistance
advisement.

Facts

The Taxpayer's Father created a Trust for the benefit of
the Taxpayer. Also, he appointed the Taxpayer and a bank or
trust company doing business out-of-state, as Taxpayer may
appoint, to be trustees of the Trust. Taxpayer appointed the
Co-Trustee and granted him full control over the management of
the Trust assets. The Co-Trustee performs all trust
administrative and management functions, including investment
decisions, distributions, and the preparation of accounting and
income tax returns. The Taxpayer is Trustee in name only.
Finally, the Taxpayer formalized this arrangement by signing a
"Delegation of Trustee Powers" delegating to the out-of-state
Co-Trustee all management and control of the assets of the
Trust.

Requested Advisements

The Taxpayer is not required to file a return, nor pay an
intangible tax, because the Trust has a foreign situs, and the
Taxpayer does not possess a taxable beneficial interest in the
Trust.

Laws and Discussion

Section 199.052(6), F.S., provides that each Florida
resident with a beneficial interest in a foreign-situs trust is
primarily responsible for returning the resident's equitable
share of the trust's intangible personal property and paying the
annual tax on it. The trustee of a foreign trust may return and
pay the tax on the equitable shares of all Florida residents
having beneficial interests. As defined in s. 199.023(7), F.S.,
a resident has a "beneficial interest" in a foreign trust if the
resident has a vested interest, even if subject to divestment,
which includes at least a current right to income and either a
power to revoke the trust or a general power of appointment.

Rule 12C-2.006(3)(d), F.A.C., states that when trustees are
both residents and nonresidents, and management and control is
with the out-of-state trustee, then no return is necessary by
the Florida trustee.

Conclusion

Based upon statutory provisions and the information
provided in your letter, the Trust is not subject to Florida
intangible personal property tax. Therefore, the Taxpayer is
not required to file an intangible tax return for this 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
Tax Audit Specialist III
Technical Assistance

NCP/mh