Did a beneficiary with only a limited power of appointment, or the non-Florida trustee, owe Florida intangible personal property tax on the trust?

Plain-English summary

Neither the beneficiary nor the non-Florida trustee owed Florida intangible personal property tax, and the trust did not have to file a return.

The beneficiary had only a limited power of appointment and could not revoke the trust or invade its corpus. That did not amount to a taxable beneficial interest under the cited statute and rule. The trust was governed by another state's law, and the trustee was not a Florida resident, so the trustee had no Florida taxable situs or liability.

What this means for you

The ruling turned on the beneficiary's actual trust powers and the trustee's residence or commercial domicile.

Common questions

Q: Did the beneficiary have a taxable beneficial interest? A: No.

Q: Why not?
A: The beneficiary had a limited—not unlimited—power of appointment and had no power to revoke the trust or invade its corpus.

Q: Did the trustee owe Florida intangible tax? A: No. The trustee was not a Florida resident.

Q: Was a Florida intangible-tax return required for the trust? A: No.

Citations and references

• Fla. Stat. § 199.023(7) and Fla. Admin. Code r. 12C-2.002(1)(c) — taxable beneficial interest in a trust
• Fla. Stat. § 199.052(5) — trustee responsibility
• Fla. Stat. § 199.175 — Florida taxable situs
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95C2-007

Original ruling text

Feb 08, 1995

Re: Technical Assistance Advisement No. 95(C)2-007 Intangible Personal Property Tax - Trust XXX (Trust) XXX (Beneficiary) XXX (Trustee)

Dear :

Your request for a technical assistance advisement has been received in this office.

Requested Advisement

(1) The Beneficiary will not be subject to Florida intangible personal property tax, with respect to his interest in the Trust because the Trust has foreign situs and the Beneficiary does not have a taxable beneficial interest in the Trust; and (2) neither the Trust nor the Trustee of the Trust will be required to file a return or pay an intangible tax.

Discussion of Trust Provisions

Under the provisions of the Trust the Beneficiary is granted a limited power of appointment over the assets of the Trust. This limitation says that the Beneficiary may not appoint to or for the benefit of the grantor, or the grantor's estate, or the creditors of the grantor's estate, any asset or income of the Trust. The Trust further provides that the Trust is established under and governed by the laws of a state other than Florida, and the Trustee is not a resident of Florida.

Provisions of Law

Section 199.023(7), F.S., and Rule 12C-2.002(1)(c), F.A.C., state that a taxable beneficial interest in a trust is the current right to income coupled with either a right t revoke the trust, or the right to invade the corpus of the trust, or an

unlimited power of appointment of future beneficiaries.

Section 199.052(5), F.S., places primary responsibility for payment of the intangible personal property tax on the Florida Trustee. To have a taxable situs in Florida the provisions of s. 199.175, F.S., must be met. The trustee must be a Florida resident or legally have a commercial domicile in Florida to have a taxable situs in Florida.

Discussion of Law

Based upon the provisions of the Trust, the Beneficiary has a limited power of appointment over the assets of the Trust, does not have a power to invade the corpus of the Trust, nor the power to revoke the Trust. Therefore, the Beneficiary of the Trust does not have a taxable beneficial interest in the Trust.

The Trustee is not a resident of Florida, and therefore, has no intangible tax liability in Florida.

Conclusion

In summary, neither the Beneficiary nor the Trustee is liable for the intangible personal property tax in Florida, and no return is required to be filed for 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
Tax Audit Specialist III
Technical Assistance

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