Did beneficiaries or trustees owe Florida intangible tax where beneficiary powers were limited and the trusts barred Florida trustees?

Plain-English summary

Neither the beneficiaries nor the trustees owed Florida intangible tax, and no trust returns were required.

The beneficiaries had only limited appointment powers and could not revoke the trusts or invade corpus. The trust documents also prohibited an individual Florida-resident trustee or a corporate trustee qualified or doing business in Florida, requiring removal if a trustee became taxable there.

What this means for you

The result depended on both the beneficiaries' legal powers and the trustees' Florida tax situs.

Common questions

Q: Did the beneficiaries have taxable beneficial interests? A: No.

Q: Did any trustee have Florida taxable situs? A: No, under the stated trust restrictions.

Q: Were Florida intangible-tax returns required? A: No.

Citations and references

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

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95C2-009

Original ruling text

Mar 02, 1995

Re: Technical Assistance Advisement 95(C)2-009 Intangible Tax; Trust Trust - Taxable Beneficial Interest in Trust Section 199.023(7), F.S., and Rule 12C-2.002(1)(c), F.A.C. XXX (hereafter referred to as the "Trusts.")

Dear :

This office has received your request for a Technical Assistance Advisement for each of the trusts listed above. An examination of each trust document has shown each trust contains similar provisions governing the duties of the trustees and the rights of the beneficiaries. Therefore, this response will apply to each of the trusts individually and collectively.

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 states that the beneficiary/grantor 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 individual trustee may not be a resident of Florida and that the corporate trustee may not be qualified to or be doing business in Florida. If either of the trustees becomes taxable in Florida the Trust requires that the trustee be removed.

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 trust is the current right to income coupled with either a right to 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 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 or commercially domiciled 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 individual trustee may not be a resident of Florida and the corporate trustee may not be doing or qualified to do business in Florida. Therefore, no trustee has a taxable situs in Florida.

In summary neither the beneficiary nor the trustee is liable for the intangible tax in Florida and no returns are 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,

J.V. Parramore, Jr.
Tax Law Specialist
Technical Assistance

JVP/mh