Under Florida's 1996 intangible tax, did a trust or its income beneficiary owe tax when no Florida-situs person could serve as trustee?

Plain-English summary

Florida found no intangible-tax or filing liability for the trust or its income beneficiary.

The beneficiary transferred taxable publicly traded securities to a management trust, received all annual income, and could receive principal only in the trustee's discretion. The beneficiary waived the power to revoke, amend, alter, remove or replace the trustee, or appoint trust property.

No person or entity with Florida tax situs could serve as trustee. A trust protector could be a Florida resident and could remove the trustee or appoint a successor, but that did not change the ruling's result. Because there was no Florida trustee and the beneficiary lacked the combination of rights required for a taxable beneficial interest, neither had to file.

What this means for you

• Income rights alone did not create the cited taxable beneficial interest.
• The beneficiary lacked revocation, corpus-control, and appointment powers.
• Trustee situs remained outside Florida by the trust's terms.

Common questions

Q: Was the trust taxable in Florida?
A: No.

Q: Was the income beneficiary taxable on the trust interest?
A: No.

Q: Could the trust protector live in Florida?
A: Yes, on the stated facts.

Citations and references

• Fla. Admin. Code r. 12C-2.002(1)(c) — taxable beneficial interest
• Fla. Admin. Code r. 12C-2.002(1)(ee) — filing responsibility without a Florida trustee
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-011

Original ruling text

Feb 05, 1996

Re: Technical Assistance Advisement No. 96(C)2-011
Intangible Personal Property Tax; Trust
XXX (Taxpayer)
XXX (Trust)
XXX (Trustee)

Dear :

This is in response to your request for a technical
assistance advisement regarding the taxability of a trust
agreement.

Facts

The Taxpayer has established the Trust and plans to
transfer to it publicly traded securities which are not exempt
from the Florida intangible personal property tax. Those
securities will be held in a brokerage account at a national
brokerage company, which may or may not have offices in Florida.

The primary purpose of the Trust is to provide a means for
the management of Taxpayer's intangible assets.

Taxpayer waives any right to alter, amend or revoke the
Trust, and to remove or replace the Trustee.

The terms of the Trust provide that Taxpayer will receive
all of the income from the Trust annually, and may receive
principal from the Trust in the Trustee's discretion for
Taxpayer's health and maintenance in reasonable comfort.

Trustee may also appoint the Trust principal to Taxpayer
and must appoint the Trust principal as directed by the trust
protector. Taxpayer has no power of appointment over any part
of the Trust.

As of Taxpayer's death, the remaining Trust property is to

be distributed by the Trustee to Taxpayer's revocable trust, as
it is then in existence, otherwise to Taxpayer's estate.

The trust protector, who may be a resident of Florida,
shall appoint a successor trustee in the event Trustee ceases to
be Trustee.

No person or entity with Florida tax situs may serve as
trustee. The trust protector may remove the Trustee. Trustee
may use the services of an advisor, who might be the Taxpayer.

Requested Rulings

1. The Trust will not be subject to Florida intangible
   personal property tax on any property not otherwise
   exempt from Florida intangible tax owned by the Trust
   on January 1 of each year, and the Trust will not be
   subject to the reporting and return requirements under
   Chapter 199 or applicable administrative code
   provisions; and
2. Taxpayer will not have a beneficial interest in the
   Trust which would be subject to Florida intangible
   personal property tax with respect to any property not
   otherwise exempt from Florida intangible tax owned by
   the Trust on January 1 of each year, and Taxpayer will
   not be subject to the reporting and return
   requirements under Chapter 199 or applicable
   administrative code provisions.

Discussion and Law

Rule 12C-2.002(1)(c), F.A.C., defines "Beneficial Interest
in a Trust" as one or more valuable property rights in a trust.
A taxable beneficial interest in a trust is the current right to
income coupled with: the right to invade the corpus of the
trust; or the right to revoke the trust; or the right to appoint
successor beneficiaries without limitation.

A trust having a taxable situs in Florida is primarily
taxable to the trustee. A beneficiary, having a taxable
beneficial interest, where there is no Florida trustee, is

responsible for filing a return for the taxable trust assets.
(See Rule 12C-2.002(1)(ee), F.A.C.)

The taxable situs of a trust shall be in Florida if the
trustee's usual place of business where the books and records
pertaining to the trust are kept is in Florida; or, if the
trustee has no principal place of business, then taxable situs
shall be determined as follows: (a) If a Florida resident is
sole trustee of a foreign trust, the trust is deemed to have a
taxable situs in Florida and the corpus is subject to tax. (b)
If there is more than one trustee, and all are Florida
residents, only one return is to be filed. (c) When trustees
are both residents and nonresidents and management and control
of the trust is with the Florida trustee, then a return for the
trust is to be filed by the Florida trustee. (d) When trustees
are both residents and nonresidents, and management and control
of the trust is with an out of state trustee, then no return is
necessary by the Florida trustee. (e) When there are two
trustees, one is a resident and one a nonresident and they share
equally in management and control of the trust, the assessment
of property shall be apportioned between them. (f) When there
are three or more trustees and they are residents and
nonresidents and they share equally in management and control,
the trust has a taxable situs in this state if the majority of
the trustees are residents of this state. In such a case, only
one return is to be filed for the trust. If the majority of the
trustees are nonresidents the trust does not have a taxable
situs in this state and no return is to be filed.

Conclusion

Based upon the statutory provisions and the information
provided, the requested rulings are answered in the affirmative.

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
Senior Tax Specialist
Tax Policy and Dispute
Resolution
Office of General Counsel

NCP/mh