Under Florida's 1996 intangible tax, did an irrevocable trust or its income beneficiaries owe tax when the trustee stayed outside Florida?

Plain-English summary

Florida found no intangible-tax liability for either the irrevocable trust's trustee or its income beneficiaries.

The trustee lived outside Florida, and the trust barred any trustee from residing or maintaining a usual place of business in Florida. It also prohibited investment in Florida real property and placed management and control with the trustee.

The beneficiaries received income but could not revoke, alter, amend, terminate, or invade the trust. Their limited power of appointment could not benefit themselves, their estates, or their creditors. The Department therefore found no taxable beneficial interest and no Florida trust situs.

What this means for you

• An income right alone did not create the cited taxable beneficial interest.
• The beneficiaries lacked revocation, corpus-invasion, and unlimited appointment powers.
• The trustee's out-of-state domicile prevented Florida trust situs on these facts.

Common questions

Q: Was the trust subject to Florida intangible tax? A: No.

Q: Were the income beneficiaries taxable on their trust interests? A: No.

Q: Why was their appointment power not taxable? A: It was limited and could not benefit themselves, their estates, or their creditors.

Citations and references

• Fla. Stat. § 199.023(7) — taxable beneficial interest
• Fla. Stat. § 199.052(5) — trust situs and trustee liability
• Fla. Admin. Code r. 12C-2.002(1)(c) — taxable beneficial interest
• Fla. Admin. Code r. 12-2.006(3) — trust situs as cited in the ruling
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-020

Original ruling text

Feb 29, 1996

Re: Technical Assistance Advisement No. 96(C)2-020 Intangible Personal Property Tax - Trust XXX (Taxpayers) XXX Irrevocable Trust of 1995 (Trust) XXX (Trustee)

Dear :

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

Request for Advisement

Is the Trust subject to the Florida Intangible Personal Property Tax imposed by Chapter 199 of the Florida Statutes? Are the Taxpayers, who are the income beneficiaries of the Trust subject to the Florida Intangible Personal Property Tax?

Statement of the Facts

The Taxpayers created a Trust. Power to manage and control the Trust was granted to the Trustee. The Trustee resides outside the State of Florida. The Trust specifically provides that no Trustee may reside in Florida or maintain a usual place of business in Florida. The Trustee also may not invest in Florida real property, and no real property is to be conveyed to the trust.

The Taxpayers are the sole income beneficiaries during their lifetime. Only a limited power of appointment is retained by the Taxpayers, which is not exercisable in favor of themselves, their estates, their creditors, or creditors of the estates. The Taxpayers have no power to revoke or alter, amend, or terminate the agreement.

Provisions of the Law

Section 199.023(7), F.S., and Rule 12C-2.002(1)(c), F.A.C., defines taxable beneficial interest in a trust as the current right to income coupled with either a right to revoke the trust, the right to invade the corpus of the trust, or an unlimited power of appointment of future beneficiaries.

Section 199.052(5), F.S., and Rule 12-2.006(3), F.A.C., taxes a trust that has a taxable situs in Florida. A trust has taxable situs if the Trustee is domiciled in this State.

Conclusion

Based on the provisions of the statutes and the provision of the Trust, neither the Trustee nor the Taxpayers are liable for the Florida Intangible Personal Property Tax.

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,

Celestine Grantham

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

CG/mh