Did the Flint Trust owe Florida intangible tax when its trustees had to remain outside Florida and its beneficiary held only a limited power of appointment?

Plain-English summary

Florida ruled that neither the trustees nor the beneficiary of the Flint Trust owed intangible personal property tax.

The trust required every individual trustee to remain a nonresident of Florida. A corporate trustee could neither qualify to do business nor actually do business in Florida, and any trustee becoming taxable in Florida had to stop serving. The Department therefore found no Florida situs at the trustee level.

The income beneficiary, who was also the grantor, held only a limited power of appointment. That power could not be exercised for the grantor, the grantor's estate, or the estate's creditors. The beneficiary also could not invade trust corpus or revoke the trust.

Because the beneficiary lacked the control rights required for a taxable beneficial interest, the Department found no beneficiary-level liability either. No Florida intangible-tax return was required for the trust.

What this means for you

Grantors and beneficiaries

A limited appointment power did not create a taxable beneficial interest on these facts. The Department distinguished it from a general power and also relied on the absence of revocation and corpus-invasion rights.

Trustees

Trust provisions governing trustee residence and corporate business activity supported the no-situs conclusion. The document also required a trustee to resign if the trustee became taxable in Florida.

Accountants and tax professionals

Review trustee situs and beneficiary rights separately. Preserve the trust clauses limiting appointment, revocation, corpus access, trustee residence, and corporate qualification.

Common questions

Q: Did any trustee have Florida taxable situs?
A: No. The trust barred individual Florida-resident trustees and corporate trustees qualified or doing business in Florida.

Q: Was the beneficiary's limited appointment power taxable?
A: No. It could not benefit the grantor, the grantor's estate, or estate creditors and was not a general power of appointment.

Q: Could the beneficiary revoke the trust or invade corpus?
A: No.

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

Q: Can another trust rely on this TAA?
A: Not automatically. The advisement says it binds the Department only for the specific trustee restrictions and beneficiary rights stated in the trust reviewed.

Citations and references

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

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-084

Original ruling text

Sep 18, 1996

Re: Technical Assistance Advisement No. 96(C)2-084
XXX; Flint Trust

Dear :

This office has received your request for a Technical
Assistance Advisement for the trust listed above. This office
has examined the provisions of the trust document that contains
provisions governing duties of trustees and rights of the
beneficiary.

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
a corporate trustee may neither be qualified to do nor do
business in Florida. If any trustee becomes taxable in Florida,
the trust requires that trustee to cease to act as trustee.

Provisions of Law

Section 199.052(5), F.S., places primary responsibility for
payment of intangible tax on a Florida trustee. Section
199.175, F.S., describes persons and assets with taxable situs
in Florida. A trustee must be a Florida resident or legally or
commercially domiciled in Florida to have a taxable situs in
Florida.

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

the trust, or a general power of appointment.

Discussion of Law

The individual trustee may not be a resident of Florida,
and no corporate trustee may do or be qualified to do business
in Florida. Therefore, no trustee has a taxable situs in
Florida.

Based on the express provisions of the trust, that the
income 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, and does not have power to revoke the trust, the
beneficiary does not have a taxable beneficial interest in the
trust.

In summary, neither the trustee nor the beneficiary 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
Tax Policy and Dispute Resolution
Office of General Counsel

JVP/mh