Did a 1995 irrevocable trust or its beneficiary owe Florida intangible tax when every trustee was required to remain outside Florida?

Plain-English summary

The Florida Department of Revenue concluded that neither the trustee nor the beneficiary of the 1995 irrevocable trust owed Florida intangible tax. No returns were required for the trust under the stated facts.

The trust barred an individual trustee from residing in Florida and barred a corporate trustee from qualifying to do or doing business in Florida. Any trustee who became taxable in Florida had to stop serving. The Department therefore found that no trustee had Florida taxable situs.

The beneficiary had only a limited power of appointment. The beneficiary could not appoint trust assets or income to the grantor, the grantor's estate, or creditors of that estate, and could not revoke the trust or invade its corpus. The Department found no taxable beneficial interest.

What this means for you

Trustees

The ruling focused on trustee residence and business domicile. The trust terms were designed to prevent a serving trustee from acquiring the Florida connections described by the Department.

Beneficiaries and grantors

The scope of retained powers mattered. A limited appointment power, without revocation or corpus-invasion rights, did not create a taxable beneficial interest under these facts.

Accountants and tax professionals

This is a 1996 ruling under the cited intangible-tax law. It found both no liability and no return requirement for this specific trust arrangement; confirm current law before relying on that historical treatment.

Common questions

Q: Could an individual trustee live in Florida? A: No. The trust prohibited an individual trustee from being a Florida resident.

Q: Could a corporate trustee do business in Florida? A: No. A corporate trustee could neither qualify to do nor actually do business in Florida.

Q: What made the beneficiary's appointment power limited? A: Trust assets and income could not be appointed to the grantor, the grantor's estate, or the estate's creditors.

Q: Were Florida intangible-tax returns required? A: No. The ruling states that no returns were required for the trust.

Citations and references

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

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96C2-146

Original ruling text

Dec 26, 1996

Re: Technical Assistance Advisement No. 96(C)2-146 Intangible Tax; Trust ss. 199.023(7), and 199.052(5), F.S. XXX Irrevocable Trust of 1995

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 the trustee cease to act as trustee.

Provisions and Discussion 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. Based upon this statute and the provisions of the trust, 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.

Section 199.023(7), F.S., and Rule 12C-2.002(1)(c), F.A.C., states 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. Based on the statute and 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
Technical Assistance

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