Intangible Asset Management Trusts
TAA Request

On September 1, 2000, this office requested a Technical Assistance Advisement from the Florida Department of Revenue concerning the practical application of the recently amended Florida Statute, Section 199.052. Prior to January 1, 2001, a trust which had certain connections with Florida was subject to the annual Florida intangible tax. A foreign trust was treated differently than a Florida trust. The distinction was eliminated by the Florida Legislature during 2000 as a result of changes set forth in Florida Laws 2000-173.

As of January 1, 2001, "[t]he trustee of a trust is not responsible for returning the trust's intangible personal property and is not required to pay any annual tax on it." F.S. § 199.052(5) (2000). "Intangible personal property that is owned, managed, or controlled by a trustee of a trust is exempt from annual tax under this chapter." F.S. § 199.183(4) (2000).

The Florida Administrative Code includes certain "safe harbor" provisions that are applicable to trusts intended to avoid the intangible personal property tax. F.A.C. Rule 12C-2.0063. The safe harbor provisions were adopted prior to the legislative changes enacted during 2000. The Department has indicated that the safe harbor provisions will be amended to comport with the statutory changes.

We requested, on behalf of our client, rulings on whether the trust or the trustee was subject to Florida intangible personal property tax beginning on January 1, 2001 for each of three intangible asset trusts with different trustees, namely, the taxpayer herself as trustee, the taxpayer's spouse as trustee, and a party not related to the taxpayer acting as trustee. Additionally, we requested a ruling of whether the grantor/beneficiary had a beneficial interest on January 1, 2001 in each of the trusts.

A copy of the Request for Technical Assistance Advisement can be viewed by clicking on the link below. The three trusts and the accompanying letters concerning the deletion requirement, expeditious handling, etc. are not attached.

On December 1, 2000, the Department issued a Letter of Technical Advice. The trust which had a third party Florida resident as trustee and the one which had the spouse of the grantor as trustee both fell within the safe harbor provisions of Rule 12C-2.0063, Fla. Admin. Code.

The trust which had the Florida resident grantor as its own trustee, however, was found to be subject to the intangible tax. The grantor, as grantor, trustee and beneficiary, held title to the legal estate as well as the equitable estate of the trust property. The Department found that the two estates merged, giving the control of the trust to the taxpayer. Therefore, the Florida resident owned, managed, or controlled the intangible property that, as a result, had a taxable situs in Florida. The taxpayer is subject to the intangible tax on the taxable intangible property held in the trust.

A copy of the Letter of Technical Advice can be viewed on the Hot Topics page of the Real Property, Probate, and Trust Law Section of The Florida Bar: http://www.flabarrpptl.org/topics.html.

Laird A. Lile, P.A. December 18, 2000

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