With an attractive tax structure and progressive trust laws, the State of Florida has earned its place
as one of the top “trust friendly” states.
On taxes, Florida has long been an attractive option with no state income tax, no estate or inheritance tax, for trusts domiciled in Florida. Because Florida does not tax trust income or capital gains, over time this can have a significant positive impact to your trust, in particular for generation skipping trusts.
This lead into Florida’s “rule against perpetuities”, which defines how long a trust may exist before it must end and distribute to its beneficiary’s. In Florida a trust can continue for 360 years and although a long time it represents approximately 4 to 5 generations. In states that have shorter time periods such as New York State, fortunes can dissipate sooner within 2 or 3 generations because the trust must end sooner thereby imposing estate taxes upon beneficiary’s receiving those assets. In Florida, you are able to create trusts that skip 4 to 5 generations before those assets become subject to estate or generation skipping taxes. This can be a significant advantage in building longstanding wealth while benefiting multiple generations.
In recent years, Florida has expanded their trust laws to provide greater flexibility and powers to trustees who are responsible for complex investment, administrative, tax and legal issues. Among them is the power of a trustee to delegate certain functions or duties to other co-trustees, or investment functions to a third party agent who has a particular expertise. It is increasingly difficult to name a trustee best suited to carry our all these responsibilities; a trust company may best suited to handle the administration, tax and legal issues and investments, while a family member might be responsible for understanding the family relationships and financial needs, or to oversee an ongoing family business.
For more information, contact Paul today.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Trust Company of Florida and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested. Investments may be offered through affiliate companies.