When did a trust administered by an out-of-state bank avoid Florida's annual intangible personal property tax?

Plain-English summary

Florida said a trust was exempt from annual intangible personal property tax when its named trustee location was outside Florida and no management or control of trust assets occurred in Florida. The ruling addressed a multistate banking reorganization that placed fiduciary operations in a single out-of-state chartered bank.

A Florida-based employee could provide investment advisory services without creating Florida taxable situs, but only if that employee had no legal authority over the trust and did not otherwise manage, administer, or control its intangible assets. Trusts whose day-to-day decisions continued to be made in a Florida office did not fit that limitation.

The Department drew a separate rule for estates: the estate of a Florida resident decedent remained subject to Florida annual intangible tax even if the personal representative and asset management were outside Florida.

What this means for you

Formal bank domicile alone did not control. The ruling looked to the specified trustee office and where actual trust management, records, decision-making, and control occurred.

Common questions

Q: Did an out-of-state trustee automatically make every trust exempt? No. Management and control also had to remain outside Florida.

Q: Did investment advice from Florida alone create taxable situs? Not when the Florida adviser lacked all other authority over the trust assets.

Q: Were estates treated the same as trusts? No. An estate of a Florida resident decedent remained taxable under the ruling.

Citations and references

• Fla. Stat. §§ 199.032, 199.052(1), (5), and (15), and 199.175(1) — annual intangible tax and taxable situs
• Fla. Admin. Code r. 12C-2.006(3) — trust situs based on trustee business location, records, management, and control
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00C2-002

Original ruling text

SUMMARY

QUESTION 1: Will a trustee, executor or personal
representative of a trust be exempt from the Florida
intangible personal property tax after merger?

QUESTION 2: Will trusts managed and administered in a state
other than Florida be exempt from the Florida intangible
personal property tax?

QUESTION 3: Does the fact that a person located in Florida
and provides only investment advisory or management
services and has no other power over the intangibles held
in the trust affect the tax liability?

ANSWER - BASED ON FACTS BELOW: As long as the trustee's
location is outside of Florida, and there is no management
or control in Florida of the trust assets, the trust will
be exempt from Florida annual intangible tax. The estate
of every Florida resident decedent is subject to Florida
annual intangible tax even if a person, including a bank,
that is not domiciled in Florida is named as personal
representative and even if management and control of estate
assets is outside of Florida.

Feb 08, 2000

Re: Technical Assistance Advisement No. 00(C)2-002
Florida Annual Intangible Tax - Trusts
ss. 199.032, 199.052(1), (5), 199.175(1), F.S.
Rule 12C-2.006(3), F.A.C.
XXX (Bank)
XXX (Bank Holding Company)
XXX (Single State Chartered Bank)

Dear :

You have petitioned for a technical assistance advisement

pursuant to s. 213.22, F.S., and Rule 12-11.003, F.A.C.

Statement of Fact Presented by Petitioner

The facts and transactions described in your letter are
summarized below:

Bank is a non-Florida corporation with its principal
business address outside of Florida. Bank Holding Company is a
Florida Corporation with its principal business address in
Florida. Single State Chartered Bank will be chartered out of
state with its principal business address outside of Florida.

Bank is a multi-state bank holding company with its
headquarters in another state. Bank has several principal
subsidiaries, all of which are bank holding companies with
numerous subsidiaries. Bank, through each bank holding company
group, provides a wide array of banking services to consumer and
commercial customers. In addition, each bank holding company
group also recognizes fees related to trust, deposit, lending
and other services provided to customers. Effective January 1,
2000, Bank will consolidate its bank charters that comprise a
part of Florida and non-Florida holding company groups into the
Single State Charter Bank. Single State Charter Bank will be
chartered under the law of a state other than Florida. The
other holding companies will cease to exist, and all of their
assets and liabilities will be transferred to the Single State
Charter Bank by operation of law. Following the transactions,
Bank will own all of the stock of Bank Holding Company, which
will own all of the stock of the Single State Charter Bank.

Each of the banking entities that have fiduciary powers and
that are included in the non-Florida and Florida holding groups
serves as a trustee of existing trusts. Each of these entities
may serve either as a sole trustee or as a cotrustee, but for
purposes of this request we may assume Single State Charter Bank
(effective January 1, 2000) will serve as a sole trustee. Also,
we should assume that no Florida resident has a taxable
beneficial interest in any of the trusts.

In many cases, but not always, a trust for which a member

in the non-Florida bank holding company group serves as trustee
does not have any Florida residents as beneficiaries. These
trusts are presently administered by employees of the nonFlorida bank holding company group from the bank office in the
state where the office is located (not Florida). Presently,
each of the bank entities that has fiduciary powers handles the
trust administration by the Board of Directors of the entity
delegating the fiduciary responsibilities to a trust committee.
The committee has the ability to delegate significant day-to-day
decision making power. While a trust officer assigned to the
trust handles the day-to-day affairs, the committee makes more
significant decisions concerning the non-Florida trusts. These
decisions may include the following, although each entity
generally has its own policies and procedures governing who must
make or approve significant decisions: (1) the acceptance of a
new fiduciary appointment, (2) the closing of an account, (3)
discretionary distributions of principal or income, (4)
investment reviews, and (5) purchases and sales of assets inside
trust accounts. The committee is appointed by and ultimately
reports to the Board of Directors of each bank entity. No
individual in the Florida bank holding company is involved in
any decisions involving the non-Florida trusts.

After the merger of the entities into what will be known as
Single State Chartered Bank, it is anticipated that the concept
of the committee will end. The head of overall trust and
investment management services for Single State Chartered Bank
will propose the adoption of a policy manual pertaining to trust
administration for approval by the audit committee of the Board
of Directors of the bank. That audit committee will delegate
power to make changes to the policy manual to the heads of the
various lines of business that handle the fiduciary
responsibilities of the bank. The audit committee will review
and approve the policy manual annually; however, while there
will be more than one head of the various lines of business, the
head of the overall trust and investment services likely will be
located outside Florida. Other than the above changes, the
anticipated actual day-to-day trust management and
administration duties will be handled identically as has been
the case. In other words, decisions concerning trust
administration and management that are booked by a particular

office in a particular state will be made by individuals located
in that state, and decision making authority, including
significant decisions concerning the trust, generally will not
cross state lines. If certain decisions involve senior
management of Single State Chartered Bank, then it is likely
that the ultimate approval or veto power will be outside of
Florida, where the principal executive office of the bank will
be located.

Effective January 1, 2000, the Florida bank holding company
group will merge into Single State Chartered Bank. The various
trusts of these entities will be administered and handled in the
same fashion as those non-Florida trusts described above. It is
presently contemplated that the trust administration and
management operations will continue to function in practice in
essentially the same way as they previously functioned with
respect to actual personnel involved in the decision making and
administrative process. Thus, for those trusts presently
administered in an office located in Florida, Single State
Chartered Bank personnel located in that office will continue to
make the day-to-day decisions over such trusts.

Requested Ruling

A. Whether existing trusts or estates for which a member
of the Non-Florida Bank Holding Company Group is the
trustee, executor or personal representative will
remain exempt from the Florida intangible personal
property tax following the merger and creation of
[Single State Chartered Bank on January 1, 2000]?

B. Whether any trusts accepted or managed and
administered by [Single State Chartered Bank on or
after January 1, 2000], will be exempt from the
Florida intangible personal property tax, provided
that [Single State Chartered Bank] is named as the
trustee or executor (or personal representative) and
the trusts and estates are administered in a state
other than Florida by persons located outside the
state?

C. Whether the fact that a person employed by [Single
State Chartered Bank] who is located in Florida
provides only investment advisory or management
services over the intangibles held in a trust or
estate administered by [Single State Chartered Bank]
in a state other than Florida does not adversely
affect the conclusion in (1) or (2) that the
referenced trusts are exempt from Florida's intangible
tax, provided that the person located in Florida has
no other power and does not otherwise manage or
administer the estate or trust for which such person
has investment management or advisory powers over
intangibles?

Discussion and Law

Section 199.052(1), F.S., requires that every person who
owns, controls or manages intangible personal property that has
a taxable situs in Florida must file an intangible tax return.
Section 199.175(1), F.S., states that intangible personal
property has a taxable situs in this state when it is owned,
managed or controlled by any person domiciled in this state on
January 1 of the tax year. As provided in Rule 12C-2.006(3),
F.A.C., the taxable situs of a trust is in Florida if the
trustee's usual place of business where the books and records
pertaining to the trust are kept is in Florida. If the trustee
has no principal place of business, then the taxable situs is
determined based on factors that focus on the residence of the
trustee and the state from which management and control of the
trust is conducted. Section 199.052(15), F.S., provides: "If a
bank or savings association, as defined in s. 220.62, F.S., acts
as a fiduciary or agent of a trust other than as a trustee,
intangible personal property of the trust shall not have a
taxable situs in this state pursuant to s. 199.175, F.S., solely
by virtue of the management or control of the bank or savings
association."

Department's Position

With respect to the annual intangible tax, your questions
are answered in the affirmative. This conclusion is limited by

the following. Single State Chartered Bank will be domiciled in
a state other than Florida. The persons employed by Single
State Chartered Bank, but who are located in Florida, will not
have legal authority to act with respect to the trust and will
not have any management or control over the trust's intangible
assets. The mere fact that a person located in Florida provides
investment advisory services over the trust's intangible assets
will not of itself constitute control or management of
intangible assets. As long as a Single State Chartered Bank
location outside of Florida is expressly specified as trustee,
and there is no management or control in Florida of the trust
assets, then the trust will be exempt from Florida annual
intangible tax. The estate of every Florida resident decedent
is subject to Florida annual intangible tax even if a person,
including a bank, that is not domiciled in Florida is named as
personal representative and even if management and control of
estate assets is outside of Florida.

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 advise is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request
and related backup documents are public records under Chapter
119, F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Baldan E. Sulker
Senior Tax Specialist
Technical Assistance & Dispute Resolution
Office of General Counsel

BES/mh