Florida Banking September 2022

TRUST BANKING

BY KELLY O’KEEFE, SHAREHOLDER, AND CHRISTOPHER CLARK, ASSOCIATE, STEARNS WEAVER MILLER TIPPING THE SCALES WITH FLORIDA COMMUNITY PROPERTY TRUSTS: DO THE REWARDS OUTWEIGH THE RISKS?

M igration from high-tax states like New York and California to low-tax states like Texas and Florida is surging. Florida saw its highest surge of net migration from 2020 to 2021, and 2022 is on track to be even higher. This “great migration” has significantly impacted real estate values for single-family residences across Florida. Key indicators show average single-family homes across Florida have appreciated between 15.4 and 33.1

weigh the potential risks and rewards associated with this tool and determine whether the scales tip in favor of creating a community property trust in the couple’s given circumstances. This article addresses some of those risks and rewards. To afford a better understanding of them, we begin by explaining how community property states and non-community property states differ. What is Community Property?

percent (area dependent). In addition, consumers are facing historic levels of inflation and economists are debating whether a recession has started.

“ FLORIDA’S PASSAGE OF THE FLORIDA UNIFORM DIRECTED TRUST ACT AND THE FLORIDA COMMUNITY PROPERTY TRUST ACT HAS POSITIONED FLORIDA AS AN ATTRACTIVE DESTINATION FOR GENERATIONAL WEALTH PLANNING. ”

There are currently nine community property states, which deem all property acquired during marriage, with limited exceptions, to be owned one-half by each spouse, regardless of how the property is titled. There are many consequences of this legal designation, one of them being that a deceased spouse in a community property state may devise his or her half interest in the community property at death to someone other than the surviving spouse, regardless of how the property is titled. I n a non - c ommun i t y property state like Florida,

While the current economic outlook is unsettled, Florida cont i nue s to i nt roduce l eg i s l a t i on i nt ended to preserve wealth and minimize taxes for current and new Floridians. Florida’s passage of the Florida Uni form Directed Trust Act and the Florida Community Property Trust Act has positioned Florida as an attractive destination for generational weal th planning, which now, due to an all-time-high federal estate tax exemption, often focuses on maximizing income tax basis. We explored Florida’s Uniform Directed Trust Act in a prior article, and in this article we focus on the Florida Community Property Trust Act (FCPTA). While the FCPTA is intended to give current and new Floridians the opportunity to secure certain tax benefits afforded to married couples in community property states, it is important that each couple

how the property is titled generally will control how the spouses may convey it during life and at death. Property may be titled in multiple ways, and in Florida most married couples hold property as tenants by the entireties. Property held in this way will pass to a surviving spouse upon the death of the first spouse and during life retains protection from the individual creditors of either spouse.

20 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING