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What’s New Under the Sun in Florida with Trusts

December 30, 2022

It’s commonly known that Florida is hot; the average high in Palm Beach in December is 78 degrees. Perhaps that’s one of the main reasons Florida is also a “hot” destination for new residents. Between April 2020 and April 2021, Florida added approximately 330,000 new residents1.

Balmy weather isn’t the only advantage of living in Florida or relocating to the Sunshine State. Beginning in 2021, the Florida Trust Code began heating up with some legislative changes that may impact estate planning for Florida residents, including existing, new, full-time, and part-time residents. This article addresses four changes to Florida’s trust laws:

New Directed Trust Act. Effective July 1, 2021, Florida enacted the Florida Uniform Directed Trust Act which defines the responsibilities (and exposure) of trust directors and directed trustees2.

New Community Property Trust Act. Effective July 1, 2021, Florida’s Community Property Trust Act allows married couples to hold assets in a community property trust in order to achieve a full basis step-up* for property held in the trust upon the death of a spouse3.

Trusts can last longer. Effective for nonvested property interests in Florida trusts created on or after July 1, 2022, such interests must vest within 1,000 years of that interest’s creation. Florida’s perpetuities period was previously 360 years (for trusts created between July 2001 and June 2022)4.

New SLAT provision. Effective July 1, 2022, so-called “spousal lifetime access trusts” created under Florida law receive expanded creditor protection in certain limited circumstances5.

*A basis step-up refers to the adjustment in the cost basis of an inherited asset to its fair market value on the date of the decendent's death.

Sources:

1 Florida’s Office of Economic & Demographic Research, Demographic Forecast, July 18, 2022, Demographic Estimating Conference Florida Demographic Forecast (state.fl.us).

2 Florida Statutes Sections 736.1401-736.1416.

3 Florida Statutes Sections 736.1501-736.1512; Internal Revenue Code Section 1014(b)(6).

4 Florida Statute Section 689.225(g).

5 Florida Statute Section 736.0505.

 

Please see important disclosures at the end of the article.

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