USA – FLORIDA Law and Practice Contributed by: Jennifer Jordan McCall, Drew Reitz and Christine Tsai, Pillsbury Winthrop Shaw Pittman LLP
ration of the GRAT’s term, any appreciation above the annuity payments passes to the grantor’s family, or trusts for their benefit, gift and estate tax free. • Charitable Lead Trust – a CLT is a type of “split- interest trust” that permits a grantor to hold assets in trust for the benefit of a charity for a certain period. After that term expires, the assets pass to the grantor’s family members, likely in further trust. A CLT permits a smaller gift to the family because the valuation of the gift is reduced by the value of the charitable interest. Also, the grantor may also qualify for an income tax charitable deduction. • Charitable Remainder Trust – a CRT is very similar to a CLT, but the family members are beneficiaries for a term (which can be a beneficiary’s lifetime) and the balance passes to charity. The tax benefits are similar to a CLT. • Qualified Personal Residence Trust – a QPRT is a trust designed to transfer a personal residence. If all qualifications are met, the personal residence is transferred into a QPRT and the grantor will be per - mitted to live in the residence for a specified term. Upon the termination of the term, the QPRT dis - tributes the residence to the grantor’s family, who may choose to continue to rent the residence to the grantor. Because of the term interest, the value of the gift for gift tax purposes is substantially reduced and generally can be a tax-efficient means of transferring assets to younger generations. Different states offer advantages, such as the long trust term of 1,000 years permitted by Florida law and its lack of income tax, but have disadvantages, such as accounting requirements which can be costly and time-consuming, and disclosure to beneficiaries which the grantor may wish to avoid so as not to dis - courage a beneficiary’s productivity. 2.7 Transfer of Assets: Digital Assets Digital assets, such as email accounts or cryptocur - rency, are treated as personal property for succession purposes. Accordingly, digital assets will pass along with a decedent’s other personal property unless specifically disposed of otherwise through a will or revocable trust.
Notwithstanding the succession of digital assets above, access to digital assets by a fiduciary is gov - erned by the Florida Fiduciary Access to Digital Assets Act. It is important to plan for digital assets as part of one’s own estate planning through a competent legal advisor. Consider giving explicit instructions for access to one’s digital assets, including careful advis - ing of passwords as part of the estate plan. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities There are various types of trusts used in estate plan - ning in Florida. The most common is a “revocable trust” which is designed to avoid the assets of the grantor from pass - ing by means of a court-supervised process of estate administration, which can be expensive, and which is public, called “probate”. By avoiding probate, the assets in a revocable trust are more efficiently admin - istered and retain privacy for the family. In addition, “irrevocable trusts” are used, many of which were described in 2.6 Transfer of Assets: Vehicle and Planning Mechanisms . These trusts per - mit not just planning to avoid probate, but also can achieve valuable income and/or gift and estate tax advantages, as previously discussed. There are also “private foundations” which many families choose to create for fulfilling the charitable inclinations of the family. These entities provide many tax benefits, but also come with administrative costs and require detailed adherence to various regulations. Depending upon the value of the assets involved and the family’s goals, some families choose to instead conduct their charitable planning by transferring assets to Donor Advised Funds (DAFs) instead of pri - vate foundations due to the relative simplicity of DAFs. DAFs are charitable funds held with an institution. The grantor can appoint themselves, during a grantor’s lifetime, or family members upon the grantor’s death
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