USA – FLORIDA Law and Practice Contributed by: Jennifer Jordan McCall, Drew Reitz, Christine Tsai and Maria Williams, Pillsbury Winthrop Shaw Pittman LLP
2.6 Transfer of Assets: Vehicle and Planning Mechanisms There are various vehicles and planning mechanisms that can facilitate the transfer of wealth to younger generations in a transfer tax efficient manner. These include, but are not limited to the following: • Intentionally Defective Grantor Trust – an IDGT is an irrevocable trust created by one or more indi - viduals (the “grantor”) to hold assets usually for the benefit of the grantor’s family members, most commonly children and other descendants. The IDGT is a “grantor trust” meaning that the grantor pays all of the income taxes on the trust during their lifetime. The grantor can transfer appreciat - ing assets, such as stocks, real estate, or closely held business entities to the IDGT via a gift. The gift uses a portion of the grantor’s available gift exemption (currently USD13.99 million in 2025); however, if properly structured, it will result in no gift taxes due so long as the gift value is less than the available exemption amount. The gifted assets then grow in the IDGT gift and estate tax free for as long as they remain in trust. Certain jurisdictions, including Florida, permit trusts to exist for 1,000 years and can shield the assets from future transfer taxes during such term. These are referred to as “dynasty trusts”. • Grantor Retained Annuity Trust – a GRAT is a trust where the grantor transfers assets, often publicly traded stock, to the trust in exchange for an annual annuity payment for a specific term. Upon the expi - 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.
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