USA – FLORIDA Law and Practice Contributed by: Jennifer Jordan McCall, Drew Reitz, Christine Tsai and Maria Williams, Pillsbury Winthrop Shaw Pittman LLP
7.2 Expeditious Citizenship Florida does not have an expeditious citizenship mechanism. 8. Planning for Minors, Adults with Disabilities and Elders 8.1 Special Planning Mechanisms It is common in Florida to transfer assets to a per - son with a disability through a special needs trust (“SNT”). An SNT can permit certain distributions to a beneficiary without disqualifying the beneficiary from government benefit assistance. Careful drafting of the SNT is a necessity. It is also common to transfer assets to minors through the Uniform Transfers to Minors Act which permits transfers to a custodian to hold on behalf of the minor until the minor reaches a certain age, which can be up to 25 years of age in Florida. The main benefit of a UTMA account is its simplicity, but it comes with the drawback that the child will receive all of the funds at the specified age. Generally, trusts are better – albeit more costly – mechanisms for such planning, because it is possible to keep the assets in trust for long periods of time, thus maximising gift and estate tax benefits as well as creditor protection. A trust must contain specific provisions to qualify to receive “annual exclusion” gifts – exempt from gift tax – and can include IRC Section 2503 provisions to so qualify, followed by continuing trust language to protect the assets for the beneficiary after they reach age 21. 8.2 Appointment of a Guardian Guardianship A guardian is appointed by the court to make personal and/or financial decisions for a minor or adult with disabilities. Florida law requires guardians for minors in the event of their parents’ death/incapacitation, or if a child receives proceeds exceeding a statutory amount. The removal of an individual’s rights simultaneously creates the court’s duty to protect that individual. The appointment of a guardian is subject to court over -
beneficiaries. Subject to certain exceptions, the trus - tee must inform all qualified beneficiaries about: i) the investment in trustee-owned or controlled instru - ments; ii) the specific investment instruments; and iii) the relationship between the trustee and any affiliate that controls these instruments. However, effective 1 January 2025, Florida trustees and personal representatives administering trusts and estates will operate under the new rules established by the Florida Uniform Fiduciary Income and Principal Act, which, among other items, provides fiduciaries with greater discretion in investment strategies and payout strategies to beneficiaries. 7. Citizenship and Residency 7.1 Requirements for Domicile, Residency and Citizenship To establish domicile in Florida, an individual must generally show, through clear and convincing evi - dence, the intent to remain indefinitely in the state. An individual’s intent to indefinitely remain in Florida is generally demonstrated through a facts and circum - stances analysis, which includes, but is not limited to, filing a Florida Declaration of Domicile. Typically, an individual can establish new ties to Florida by severing ties with the individual’s old state. The old state can have additional factors and considerations, which can be more onerous than Florida’s domicile requirements in order for the individual to severe ties. For example, New York has a statutory test and several factors that it weighs up when considering whether an individual is domiciled there. Terminating ties to the old state and establishing ties in the new state include taking action such as updating: voter registration, driver’s licence, clubs, church or synagogue, veterinarian, doctors, schools for children, and determining the relative size and value of residences between the two states. Severing ties with an old state and establish - ing Florida domicile is often a complicated issue for high net worth individuals without proper tax planning, and can be the reason for ongoing state audits by the old state.
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