News & Commentary
FLORIDA INTANGIBLE TAX
NOVEMBER 5, 2004
At the present time, subject to certain exceptions, the State of Florida imposes a tax on Florida residents in the amount of one mil or $1.00 for each $1,000.00 of assets subject to tax that are owned or controlled on January 1st of each year. The annual exemption is $250,000.00 for individuals and $500,000.00 for a husband and wife filing jointly. A husband and wife with taxable intangible assets of $3,000,000.00 on January 1steach year will pay intangible taxes of $2,500 each year.
The Flite Trust is a technique where an individual or a married couple transfers assets subject to the tax to a short-term irrevocable trust to avoid the payment of the intangible tax. The transfer takes place prior to year end. The process reverses itself usually during the first quarter of the new year. The trust is designed to repeat the process annually. A family member may serve as trustee and the owner(s) of the assets receive all dividend and interest payments while the trust is active. There are also estate planning and disability provisions incorporated into the trust.
Flite Trusts are not for everyone even if you owe Florida Intangible Tax. An analysis needs to be made that considers the cost of preparing the trust; the trustee’s fee (if any); the likelihood the taxpayer will retain the assets subject to the tax and the net cost of the tax given its deductibility for federal income tax purposes.
If you would be interested in discussing this issue further please contact Investors' Security Trust Company at (239) 267-6655.
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