Florida’s new Community Property Trust Act is the subject of two excellent Florida Bar Journal articles by Orlando attorney Joseph Percopo (see here and here). But nothing quite beats an insider’s view on new legislation from the person primarily responsible for its development and passage, which in this case is Naples attorney Travis Hayes.
And it’s against that backdrop that I had the good fortune to attend the recent ATO conference where Travis shared his unique insights for estate planners considering this new tool. I was so impressed with Travis’ thoughtful explanations, practical advice, and sample trust clauses (always gold for practitioners), that I asked if I could help spread the word by posting his written materials on the blog. Being the good guy that he is, Travis graciously agreed.
Here’s an excerpt from Travis’ presentation entitled To Share and Share Alike: an Examination of the Treatment of Community Property in Florida and the new Florida Community Property Trust Act, which I highly recommend.
A vastly increasing amount of married couples are moving to the State of Florida to take up residency. Due to the high growth in the number of people moving to Florida, the state’s population surpassed 20 million in 2015, and the state is adding over 1,000 people per day. And those statistics are from the pre-COVID population boom in Florida! In today’s ever-increasing mobile society, many of these couples may have come to Florida from a community property jurisdiction or may have acquired property in a community property jurisdiction at some point during their marriage.
With the increased emphasis on income tax planning caused by the higher estate and gift tax exemptions, as well as portability, many practitioners are revisiting the issue of “stepped-up” basis, which has favored joint owners who live in community property states. Passage of the Patient Protection and Affordable Care Act of 2010, the American Tax Payer Relief Act of 2012, and the Tax Cuts and Jobs Act of 2017 have made income tax planning, specifically with respect to capital gains, an issue to be brought to the forefront of any estate planning strategy, regardless of net worth. It has therefore become even more important for attorneys in Florida to be able to identify and determine the community property status of Florida couples’ assets, and to examine the treatment of community property for Florida residents under Florida law.
Florida has also now taken the monumental step of enacting legislation which will permit the creation of community property trusts in our state. This is a very significant development in the treatment of community property under Florida law. Every trusts and estates practitioner in Florida should be familiar with the provisions of the Florida Community Property Trust Act, what type of clients would benefit from the implementation and usage of Florida Community Property Trusts, and the situations in which Florida Community Property Trusts should be recommended and considered. If you want to dive right into the Florida Community Property Trust Act, the discussion of the Act is contained in Section VI of this outline. But first off, the outline contains a detailed discussion of community property and its current treatment under Florida law, as it is important to have a working knowledge of those subjects if you want to become a Florida Community Property Trust expert!