Steps for Moving Your Trust to Florida Successfully

You might not think of your trust as being tied to a particular place. However, when someone creates a trust, they usually set the situs in the state where they reside.

A “situs” for a trust is similar to a domicile for a person. It’s the location where the trust is situated for legal and tax purposes. When someone moves to a new state, they often choose to move their trust with them.

Are you thinking about moving your trust to Florida? Relocating a trust created in another state is entirely possible, but it may be more complex than you think.

When you move from one state to another, you aren’t required to move your trust with you. However, transferring trust administration to Florida could make financial sense.

Why? The answer is simple: Florida has no state income tax, no inheritance tax, and no estate tax. Only a handful of states offer this triple tax advantage, so in most cases, Florida offers a more favorable tax treatment than the grantor’s former home state. (The grantor is the person who created the trust.)

Learning and adhering to Florida trust relocation requirements may seem like one more tedious hassle, especially when you’re already dealing with a logistically complicated move. However, if you don’t move the trust, your previous state government might claim the right to tax the assets within it. Having trusts in multiple states can also make estate administration needlessly stressful for your heirs.

Moving an out-of-state trust to Florida is legal. However, you can’t just make a simple transfer of the assets. The process can be complicated, and it’s very easy to make mistakes.

The importance of working with an estate planning lawyer or law firm cannot be overstated. If you follow your attorney’s recommendations, you can be confident that the move was properly executed and your trust has been legally established in Florida.

When you move a trust to Florida, you have multiple options for the method of transfer.

This option is relatively straightforward, but it’s only possible if you have a revocable trust.

This is another method that is limited to revocable trusts. You’ll need to revoke your out-of-state trust and then establish a new one in Florida.

Although irrevocable trusts generally cannot be changed, there are select circumstances where they may be. One potential option is judicial modification.

Suppose that when you created your trust, you did not anticipate that you would move to Florida in the future. In this situation, you could file a petition with the court in your current state, explaining the situation and asking to modify the trust.

In some cases, an irrevocable trust agreement can be changed outside of court. If the grantor of the trust and all trust beneficiaries agree to modify the trust, they may do so by signing a nonjudicial settlement agreement.

Usually, the services of an estate planning attorney are necessary for this method of transfer. Your lawyer can verify that the settlement agreement is compliant with Florida law.

If you are a new Florida resident looking to transfer your trust, decanting could be an option. This is when you create a new trust in Florida and then pour the assets from the old trust into the new one.

This method may be practical if you have an existing trust in Florida and want to combine it with a trust from another state. While a merger may sound simple, it will probably involve a good bit of administrative work. A probate attorney can draft all necessary paperwork and make sure the merger is done properly.

If you have a trust moving to Florida, choosing the transfer method is just one step. Our attorneys can explain the finer details of the move, but it may still be helpful to understand the general steps to relocate a trust to Florida.

Before you get started, look over the trust document. The type of trust is a major factor in determining the difficulty of the move. If you have a revocable living trust or another kind of living trust, the process will likely be simpler. In contrast, irrevocable trusts cannot usually be changed without court intervention.

The trust document may also have important guidance. Some trusts have explicit instructions for changing the situs.

Before you take any steps toward moving your trust, speak to your estate planning attorney and a tax advisor. Moving a trust to Florida is often wise from a tax standpoint, but a tax professional can offer advice regarding your specific situation.

Which method of transfer is in your best interests depends on the terms of the trust, the assets within it, your overall financial plan, and several other factors. When you work with our estate planning law firm, we’ll take the time to discuss your options and help you choose the right one for your situation.

Once you’ve chosen a transfer method, we can execute the change for you, file any necessary paperwork, and notify beneficiaries, your personal representative, and any other interested parties.

You may need to choose a new trustee. If your current trustee is a friend or family member living in another state, they might be able to remain in that role. However, if a financial institution from your previous state is currently the trustee, you may need to name a new one.

In Florida, financial institutions and other businesses may only serve as trustees if they were incorporated under Florida law.

While you are moving your trust to Florida, you should also update your estate planning documents. This is one of the key aspects of establishing yourself as a Florida resident, and it also ensures that your estate plan is consistent.

A trust is an incredibly useful estate planning tool. Once you’ve moved your trust to Florida, you might want to transfer property into it. Transferring a Florida home or other piece of real estate is a multistep process.

The first step in transferring real property into your trust is drawing up a new deed. This may take the form of a warranty deed or a quitclaim deed.

A warranty deed guarantees that the property has no liens, but it may require a title search and title insurance. Typically, a title insurance company will base the cost of insurance on the value of the property.

If you want to avoid the challenges that come with getting a title insurance policy, you might choose a quitclaim deed instead.

Quitclaim deeds don’t offer the same protections that warranty deeds do, but they are often sufficient for transferring property into a trust (or otherwise transferring ownership interest). When you’re placing property into your trust in order to avoid probate, there’s no need for title insurance or a warranty.

Deed preparation can be a painstaking process. The new deed must include a proper legal description of the property that exactly matches the legal description in the original deed. If the property is co-owned and you’re only moving your share to the trust, the deed must specify that.

For new quitclaim deeds or warranty deeds to be legally valid, they must be notarized. This means that you must sign and date the deed in front of a Florida notary and two witnesses. The deed will then be recorded in the county office.

If you transfer property in Florida using a deed, you must pay what’s called a “documentary stamp tax.” With the exception of Miami-Dade County, all counties in Florida charge $0.70 per $100 in property value. You’ll need to pay the fee at the county clerk’s office.

When you transfer property to a trust, your property taxes and homeowners’ insurance costs shouldn’t change. However, you should immediately tell your homeowners’ insurance provider about the change in ownership status.

You should also inform your title insurance company. You might have to obtain an endorsement on your title insurance policy when you transfer property into a trust.

Florida is known for beautiful beaches and sunny weather, but it also offers some of the best tax and asset protection advantages in the country.

Florida’s homestead laws dramatically reduce property taxes on most primary residences. The state’s homestead exemption can reduce your home’s assessed value by up to $50,000 for property tax purposes.

Additionally, Florida’s homestead exemption protects your primary home from forced sale by creditors. Florida statutes set specific acreage limitations for properties that qualify as homesteads, but there is no limit to the home’s value.

Whether you’re a retiree or currently working, you’ll benefit from Florida’s lack of state income tax. Wages, salaries, retirement account distributions, and pensions aren’t taxed at the state level.

Florida does have an income tax for corporations. However, that tax does not apply to pass-through entities like most LLCs, S corporations, and partnerships.

Some states impose a state-level estate or inheritance tax, but Florida does not. At the federal level, the lifetime gift and estate tax exemption is $13.99 million. Most Floridians will never have to deal with estate taxes.

If you modify an existing trust, you can generally choose to amend or restate it. Amending a trust involves making simple, isolated changes. Restating it, by contrast, effectively involves reworking the entire trust.

When you move an out-of-state trust to Florida, restating it may be the better choice. State laws governing trusts can vary, and if your trust isn’t in compliance with Florida laws, parts of it may be legally invalid.

There are many steps involved in moving a trust to Florida, so it’s very easy to make mistakes. These are a few common pitfalls to avoid.

When you transfer an asset (like a bank account or a piece of real estate) to a trust, you must retitle that asset in the trust’s name. Failing to do this might sound like a trivial mistake, but it can come with significant consequences. If assets in the trust aren’t properly titled, they might have to go through probate.

If you amend or restate a trust in a new state, you must explicitly change the legal situs. If you don’t, your previous state could still claim jurisdiction for tax purposes.

Any trust document must be specific to Florida. For example, if you place your home into the trust, the document must include special provisions in order to preserve the homestead property tax exemption.

If you’re not quite sure how to move your trust to Florida, count on our team for legal help. Our skilled attorneys can work with you to prevent unforeseen tax implications, costly errors, hassle, and confusion.

If you’ll be moving to Florida soon and need to transfer your trust administration, William C. Roof Law Group is ready to assist you.

We can help you develop a transfer plan aligned with Florida law, establish your trust in Florida, and transfer property into it. We’ll also assist you with any other estate planning needs once you arrive.

To learn more about how we can make moving your trust to Florida as streamlined as possible, contact us today!