FLORIDA COMMUNITY PROPERTY TRUSTS
A POWERFUL ESTATE PLANNING TOOL
FOR FLORIDA MARRIED COUPLES
Florida law now allows married couples to voluntarily transfer certain assets into a Community Property Trust. This planning strategy can help reduce estate taxes, protect assets, and provide greater control and flexibility for your family.
Key Benefits
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Potential full basis adjustment at the first spouse’s death
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Potential reduction of later capital-gains tax
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Equal one-half ownership classification
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Flexible management provisions
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Coordination of appreciated marital assets
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Potential probate avoidance when structured as a continuing trust
What is a Florida Community Property Trust?
A Florida Community Property Trust (CPT) is a trust created by a married couple that allows certain assets held in the trust to be treated as community property for federal tax purposes, even though Florida is not a traditional community property state.
The trust may be revocable or irrevocable, depending on the couple's estate planning objectives and the terms of the trust. Assets transferred to the trust are treated as community property if the trust satisfies the requirements of the Florida Community Property Trust Act.
Each spouse owns an undivided one-half interest in the community property held by the trust. Upon the death of the first spouse, the trust can provide for the surviving spouse while preserving valuable tax benefits, including the potential for a full step-up in income tax basis of qualifying appreciated assets.
FLORIDA LAW AUTHORITY
Florida Statute Chapter 736 authorizes married couples to create Community Property Trusts and elect to treat trust assets as community property for estate planning and tax purposes.
How It Works
CREATE THE TRUST
TRANSFER ASSETS
TREAT AS COMMUNITY PROPERTY
Married couple establishes
a Florida Community
Property Trust.
Assets, such as real estate, investments, and/or business interests are transferred into the trust.
Each spouse is treated as owning an undivided one-half interest in the trust propety.
BASIS STEP-UP
Qualifying trust property may receive an income-tax basis adjustment on both spouses’ one-half interests upon the death of the first spouse. A second basis adjustment may apply to property included in the surviving spouse’s estate at the surviving spouse’s later death.
Is a Florida Community Property Trust
Right for You?
A Community Property Trust is not the right solution for every married couple.
It is generally best suited for couples who:
✓ Have significant assets
✓ Want to protect assets from creditors or lawsuits
✓ Wish to provide for a surviving spouse while preserving assets for children or other beneficiaries
✓ Are concerned about estate or capital gains taxes
✓ Want greater control over how and when assets are distributed
IMPORTANT CONSIDERATIONS
• The trust must comply with the requirements of the Florida Community Property Trust Act to qualify for community property treatment.
• Proper funding of the trust is essential. Assets not transferred into the trust generally will not receive the intended benefits.
• Community Property Trusts should be reviewed periodically as your assets, family circumstances, and tax laws change.
• Because these trusts involve sophisticated federal income tax planning, they should be prepared by an attorney experienced in Florida estate planning and trust law.
RELATED ESTATE PLANNING RESOURCES
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Florida Probate Overview (because every estate plan eventually leads to probate or trust administration)