On July 1, 2021, Florida’s new Community Property Trust Act became effective. The Community Property Trust Act (or “CPTA”) allows married couples in Florida to create a valid community property trust (“CPT”) and transfer property to that trust.
Having a CPT lets married couples obtain community property tax benefits which are otherwise not available under Florida law.
But not just any trust will do.
To qualify as a CPT, the trust created must contain four essential elements.
4 Essential Elements of a Florida Community Property Trust
The essential elements of a Florida Community Property Trust are:
- The Trust Must Contain an Express Declaration
To qualify under the new law, the trust must expressly declare that it is a community property trust within the meaning of the CPTA.
- A Qualified Trustee Must be Named in the Trust
Every trust must have a trustee, and the CPT is no different.
To qualify as a community property trust in Florida, the trust must name a qualified trustee (this can be one or both spouses) to administer the trust.
This requirement is not as restrictive as it might at first appear. That’s because essentially, anyone residing in Florida can serve as trustee or co-trustee of a community property trust.
- The Trust Must Be Properly Executed
To be valid, a CPT must be executed with all the same formalities required for executing a Last Will and Testament (“Will”).
This means that both spouses must sign the trust instrument, and their signatures must be witnessed and notarized.
- The Trust Must Contain a Statutory Warning
The final requirement for creating a valid community property trust in Florida, is that the trust must contain language regarding the legal consequences of signing a community property trust instrument.
This language must appear at the beginning of the trust and be conspicuous.
In addition, the language must follow the statutory language of the CPTA itself. While it is not necessary to quote the actual language used in the CPT, the warning must mirror the statutory warning very closely.
Passage of the CPTA is an exciting advancement for estate planning in Florida.
But while the new law makes it easier for married couples in Florida to take advantage of the tax benefits of community property, it is critical that the trust itself comply with the law’s specific requirements.
To learn more about Florida’s CPTA, contact an experienced estate and probate attorney.
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