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Florida leaders give more love to family trusts of the super-rich


In defending their work, politicians love to repeat a quotation attributed to Otto von Bismarck: “If you like laws and sausages, you should never watch either one being made.” Those words of wisdom apply with equal force to certain Florida trust legislation, as reported in an fascinating investigative piece by Jeffrey Schweers entitled Florida leaders give more love to family trusts of the super-rich (subscription required). (Full disclosure, I’m quoted in the piece.)

If you make your living drafting trusts in Florida or advising the families that create them, you’ll want to read this report. The back-story on some of our trust legislation may not be appetizing, but it’s certainly enlightening. Here’s an excerpt:

TALLAHASSEE — Florida has long been a tax haven, but new trust laws enacted over the past three years friendly to the heirs of the Walmart fortune and other families will make the state even more accommodating to the uber-rich looking to hide wealth and avoid taxes for generations to come.

The money at stake is astronomical.

The largest transfer of intergenerational wealth is about to occur over the next few decades, with an estimated $30 trillion to $68 trillion to be handed down, said Juan C. Antunez, a real estate and trust lawyer in Miami. With a maximum 40% tax on inherited wealth over $12.9 million, there is a potential loss of as much as $27 trillion in federal tax revenue.

“The jurisdictional competition among U.S. states to capture as much of that trust business as possible is fierce, and for the bankers and professionals who make a living working with those trusts the stakes are high,” Antunez said. “How high? Think billions of dollars.”

With these laws, Florida climbs up in the ranks of the dozen or so highly competitive states that are considered friendly to the trust industry, according to a study by the National Institute for Policy Studies. Currently, an estimated $5.6 trillion is held in trust and estate assets in the U.S.

“Trusts are one of the major mechanisms that ultra-high-net-worth families around the world use to cement their fortunes into hereditary wealth dynasties,” the study said. “One type of trust, the dynasty trust, is such a tool, as these trusts can last for centuries, or sometimes forever.”

Those enabling states have three common ingredients, the study said: Low or no taxes, secrecy and trust longevity. “These states pass laws to cut or abolish taxes or hide trust records from prying eyes,” the study said.


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