Florida Revocable Trust
Many owners of offshore companies which hold real estate assets (or shares of companies which in turn own Florida real estate) or have banking or brokerage accounts in Florida may be able to benefit from the creation of a Florida Revocable Trust.
This trust provides that the shares of the offshore company are issued to a trust under which the maker of the trust or a member of his family is also the trustee. The trust is revocable so that it can be changed or modified at any time and in case of the maker’s death provisions are made for successor trustees to act and carry out the maker’s desires. For example, upon the maker’s demise all of the assets might be divided among the maker’s family and the trust terminated or perhaps the assets continue to be held in trust for the maker’s children by another family member until they reach certain ages.
The main advantage of this trust is cost and flexibility. The maker controls the offshore company which owns the assets and can sign all documents relating to these assets. The trust can be amended by a simple document as family circumstances change and there are no trustees or annual fees for the trust as the maker himself or a family member is the trustee. Thus, the only cost is the initial legal cost to create the trust.
The trust acts like a will and is a private document. It is not registered publicly but must be “provided to the financial institution where the offshore company holds accounts under their know your customer policies” so they will have in writing who is the beneficial owner of the offshore company’s shares. On the demise of the maker, by the institution’s possession of a copy of the trust a smooth transition should be assured. Further, as long as the Trustee is not a United States resident the trust for United States tax purposes is considered a foreign trust.
This trust, however, may not be compliant with the forced heirship and creditor laws of civil law countries since it is revocable and therefore when dispositions are not to family members (or compliant with those countries’ laws) or when there are creditors who might challenge the trust, another form of trust should be considered. Further, Florida law requires a nexus with the State of Florida for its laws to be applied, thus, this type of trust under Florida law cannot be utilized where the offshore company holds only assets not connected to Florida. Other types of trusts are, of course, available and should be utilized under these circumstances
Prior to adoption of this type of trust the maker should review his or her entire estate plan with competent local and international counsel and his financial advisers.
