Florida Residents Giving Their Mansion Away?: a look at Florida personal residence trusts
Why in the world would a wealthy Florida resident give away their million dollar Florida house right now? Why are Florida probate lawyers and Florida estate lawyers recommending you do that with your beautiful mansion in Palm Beach, Manalapan or Hypoluxo? Are you willing to give up ownership and control of your house for the benefit of your children or grandchildren? The truth is that Florida trusts set up to hold and receive your Florida mansion and Florida residence –during YOUR LIFE (right now, not after you die) — have been around for a while. Personal residence trusts, and qualified personal residence trusts, called “QPRTs”, have been one of many estate planning devices, or as some Florida probate lawyers might refer to them, “gimmicks”, to try to save you estate taxes. The “problem” (challenge) is that you, a Florida resident, have to give your mansion away. Yes, that’s right. You give away that beautiful John Volk house in Palm Beach, or the contemporary house on Star Island in Miami with views of Biscayne Bay and the Miami skyline. Why in the world would a Florida millionaire give away their residence during life? Why not give it away at death, when you are gone? There’s only one answer: to maybe –maybe — save estate taxes sometime in the future. Is saving estate taxes for your Florida estate and Florida beneficiaries worth it? My suggestion: perhaps but don’t let the tax “tail” wag the “dog.” Without going into great detail about how you might, or might not, save estate taxes, I will leave it to the great Florida tax lawyers from Palm Beach Gardens to Ft. Lauderdale and Aventura to explain the specifics to you. But here’s what I want you to understand: you really give your mansion away. You sign a deed. It’s recorded. It’s irrevocable. Your Florida residence goes into a trust. You don’t own it anymore. And while you can be the trustee of your QPRT or Florida personal residence trust, you only get to use it according to the Florida trust’s terms for a stated (limited) number of years–a term for, say, 5 years, 10 years, 20 years). Where do you live after the term? Somewhere else. Or, you could rent the residence from the trust? Rent your own Florida mansion? Yes. Remember, you don’t own it anymore: the trust does. You “deeded” the Florida residence away, to the trust. Who owns it ? The trust does. Who gets the Florida mansion after the trust term? Your family members. ……. who you have to pay rent to (to the trust) if you want to use your Florida mansion after the trust term. Here’s the short of it: people LOVE to save taxes. Probate lawyers in places like Boca Raton and Delray Beach and Boynton Beach spend hours explaining these devices to you to save you estate taxes. They do a great job. I understand that. But very few people actually want to give away their Jupiter mansion or Ft. Lauderdale on-the-water house . Florida residents don’t want to give away their Florida house when they fully understand that they have to give up control (and ownership of the Florida house). There are many, many ways, that are actually more simple and less costly, to save estate taxes, gift taxes and generation-skipping taxes WITHOUT giving away your house. Call your Florida estate attorney or your Florida trust attorney and discuss the many ways to shift wealth and save estate taxes. Or email michelle@pankauskilawfirm.com at our firm.