Charlotte, NC asked in Tax Law and Estate Planning for North Carolina

Q: Can a non-resident of Florida set-up a living trust in Florida to avoid state taxes on investments within the trust.

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1 Lawyer Answer
James L. Arrasmith
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  • Estate Planning Lawyer
  • Sacramento, CA

A: Setting up a living trust in Florida as a non-resident solely to avoid state taxes on investments within the trust may not be a viable strategy. While Florida does not impose state income tax on individuals, there are other factors to consider, such as residency requirements and potential tax implications in your home state. Additionally, establishing a living trust for the primary purpose of tax avoidance may raise legal and ethical concerns and could potentially lead to scrutiny from tax authorities.

It's important to consult with a qualified attorney or financial advisor who is familiar with both Florida state tax laws and the tax laws of your home state. They can provide personalized guidance and advice based on your individual circumstances, including your residency status, the nature of your investments, and your overall financial goals. By seeking professional assistance, you can make informed decisions and develop a comprehensive estate planning strategy that complies with all applicable tax laws and regulations.

In addition to tax considerations, it's essential to evaluate the broader implications and objectives of setting up a living trust in Florida. A living trust can offer various benefits, such as asset protection, probate avoidance, and privacy, but it should be established for legitimate estate planning purposes rather than solely for tax avoidance. By working with knowledgeable professionals and carefully considering your goals and circumstances, you can create an effective estate plan that meets your needs while adhering to legal and ethical standards.

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