The New Florida Family Trust Company Act

The Florida Family Trust Company Act was signed into law in 2014, allowing for the creation and regulation of family trust companies (FTCs) in Florida. FTCs provide trust services for family members and also offer investment and administrative services. Before this law, there was no way for FTCs to operate in Florida. Existing FTCs need to apply for a license or register with the state by the end of 2015 or stop operating. A new bill was supposed to fix some issues with the law but didn’t pass in time. All existing Florida Trust Companies (FTCs) must comply with a new law by the end of the year or stop operating. If they don’t want to become licensed under the new law, they can register as unlicensed FTCs by providing some basic information and paying a $5,000 fee. They also have to promise not to do certain things, and keep at least $250,000 in cash or treasury obligations. For existing family trust companies (FTCs) and families looking to start new unlicensed FTCs, the new regulations could be a cause for concern. Unlicensed FTCs will have to undergo mandatory examinations by the Office of Financial Regulation (OFR), which could be intrusive. The “glitch bill” would have exempted unlicensed FTCs from these examinations, but it did not pass. Meanwhile, FTCs that want to become licensed will face closer scrutiny during the application process. Most FTCs are expected to stay unlicensed to avoid the extra supervision, but some may choose to become licensed for various reasons. In order to become a licensed FTC, the company needs to apply with the OFR and pay a $10,000 fee. The application requires the company to provide a lot of information about its owners and managers, as well as details about its services. The OFR will investigate the company to make sure it meets certain requirements. The company also needs to have a certain amount of capital and get insurance to protect against bad behavior by its managers. These rules don’t apply to unlicensed FTCs. A committee created a law to attract big family businesses to Florida. The law makes it easy for families to set up their own financial companies in Florida. This would bring more money to Florida and create jobs for people living there. It would also help the state as a whole. It’s important for the FTC and the state of Florida to establish the FTC’s location in Florida. This is because the situs of the trust company, or where it does the majority of its business, determines which laws apply to it. The glitch bill aims to fix some issues with Florida’s FTC legislation, making it more attractive for trust companies to operate there. The bill would make it easier for unlicensed FTCs to comply with regulations and ensure that licensed FTCs are properly regulated. The goal is to make Florida a top choice for trust companies. The Office of Financial Regulation (OFR) in Florida supervises banks and trust companies. They are required to conduct regular examinations of unlicensed family trust companies (FTCs) to make sure they are following the rules. However, many FTCs prefer not to be regulated, so they might go to other states like Nevada or Wyoming where they won’t be examined. The law says that family trust companies (FTCs) don’t need to be regulated unless they’re doing something wrong. This is because FTCs are like family offices, which are not regulated by the government. The law should be changed to remove the requirement for regular inspections of unlicensed FTCs in order for Florida to attract more FTC business. Licensed Family Trust Companies (FTCs) in Florida may choose to be regulated by the Office of Financial Regulation (OFR) for various reasons, such as family governance issues and tax considerations. The “glitch bill” would have increased regulation for licensed FTCs, but most would likely seek OFR supervision to avoid stricter regulation under federal law. Many FTCs become licensed to avoid regulation by the Securities and Exchange Commission (SEC) as investment advisers. The SEC has specific rules for family offices, and those that don’t meet the criteria would have to follow burdensome SEC regulations. Families who can’t set up their family offices within the SEC exemption may try to find other ways to avoid SEC regulation. One option is the bank exemption, which means they don’t have to register with the SEC. The Family Trust Company Act was created to help these family trust companies qualify for the bank exemption. However, it’s now thought that these companies need to be regulated in a similar way to public trust companies to qualify for the exemption. Public trust companies are examined more frequently and in more detail than licensed family trust companies, so it’s harder for family trust companies to qualify for the bank exemption. The glitch bill changed the way small financial companies are examined and regulated. It made the exams less frequent, but more thorough. It also clarified that these companies should only serve family members and their related interests. These changes are meant to make the exams and regulations more fair and practical for small companies. Florida is a great place for family trust companies because of its good tax and trust laws. The state has laws in place to make it easy for companies to set up and operate there. There was a bill called the “glitch bill” that was meant to make the laws even better for these companies. The bill passed without any opposition and will likely be considered again in the next legislative session. This is a list of laws in Florida related to family trust companies. The laws cover things like exemptions, registration, and licensing. The author is a tax law expert who played a role in drafting these laws. The article is published on behalf of a legal section in Florida.

Source: https://www.floridabar.org/the-florida-bar-journal/the-new-florida-family-trust-company-act/