TALLAHASSEE, Fla. — 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.
Such trusts are crucial to keeping trillions of dollars out of the federal treasury, enough to pay down a big chunk of the national debt or spend on education, social services or other government programs.
The three new laws give Florida a more competitive edge in the trust and estate management business, and protect the personal information of wealthy families, bill sponsors said.
They also make it harder to scrutinize the activities of family trusts to know how much property and money are being transferred, a lack of transparency that can hide assets.
Opponents, including the First Amendment Foundation and real estate and trust lawyers, said they created an elite, secret court system where the wealthiest families can air out their affairs without scrutiny, promote dynasty trusts that don’t have to pay taxes for 1,000 years, and protect trustees from adverse consequences.
“There is that concern that the more you exempt anybody from public accountability you’re going to have a forum for potential bad actors,” said Sarah Butters, a Tallahassee lawyer and chair of the Florida Bar’s real estate section.
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.”
There is no Florida residency required for the trustees of family trusts and no tax or economic benefit other than what the bankers and lawyers receive in payments.
Only 24 family trust companies are registered with the state Division of Management Services since the family trust company law was passed in 2014, but they represent some of the wealthiest families in the United States and Florida. Besides the Waltons of Walmart, they represent owners of the Outback Steakhouse and Bloomin’ Onion brands and the family of Ron Perelman, the former head of Revlon Inc.
Also on the list is the Greenway Family Trust, which manages the wealth of the owners of the Orlando-based Greenway Automotive Group. And another manages the wealth of the Demetree family, which helped put together land deals for Walt Disney to create Walt Disney World and Epcot.
Links to Walmart heirs
Public records obtained by the Orlando Sentinel found that Mat Forrest of the powerful Tallahassee lobby firm Ballard Partners played an extensive role in drafting the trust legislation and preparing talking points to counter arguments made by opponents.
Records also show that the lobbying effort was spearheaded by Kenneth Halcom, a partner with Cravath, Swaine and Moore, a New York law firm, who had represented Walmart’s heirs.
Halcom set up a family trust company in Naples, Florida, for the Waltons on December 2018 called River Bend Holdings. It is affiliated with Walton Enterprises LLC, the main investment arm of the Walton family, according to a Bloomberg News report.
A year later, in October 2019, Halcom incorporated the Florida Coalition for Modern Laws and promptly hired Ballard Partners to represent them before the Legislature. It’s registered as a nonprofit “social change advocacy organization” and its membership is exempt from public records laws.
The coalition paid Ballard Partners as much as $200,000 over the four years it represented the organization before the Legislature, lobbyist records show. The records provide a range rather than a specific amount paid by clients.
While they worked on drafting legislation, Walmart heir Jim Walton funneled nearly $200,000 over four years into the campaigns of the bill’s sponsors and the chairs of committees that would be responsible for pushing the bills through, state campaign finance records show.
Among those donations leading up to the 2020 session was $5,000 each to state Rep. Mike Caruso, a Delray Beach Republican, who sponsored HB 1089, and state Sen. Joe Gruters, a Sarasota Republican, who sponsored the Senate version, SB 1366.
He also donated $25,000 each to the Republican Party of Florida and the Florida Republican Senatorial Campaign Committee. Another heir, Robson Walton, gave $25,000 to Friends of Ron DeSantis.
Signed into law by Gov. Ron DeSantis in June 2020, the law protects trustees from any adverse consequences when paying taxes for the beneficiaries of a trust.
It also created tax shelters in the form of nontaxable gifts to the beneficiaries of the trust and withdrawals without incurring gift or estate taxes and it protects trust assets from being subject to claims from creditors.
Two more laws in 2022
The pattern was repeated in the months leading up to the 2022 legislative session when lawmakers filed two more bills — one closing a public records loophole in court proceedings involving the internal affairs of family trust companies and another that extends the life of trusts to 1,000 years.
Starting as early as November, Forrest contacted lawmakers ahead of the 2022 session to drum up support while records show Jim Walton distributed another $100,000 to key legislators.
Among those recipients were $10,000 to Gruters, who sponsored both Senate bills passed in 2022, and $2,500 to House bill sponsor state Rep. Elizabeth Fetterhoff, a DeLand Republican.
Jim Walton also gave $10,000 to state Rep. Mike Beltran, a Lithia Republican, who sponsored HB 1001 extending the life of trusts to 1,000 years. Walton also donated thousands to committee chairs who heard the bills, including Danny Burgess, a Zephyrhills Republican, of the Senate Judiciary Committee, and Jim Boyd, a Bradenton Republican, of the Senate Banking and Insurance Committee.
In a text message to Beltran, Forrest said he was going on the road to “hit up” committee chairs who got money from Walton.
According to a 2021 Bloomberg News article, Halcom left Cravath Swaine and Moore to manage River Bend Holdings. State corporate records show he stepped down from the Florida Coalition for Modern Laws in 2022 and was replaced by David Finkelstein of the Cravath, Swaine and Moore law firm.
Halcom could not be reached for comment.
Forrest said Ballard Partners doesn’t represent Walmart, and the coalition had “multiple supporters” of the legislation and wasn’t written for a particular family trust company.
Forrest also said he was just keeping an eye on the legislation on behalf of his client, but emails and text messages show extensive communications between himself and the bill’s sponsors months before the bill was filed and the legislative session began.
In one text message to Beltran, he refers to the public records exemption as “my public records bill” and asks if “the latest draft is satisfactory to you.” He also confirms Cravath Swaine and Moore’s involvement in the bill’s development, calling it the “Cravath/Swaine legislation.”
Just a few weeks into the 2022 session, Forrest emailed an aide to Gruters with updated talking points on the public records exemption attached.
“Did you get the draft amendment I sent last night? Let me know when you get a draft back and I’ll have my team double check it,” the email reads.
During committee discussion on the bill, state Rep. Carlos Guillermo Smith, an Orlando Democrat, said he was afraid the exemption would create a two-tier court system: one for the rich and another for the rest.
“I’m concerned some trusts are going to be public records and some are not, which is going to mean the have-nots are going to be kept in the sunshine and the haves are not going to be in sunshine,” Smith said.
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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