Fla. Stat. § 738.202
Judicial review of exercise of discretionary power; request for instruction
Redline — January 1, 2012 → current.View current text →
Current — January 1, 2024
As of January 1, 2012
(1) Each beneficiary described in s. 738.201(4) is entitled to receive a portion of the net income remaining after the application of s. 738.201(1)-(3), which is equal to the beneficiary’s fractional interest in undistributed principal assets, using carrying values as of the distribution date. If a fiduciary makes more than one distribution of assets to beneficiaries to whom this section applies, each beneficiary, including one who does not receive part of the distribution, is entitled, as of each distribution date, to the net income the fiduciary received after the date of death or terminating event or earlier distribution date but has not distributed as of the current distribution date.
(2) In determining a beneficiary’s share of net income, the following applies:
(a) The beneficiary is entitled to receive a portion of the net income equal to the beneficiary’s fractional interest in the carrying value of the undistributed principal assets immediately before the distribution date, excluding the amount of unpaid liabilities.
(b) The beneficiary’s fractional interest in the undistributed principal assets shall be calculated:
1. At the time the interest began and adjusted for any disproportionate distributions since the interest began;
2. By excluding any liabilities of the estate or trust from the calculation;
3. By also excluding property specifically given to a beneficiary and property required to pay pecuniary amounts not in trust; and
4. On the basis of the aggregate carrying value of those assets determined under subsection (1) as of the distribution date.
(c) If a disproportionate distribution of principal is made to any beneficiary, the respective fractional interests of all beneficiaries in the remaining underlying assets shall be recomputed by:
1. Adjusting the carrying value of the principal assets to their fair market value before the distribution;
2. Reducing the fractional interest of the recipient of the disproportionate distribution in the remaining principal assets by the fair market value of the principal distribution; and
3. Recomputing the fractional interests of all beneficiaries in the remaining principal assets based upon the now restated carrying values.
(3) If a fiduciary does not distribute all of the collected but undistributed net income to each person as of a distribution date, the fiduciary shall maintain appropriate records showing the interest of each beneficiary in that net income.
(4) A fiduciary may apply the provisions of this section, to the extent the fiduciary considers appropriate, to net gain or loss realized after the date of death or terminating event or earlier distribution date from the disposition of a principal asset if this section applies to the income from the asset.
(5) The carrying value or fair market value of trust assets shall be determined on an asset-by-asset basis and is conclusive if reasonable and determined in good faith. Determinations of fair market value based on appraisals performed within 2 years before or after the valuation date are presumed reasonable. The values of trust assets are conclusively presumed to be reasonable and determined in good faith unless proven otherwise in a proceeding commenced by or on behalf of a person interested in the trust within the time provided in s. 736.1008.
(6) All distributions to a beneficiary shall be valued based on their fair market value on the date of distribution.
(1) As used in this section, the term “fiduciary decision” means any of the following:
(a) A fiduciary’s allocation between income and principal or other determination regarding income and principal required or authorized by the terms of the trust or this chapter.
(b) The fiduciary’s exercise or nonexercise of a discretionary power regarding income and principal granted by the terms of the trust or this chapter, including the power to adjust under s. 738.203, convert an income trust to a unitrust under ss. 738.301-738.310, change the percentage or method used to calculate a unitrust amount under ss. 738.301-738.310, convert a unitrust to an income trust under ss. 738.301-738.310, or the method used to make property productive of income under s. 738.413.
(c) The fiduciary’s implementation of a decision described in paragraph (a) or paragraph (b).
(2) The court may not order a fiduciary to change a fiduciary decision unless the court determines that the fiduciary decision was an abuse of the fiduciary’s discretion. A court may not determine that a fiduciary abused its discretion merely because the court would have exercised the discretion in a different manner or would not have exercised the discretion.
(3) If the court determines that a fiduciary decision was an abuse of the fiduciary’s discretion, the court may order a remedy authorized by law, including those prescribed under ss. 736.1001 and 736.1002. Following such a determination by the court, the remedy is to place the beneficiaries in the positions the beneficiaries would have occupied if the fiduciary had not abused its discretion, as follows:
(a) The court may order the fiduciary to exercise or refrain from exercising the power to adjust under s. 738.203;
(b) The court may order the fiduciary to exercise or refrain from exercising the power to convert an income trust to a unitrust under ss. 738.301-738.310, change the percentage or method used to calculate a unitrust amount under ss. 738.301-738.310, or convert a unitrust to an income trust under ss. 738.301-738.310;
(c) The court may compel the fiduciary to take any of the actions listed under s. 738.413;
(d) To the extent that the abuse of discretion has resulted in no distribution to a beneficiary or a distribution that is too small, the court shall require the fiduciary to distribute from the trust to the beneficiary an amount the court determines will restore the beneficiary, in whole or in part, to his or her appropriate position;
(e) To the extent that the abuse of discretion has resulted in a distribution to a beneficiary that is too large, the court shall restore the beneficiaries, the trust, or both, in whole or in part, to their appropriate positions by requiring the fiduciary to withhold an amount from one or more future distributions to the beneficiary who received the distribution that was too large or requiring that beneficiary to return some or all of the distribution to the trust; or
(f) To the extent that the court is unable, after applying paragraphs (a)-(e), to restore the beneficiaries or the trust, or both, to the positions they would have occupied if the fiduciary had not abused its discretion, the court may require the fiduciary to pay an appropriate amount from its own funds to one or more of the beneficiaries or the trust or both.
(4) On petition by the fiduciary for instruction, the court may determine whether a proposed fiduciary decision will result in an abuse of the fiduciary’s discretion. If the petition describes the proposed decision, contains sufficient information to inform the beneficiary of the reasons for making the proposed decision and the facts on which the fiduciary relies, and explains how the beneficiary will be affected by the proposed decision, a beneficiary who opposes the proposed decision has the burden to establish that it will result in an abuse of the fiduciary’s discretion.
(5) If an action is instituted alleging an abuse of discretion in the exercise or nonexercise of the fiduciary’s discretion under this chapter and the court determines no abuse of discretion has occurred, the fiduciary’s costs and attorney fees incurred in defending the action shall be paid from the trust assets.
Official source: Online Sunshine (Florida Legislature). Reproduced from public-domain Florida statutes; confirm against the official source for the current text. Not legal advice.