Fla. Stat. § 738.602
Distribution to successor beneficiary
Redline — January 1, 2011 → current.View current text →
Current — January 1, 2024
As of January 1, 2011
(1) For purposes of this section:
(a) “Fund” means a private or commercial annuity, an individual retirement account, an individual retirement annuity, a deferred compensation plan, a pension plan, a profit-sharing plan, a stock-bonus plan, an employee stock-ownership plan, or another similar arrangement in which federal income tax is deferred.
(b) “Income of the fund” means income that is determined according to subsection (2) or subsection (3).
(c) “Nonseparate account” means a fund for which the value of the participant’s or account owner’s right to receive benefits can be determined only by the occurrence of a date or event as defined in the instrument governing the fund.
(d) “Payment” means a distribution from a fund that a trustee may receive over a fixed number of years or during the life of one or more individuals because of services rendered or property transferred to the payor in exchange for future payments. The term includes a distribution made in money or property from the payor’s general assets or from a fund created by the payor or payee.
(e) “Separate account” means a fund holding assets exclusively for the benefit of a participant or account owner and:
1. The value of such assets or the value of the separate account is ascertainable at any time; or
2. The administrator of the fund maintains records that show receipts and disbursements associated with such assets.
(2)(a) For a fund that is a separate account, income of the fund shall be determined:
1. As if the fund were a trust subject to the provisions of ss. 738.401-738.706; or
2. As a unitrust amount calculated by multiplying the fair market value of the fund as of the first day of the first accounting period and, thereafter, as of the last day of the accounting period that immediately precedes the accounting period during which a payment is received by the percentage determined in accordance with s. 738.1041(2)(b)2.a. The trustee shall determine such percentage as of the first month that the trustee’s election to treat the income of the fund as a unitrust amount becomes effective. For purposes of this subparagraph, “fair market value” means the fair market value of the assets held in the fund as of the applicable valuation date determined as provided in this subparagraph. The trustee is not liable for good faith reliance upon any valuation supplied by the person or persons in possession of the fund. If the trustee makes or terminates an election under this subparagraph, the trustee shall make such disclosure in a trust disclosure document that satisfies the requirements of s. 736.1008(4)(a).
(b) The trustee shall have discretion to elect the method of determining the income of the fund pursuant to this subsection and may change the method of determining income of the fund for any future accounting period.
(3) For a fund that is a nonseparate account, income of the fund is a unitrust amount determined by calculating the present value of the right to receive the remaining payments under 26 U.S.C. s. 7520 of the Internal Revenue Code as of the first day of the accounting period and multiplying it by the percentage determined in accordance with s. 738.1041(2)(b)2.a. The trustee shall determine the unitrust amount as of the first month that the trustee’s election to treat the income of the fund as a unitrust amount becomes effective.
(4) Except for those trusts described in subsection (5), the trustee shall allocate a payment from a fund as follows:
(a) That portion of the payment the payor characterizes as income shall be allocated to income, and any remaining portion of the payment shall be allocated to principal.
(b) To the extent that the payor does not characterize any portion of a payment as income or principal and the trustee can ascertain the income of the fund by the fund’s account statements or any other reasonable source, the trustee shall allocate to income the lesser of the income of the fund or the entire payment and shall allocate to principal any remaining portion of the payment.
(c) If the trustee, acting reasonably and in good faith, determines that neither paragraph (a) nor paragraph (b) applies and all or part of the payment is required to be made, the trustee shall allocate to income 10 percent of the portion of the payment that is required to be made during the accounting period and shall allocate the balance to principal. If no part of a payment is required to be made or the payment received is the entire amount to which the trustee is entitled, the trustee shall allocate the entire payment to principal. For purposes of this paragraph, a payment is not “required to be made” to the extent the payment is made because the trustee exercises a right of withdrawal.
(5) For a trust which, to qualify for the estate or gift tax marital deduction under the Internal Revenue Code, entitles the spouse to all of the income of the trust, and the terms of the trust are silent as to the time and frequency for distribution of the income of the fund, then:
(a) For a fund that is a separate account, unless the spouse directs the trustee to leave the income of the fund in the fund, the trustee shall withdraw and pay to the spouse, no less frequently than annually:
1. All of the income of the fund determined in accordance with subparagraph (2)(a)1.; or
2. The income of the fund as a unitrust amount determined in accordance with subparagraph (2)(a)2.
(b) For a fund that is a nonseparate account, the trustee shall withdraw and pay to the spouse, no less frequently than annually, the income of the fund as a unitrust amount determined in accordance with subsection (3).
(6) This section does not apply to payments to which s. 738.603 applies.
(1) Except to the extent that ss. 738.301-738.310 apply for a beneficiary that is a trust, each beneficiary described in s. 738.601(5) is entitled to receive a share of the net income 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 which this section applies, each beneficiary, including a beneficiary who does not receive part of the distribution, is entitled, as of each distribution date, to a share of the net income the fiduciary received after the decedent’s death, an income interest’s other terminating event, or the preceding distribution by the fiduciary.
(2) In determining a beneficiary’s share of net income under subsection (1), the following rules apply:
(a) The beneficiary is entitled to receive a share of the net income equal to the beneficiary’s fractional interest in the undistributed principal assets immediately before the distribution date.
(b) The beneficiary’s fractional interest under paragraph (a) must be calculated:
1. On the aggregate carrying value of the assets as of the distribution date; and
2. Reduced by:
a. Any liabilities of the estate or trust;
b. Property specifically given to a beneficiary under the decedent’s will or the terms of the trust; and
c. Property required to pay pecuniary amounts not in trust.
(c) If a disproportionate distribution of principal is made to any beneficiary, the respective fractional interests of all beneficiaries in the undistributed principal assets must 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.
(d) The distribution date under paragraph (a) may be the date as of which the fiduciary calculates the value of the assets if that date is reasonably near the date on which the assets are distributed. All distributions to a beneficiary must be valued based on the assets’ fair market value on the date of the distribution.
(3) To the extent that a fiduciary does not distribute under this section all the collected but undistributed net income to each beneficiary as of a distribution date, the fiduciary shall maintain records showing the interest of each beneficiary in the net income.
(4) If this section applies to income from an asset, a fiduciary may apply the requirements in this section to net gain or loss realized from the disposition of the asset after the decedent’s date of death, an income interest’s terminating event, or the preceding distribution by the fiduciary.
(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.
Official source: Online Sunshine (Florida Legislature). Reproduced from public-domain Florida statutes; confirm against the official source for the current text. Not legal advice.