CHAPTER 738

738.101 Short title. This chapter may be cited as the “Florida Uniform Fiduciary Income and Principal Act.” History. — s. 1, ch. 2002-42; s. 1, ch. 2024-216. 738.102 Definitions. As used in this chapter, the term: (1) “Accounting period” means a calendar year unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. The term includes a part of a calendar year or another period of 12 calendar months or approximately 12 calendar months which begins or ends when an income interest ends. (2) “Asset-backed security,” as provided in s. 738.415, means a security that is serviced primarily by the cash flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert to cash within a finite time. The term includes rights or other assets that ensure the servicing or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which s. 738.401, s. 738.409, or s. 738.414 applies. (3) “Beneficiary” includes: (a) For a trust: 1. A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal; 2. A remainder beneficiary; and 3. Any other successor beneficiary; (b) For an estate, an heir, and a devisee; and (c) For a life estate or term interest, a person who holds a life estate, a term interest, or a remainder or other interest following a life estate or term interest. (4) “Carrying value” means the fair market value at the time the assets are received by the fiduciary. For an estate and for a trust described in s. 733.707(3), after the settlor’s death, the assets are considered received as of the date of the settlor’s death. If there is a change in fiduciaries, a majority of the continuing fiduciaries may elect to adjust the carrying values to reflect the fair market value of the assets at the beginning of their administration. If such election is made, it must be reflected on the first accounting filed after the election. For assets acquired during the administration of the estate or trust, the carrying value is equal to the acquisition costs of the asset. Carrying value of assets should not be arbitrarily “written up” or “written down.” In some circumstances, including, but not limited to, those described in ss. 738.410 and 738.602, carrying value may be adjusted with proper disclosure to reflect changes in carrying value applied in a consistent manner. (5) “Court” means a circuit court of this state. (6) “Current income beneficiary” means a beneficiary to which a fiduciary may or must distribute net income, regardless of whether the fiduciary also distributes principal to the beneficiary. (7) “Distribution” means a payment or transfer by a fiduciary to a beneficiary in the beneficiary’s capacity as a beneficiary, without consideration other than the beneficiary’s right to receive the payment or transfer under the terms of the trust as defined in this section, will, life estate, or term interest. “Distribute,” “distributed,” and “distributee” have corresponding meanings. (8) “Estate” means a decedent’s estate, including the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration. (9) “Fiduciary” includes a trustee, a trust director as defined in s. 736.0103, or a personal representative, and a person acting under a delegation from a fiduciary. The term also includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more cofiduciaries, the term includes all cofiduciaries acting under the terms of the trust and applicable law. (10) “Income” means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in ss. 738.401-738.416. (11) “Income interest” means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciary’s discretion. The term includes the right of a current beneficiary to use property held by a fiduciary. (12) “Independent person” means a person who is not: (a) For a trust: 1. A qualified beneficiary as defined in s. 736.0103; 2. A settlor of the trust; 3. An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust; or 4. Any trustee whom an interested distributee has the power to remove and replace with a related or subordinate party. (b) For an estate, a beneficiary; (c) A spouse, a parent, a brother, a sister, or an issue of an individual described in paragraph (a) or paragraph (b); (d) A corporation, a partnership, a limited liability company, or another entity in which persons described in paragraphs (a)-(c), in the aggregate, have voting control; or (e) An employee of a person described in paragraph (a), paragraph (b), paragraph (c), or paragraph (d). (13) “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended. (14) “Mandatory income interest” means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute. (15) “Net income” means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. To the extent that the trust is a unitrust under ss. 738.301-738.310, the term means the unitrust amount determined under ss. 738.301-738.310. The term includes the amount of an adjustment from principal to income under s. 738.203. The term does not include the amount of an adjustment from income to principal under s. 738.203. (16) “Person” means an individual; a business or a nonprofit entity; an estate; a trust; a public corporation; a government or governmental subdivision, agency, or instrumentality; or other legal entity. (17) “Personal representative” means an executor, an administrator, a successor personal representative, a special administrator, or a person that performs substantially the same function with respect to an estate under the law governing the person’s status. (18) “Principal” means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary. (19) “Record” means information inscribed on a tangible medium or stored in an electronic or other medium and is retrievable in perceivable form. (20) “Settlor” means a person, including a testator, who creates or contributes property to a trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that person’s contribution, except to the extent that another person has the power to revoke or withdraw that portion. (21) “Special tax benefit” means: (a) Exclusion of a transfer to a trust from gifts described in s. 2503(b) of the Internal Revenue Code because of the qualification of an income interest in the trust as a present interest in property; (b) Status as a qualified subchapter S trust described in s. 1361(d)(3) of the Internal Revenue Code at a time the trust holds stock of an S corporation described in s. 1361(a)(1) of the Internal Revenue Code; (c) An estate or gift tax marital deduction for a transfer to a trust under s. 2056 or s. 2523 of the Internal Revenue Code which depends or depended in whole or in part on the right of the settlor’s spouse to receive the net income of the trust; (d) Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by s. 2601 of the Internal Revenue Code because the trust was irrevocable on September 25, 1985, if there is any possibility that: 1. A taxable distribution as defined in s. 2612(b) of the Internal Revenue Code could be made from the trust; or 2. A taxable termination as defined in s. 2612(a) of the Internal Revenue Code could occur with respect to the trust; or (e) An inclusion ratio as defined in s. 2642(a) of the Internal Revenue Code of the trust which is less than one, if there is any possibility that: 1. A taxable distribution as defined in s. 2612(b) of the Internal Revenue Code could be made from the trust; or 2. A taxable termination as defined in s. 2612(a) of the Internal Revenue Code could occur with respect to the trust. (22) “Successive interest” means the interest of a successor beneficiary. (23) “Successor beneficiary” means a person entitled to receive income or principal or to use property when an income interest or other current interest ends. (24) “Terms of a trust” means: (a) Except as otherwise provided in paragraph (b), the manifestation of the settlor’s intent regarding a trust’s provisions as: 1. Expressed in the will or trust instrument; or 2. Established by other evidence that would be admissible in a judicial proceeding. (b) The trust’s provisions as established, determined, or amended by: 1. A trustee or trust director in accordance with the applicable law; 2. A court order; or 3. A nonjudicial settlement agreement under s. 736.0111. (c) For an estate, a will; or (d) For a life estate or term interest, the corresponding manifestation of the rights of the beneficiaries to the extent provided in s. 738.508. (25) “Trust” includes an express trust, whether private or charitable, with additions to the trust, wherever and however created; and a trust created or determined by a judgment or decree under which the trust is to be administered in the manner of an express trust. The term does not include a constructive trust; a resulting trust; a conservatorship; a custodial arrangement under the Florida Uniform Transfers to Minors Act; a business trust providing for certificates to be issued to beneficiaries; a common trust fund; a land trust under s. 689.071; a trust created by the form of the account or by the deposit agreement at a financial institution; a voting trust; a security arrangement; a liquidation trust; a trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind; or an arrangement under which a person is a nominee, an escrowee, or an agent for another. (26) “Trustee” means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, regardless of whether they are appointed or confirmed by a court. (27) “Will” means any testamentary instrument recognized under applicable law which makes a legally effective disposition of an individual’s property, effective at the individual’s death. The term includes a codicil or other amendment to a testamentary instrument. History. — s. 1, ch. 2002-42; s. 2, ch. 2012-49; s. 2, ch. 2024-216. 738.103 Scope. Except as otherwise provided in the terms of a trust or this chapter, this chapter applies to all of the following: (1) A trust or an estate. (2) A life estate or other term interest in which the interest of one or more persons will be succeeded by the interest of one or more other persons to the extent provided in s. 738.508. History. — s. 1, ch. 2002-42; s. 3, ch. 2012-49; s. 3, ch. 2024-216. 738.104 Governing law. Except as otherwise provided in the terms of a trust or this chapter, this chapter applies when this state is the principal place of administration of a trust or estate or the situs of property that is not held in a trust or estate and is subject to a life estate or other term interest described in s. 738.103(2). By accepting the trusteeship of a trust having its principal place of administration in this state or by moving the principal place of administration of a trust to this state, the trustee submits to the application of this chapter to any matter within the scope of this chapter involving the trust. History. — s. 1, ch. 2002-42; s. 1, ch. 2003-43; s. 5, ch. 2005-85; s. 40, ch. 2006-217; s. 4, ch. 2012-49; s. 20, ch. 2013-172; s. 43, ch. 2021-183; s. 4, ch. 2024-216. 738.201 Fiduciary duties; general principles. (1) In making an allocation or determination or exercising discretion under this chapter, a fiduciary shall do all of the following: (a) Act in good faith, based on what is a fair and reasonable fee to all beneficiaries; (b) Administer a trust or estate impartially, except to the extent that the terms of the trust manifest an intent that the fiduciary favors one or more beneficiaries; (c) Administer the trust or estate in accordance with the terms of the trust, even if there is a different provision in this chapter. (d) Administer the trust or estate in accordance with this chapter, except to the extent that the terms of the trust provide otherwise or authorize the fiduciary to determine otherwise. (2) A fiduciary’s allocation, determination, or exercise of discretion under this chapter is presumed to be fair and reasonable to all beneficiaries. A fiduciary may exercise a discretionary power of administration given to the fiduciary by the terms of the trust, and an exercise of the power that produces a result different from a result required or permitted by this chapter does not create an inference that the fiduciary abused the fiduciary’s discretion. (3) A fiduciary shall: (a) Add a receipt to principal, to the extent that the terms of the trust and this chapter do not allocate the receipt between income and principal; (b) Charge a disbursement to principal, to the extent that the terms of the trust and this chapter do not allocate the disbursement between income and principal; and (c) Within 65 days after the fiscal year ends, add any undistributed income to principal, unless otherwise provided by the terms of the trust. (4) A fiduciary may exercise the power to adjust under s. 738.203(1), 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 if the fiduciary determines the exercise of the power will assist the fiduciary to administer the trust or estate impartially. (5) The fiduciary must consider the following factors in making the determination in subsection (4), including: (a) The terms of the trust. (b) The nature, distribution standards, and expected duration of the trust. (c) The effect of the allocation rules, including specific adjustments between income and principal, under ss. 738.301-738.416. (d) The desirability of liquidity and regularity of income. (e) The desirability of the preservation and appreciation of principal. (f) The extent to which an asset is used or may be used by a beneficiary. (g) The increase or decrease in the value of principal assets, reasonably determined by the fiduciary. (h) Whether and to what extent the terms of the trust give the fiduciary power to accumulate income or invade principal or prohibit the fiduciary from accumulating income or invading principal. (i) The extent to which the fiduciary has accumulated income or invaded principal in preceding accounting periods. (j) The effect of current and reasonably expected economic conditions. (k) The reasonably expected tax consequences of the exercise of the power. (l) The identities and circumstances of the beneficiaries. (6) Except as provided in ss. 738.301-738.310, this chapter pertains to the administration of a trust and is applicable to any trust that is administered in this state or under its law. This chapter also applies to any estate that is administered in this state unless the provision is limited in application to a trustee, rather than a fiduciary. History. — s. 1, ch. 2002-42; s. 7, ch. 2012-49; s. 7, ch. 2024-216. 738.202 Judicial review of exercise of discretionary power; request for instruction. (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. History. — s. 1, ch. 2002-42; s. 3, ch. 2003-43; s. 42, ch. 2006-217; s. 8, ch. 2012-49; s. 8, ch. 2024-216. 738.203 Fiduciary’s power to adjust. (1) Except as otherwise provided in the terms of a trust or this section, a fiduciary, in a record without court approval, may adjust between income and principal if the fiduciary determines that the exercise of the power to adjust will assist the fiduciary in administering the trust or estate impartially. (2) This section does not create a duty to exercise or consider the power to adjust under subsection (1) or to inform a beneficiary about the applicability of this section. (3) A fiduciary that in good faith exercises or fails to exercise the power to adjust under subsection (1) is not liable to a person affected by the exercise or failure to exercise. (4) In deciding whether and to what extent to exercise the power to adjust under subsection (1), a fiduciary shall consider all factors the fiduciary considers relevant, including relevant factors in s. 738.201(5) and the application of ss. 738.401(9), 738.408, and 738.413. (5) A fiduciary may not exercise the power under subsection (1) to make an adjustment or under s. 738.408 to make a determination that an allocation is insubstantial if: (a) The adjustment or determination would reduce the amount payable to a current income beneficiary from a trust that qualifies for a special tax benefit, except to the extent that the adjustment is made to provide for a reasonable apportionment of the total return of the trust between the current income beneficiary and successor beneficiaries; (b) The adjustment or determination would change the amount payable to a beneficiary, as a fixed annuity or a fixed fraction of the value of the trust assets, under the terms of the trust; (c) The adjustment or determination would reduce an amount that is permanently set aside for a charitable purpose under the terms of the trust unless both income and principal are set aside for the charitable purpose; (d) Possessing or exercising the power would cause a person to be treated as the owner of all or part of the trust for federal income tax purposes and the person would not be treated as the owner if the fiduciary did not possess the power to adjust; (e) Possessing or exercising the power would cause all or part of the value of the trust assets to be included in the gross estate of an individual for federal real estate tax purposes and the assets would not be included in the gross estate of the individual if the fiduciary did not possess the power to adjust; (f) Possessing or exercising the power would cause an individual to be treated as making a gift for federal gift tax purposes; (g) The fiduciary is not an independent person; (h) The trust is irrevocable and provides for income to be paid to the settlor and possessing or exercising the power would cause the adjusted principal or income to be considered an available resource or available income under a public-benefit program; or (i) The trust is a unitrust under ss. 738.301-738.310. (6) If paragraph (5)(d), paragraph (5)(e), paragraph (5)(f), or paragraph (5)(g) applies to a fiduciary: (a) A cofiduciary to which paragraphs (5)(d)-(g) do not apply may exercise the power to adjust, unless the exercise of the power by the remaining cofiduciary or cofiduciaries is not permitted by the terms of the trust or law other than this chapter; or (b) If there is no cofiduciary to which paragraphs (5)(d)-(g) do not apply, the fiduciary may appoint a cofiduciary to which paragraphs (5)(d)-(g) do not apply which may be a special fiduciary with limited powers, and the appointed cofiduciary may exercise the power to adjust under subsection (1), unless the appointment of a cofiduciary or the exercise of the power by a cofiduciary is not permitted by the terms of the trust or law other than this chapter. (7) A fiduciary may release or delegate to a cofiduciary the power to adjust under subsection (1) if the fiduciary determines that the fiduciary’s possession or exercise of the power will or may: (a) Cause a result described in paragraph (5)(a), paragraph (5)(b), paragraph (5)(c), paragraph (5)(d), paragraph (5)(e), paragraph (5)(f), or paragraph (5)(h); or (b) Deprive the trust of a tax benefit or impose a tax burden not described in paragraph (5)(a), paragraph (5)(b), paragraph (5)(c), paragraph (5)(d), paragraph (5)(e), or paragraph (5)(f). (8) A fiduciary’s release or delegation to a cofiduciary under subsection (7) of the power to adjust under subsection (1): (a) Must be in a record; (b) Applies to the entire power, unless the release or delegation provides a limitation, which may be a limitation to the power to adjust: 1. From income to principal; 2. From principal to income; 3. For specified property; or 4. In specified circumstances. (c) For a delegation, may be modified by a redelegation under this subsection by the cofiduciary to which the delegation is made; and (d) Subject to paragraph (c), is permanent, unless the release or delegation provides a specified period, including a period measured by the life of an individual or the lives of more than one individual. (9) Terms of a trust that deny or limit the power to adjust between income and principal do not affect the application of this section, unless the terms of the trust expressly deny or limit the power to adjust under subsection (1). (10) The exercise of the power to adjust under subsection (1) in any accounting period may apply to the current period, the immediately preceding period, and one or more subsequent periods. (11) A description of the exercise of the power to adjust under subsection (1) must be: (a) Included in a report, if any, sent to beneficiaries under s. 736.0813; or (b) Communicated at least annually to the qualified beneficiaries as defined in s. 736.0103 other than the Attorney General. (12) With respect to a trust in existence on January 1, 2003: (a) A fiduciary may not have the power to adjust under this section until the statement required in subsection (13) is provided and either no objection is made or any objection which is made has been terminated. 1. An objection is made if, within 60 days after the date of the statement required in subsection (13), a super majority of the eligible beneficiaries deliver to the fiduciary a written objection to the application of this section to such trust. An objection shall be deemed to be delivered to the fiduciary on the date the objection is mailed to the mailing address listed in the notice provided in subsection (13). 2. An objection is terminated upon the earlier of the receipt of consent from a super majority of eligible beneficiaries of the class that made the objection, or the resolution of the objection under paragraph (c). (b) An objection or consent under this section may be executed by a legal representative or natural guardian of a beneficiary without the filing of any proceeding or approval of any court. (c) If an objection is delivered to the fiduciary, then the fiduciary may petition the circuit court for an order quashing the objection and vesting in such fiduciary the power to adjust under this section. The burden will be on the objecting beneficiaries to prove that the power to adjust would be inequitable, illegal, or otherwise in contravention of the settlor’s intent. The court may award costs and attorney fees relating to the fiduciary’s petition in the same manner as in chancery actions. When costs and attorney fees are to be paid out of the trust, the court may, in its discretion, direct from which part of the trust they shall be paid. (d) If no timely objection is made or if the fiduciary is vested with the power to adjust by court order, the fiduciary may thereafter exercise the power to adjust without providing notice of its intent to do so unless, in vesting the fiduciary with the power to adjust, the court determines that unusual circumstances require otherwise. (e)1. If a fiduciary makes a good faith effort to comply with the notice provisions of subsection (13), but fails to deliver notice to one or more beneficiaries entitled to such notice, neither the validity of the notice required under this subsection nor the fiduciary’s power to adjust under this section shall be affected until the fiduciary has actual notice that one or more beneficiaries entitled to notice were not notified. Until the fiduciary has actual notice of the notice deficiency, the fiduciary shall have all of the powers and protections granted a fiduciary with the power to adjust under this chapter. 2. When the fiduciary has actual notice that one or more beneficiaries entitled to notice under subsection (13) were not notified, the fiduciary’s power to adjust under this section shall cease until all beneficiaries who are entitled to such notice, including those who were previously provided with such notice, are notified and given the opportunity to object as provided for under this subsection. (f) The objection of a super majority of eligible beneficiaries under this subsection shall be valid for a period of 1 year after the date of the notice set forth in subsection (13). Upon expiration of the objection, the fiduciary may thereafter give a new notice under subsection (13). (g) This section is not intended to create or imply a duty of the fiduciary of a trust existing on January 1, 2003, to seek a power to adjust under this subsection or to give the notice described in subsection (13) if the fiduciary does not desire to have a power to adjust under this section, and no inference of impropriety shall be made as the result of a fiduciary not seeking a power to adjust under this subsection. (13)(a) A fiduciary of a trust in existence on January 1, 2003, that is not prohibited under subsection (5) from exercising the power to adjust shall, any time before initially exercising the power, provide to all eligible beneficiaries a statement containing the following: 1. The name, telephone number, street address, and mailing address of the fiduciary and of any person who may be contacted for further information; 2. A statement that unless a super majority of the eligible beneficiaries objects to the application of this section to the trust within 60 days after the date the statement pursuant to this subsection was served, this section shall apply to the trust; and 3. A statement that, if this section applies to the trust, the fiduciary will have the power to adjust between income and principal and that such a power may have an effect on the distributions to such beneficiary from the trust. (b) The statement may contain information regarding a fiduciary’s obligation with respect to the power to adjust between income and principal under this section. (c) The statement shall be served informally, in the manner provided in the Florida Rules of Civil Procedure relating to service of pleadings subsequent to the initial pleading. The statement may be served on a legal representative or natural guardian of a beneficiary without the filing of any proceeding or approval of any court. (14) For purposes of subsections (12) and (13), the term: (a) “Eligible beneficiaries” means: 1. If at the time the determination is made there are one or more beneficiaries described in s. 736.0103(19)(c), the beneficiaries described in s. 736.0103(19)(a) and (c); or 2. If there is no beneficiary described in s. 736.0103(19)(c), the beneficiaries described in s. 736.0103(19)(a) and (b). (b) “Super majority of the eligible beneficiaries” means: 1. If at the time the determination is made there are one or more beneficiaries described in s. 736.0103(19)(c), at least two-thirds in interest of the beneficiaries described in s. 736.0103(19)(a) or two-thirds in interest of the beneficiaries described in s. 736.0103(19)(c), if the interests of the beneficiaries are reasonably ascertainable; otherwise, it means two-thirds in number of either such class; or 2. If there is no beneficiary described in s. 736.0103(19)(c), at least two-thirds in interest of the beneficiaries described in s. 736.0103(19)(a) or two-thirds in interest of the beneficiaries described in s. 736.0103(19)(b), if the interests of the beneficiaries are reasonably ascertainable, otherwise, two-thirds in number of either such class. (15) A trust exists on January 1, 2003, if it is not revocable on January 1, 2003. A trust is revocable if revocable by the settlor alone or in conjunction with any other person. A trust is not revocable for purposes of this section if revocable by the settlor only with the consent of all persons having a beneficial interest in the property. History. — s. 9, ch. 2024-216. 738.301 Definitions. For purposes of this section and ss. 738.302-738.310: (1) “Applicable value” means the amount of the net fair market value of a trust taken into account under s. 738.307. (2) “Express unitrust” means a trust for which, under the terms of the trust without regard to this section and ss. 738.302-738.310, net income must be calculated as a unitrust amount. (3) “Income trust” means a trust, created by an inter vivos or testamentary instrument, that directs or permits the trustee to distribute the net income of the trust to one or more persons, in fixed proportions or in amounts or proportions determined by the trustee and regardless of whether the trust directs or permits the trustee to distribute the principal of the trust to one or more such persons. (4) “Net fair market value of a trust” means the fair market value of the assets of the trust, less the reasonably known noncontingent liabilities of the trust. (5) “Unitrust” means a trust for which net income is a unitrust amount. The term includes an express unitrust. (6) “Unitrust amount” means an amount computed by multiplying a determined value of a trust by a determined percentage. For a unitrust administered under a unitrust policy, the term means the applicable value multiplied by the unitrust rate. (7) “Unitrust policy” means a policy described in ss. 738.301-738.310 and adopted under s. 738.303. (8) “Unitrust rate” means the rate used to compute the unitrust amount for a unitrust administered under a unitrust policy. History. — s. 1, ch. 2002-42; s. 9, ch. 2012-49; s. 10, ch. 2024-216. 738.302 Applications; duties and remedies. (1) Except as otherwise provided in subsection (2), ss. 738.301-738.310 apply to all of the following: (a) An income trust, unless the terms of the trust expressly prohibit the use of ss. 738.301-738.310 by a specific reference to this paragraph or corresponding provision of prior law, or an explicit expression of intent that net income not be calculated as a unitrust amount. (b) An express unitrust, except to the extent that the terms of the trust explicitly: 1. Prohibit the use of ss. 738.301-738.310 by a specific reference to this paragraph or corresponding provision of prior law; 2. Prohibit conversion to an income trust; or 3. Limit changes to the method of calculating the unitrust amount. (c) A unitrust that had been converted from an income trust. (2) The provisions of ss. 738.301-738.310 do not apply to a trust described in s. 170(f)(2)(B), s. 642(c)(5), s. 664(d), s. 2702(a)(3)(A)(ii) or (iii), or s. 2702(b) of the Internal Revenue Code. (3) An income trust to which ss. 738.301-738.310 apply under paragraph (1)(a) may be converted to a unitrust under ss. 738.301-738.310 regardless of the terms of the trust concerning distributions. Conversion to a unitrust under ss. 738.301-738.310 does not affect other terms of the trust concerning distributions of income or principal. (4) Sections 738.301-738.310 apply to an estate only to the extent that a trust is a beneficiary of the estate. To the extent of the trust’s interest in the estate, the estate may be administered as a unitrust, the administration of the estate as a unitrust may be discontinued, or the percentage or method used to calculate the unitrust amount may be changed, in the same manner as for a trust under those sections. (5) The provisions of ss. 738.301-738.310 do not create a duty to take or consider action under ss. 738.301-738.310 or to inform a beneficiary about the applicability of ss. 738.301-738.310. (6) A fiduciary that in good faith takes or fails to take an action under ss. 738.301-738.310 is not liable to a person affected by the action or inaction. History. — s. 1, ch. 2002-42; s. 10, ch. 2012-49; s. 11, ch. 2024-216. 738.303 Authority of fiduciary. (1) By complying with subsections (2) and (6), and without court approval, a fiduciary may do any of the following: (a) Convert an income trust to a unitrust if the fiduciary adopts in a record a unitrust policy for the trust which provides: 1. That in administering the trust, the net income of the trust will be a unitrust amount rather than net income determined without regard to ss. 738.301-738.310; and 2. The percentage and method used to calculate the unitrust amount. (b) Change the percentage or method used to calculate a unitrust amount for a unitrust if the fiduciary adopts in a record a unitrust policy or an amendment or replacement of a unitrust policy providing charges in the percentage or method used to calculate the unitrust amount. (c) Convert a unitrust to an income trust if the fiduciary adopts in a record a determination that, in administering the trust, the net income of the trust will be net income determined without regard to ss. 738.301-738.310 rather than a unitrust amount. (2) A fiduciary may take an action under subsection (1) if all of the following apply: (a) The fiduciary determines that the action will assist the fiduciary to administer a trust impartially. (b) The fiduciary sends a notice in a record to the qualified beneficiaries determined under ss. 736.0103 and 736.0110 in the manner required by s. 738.304, describing and proposing to take the action. (c) The fiduciary sends a copy of the notice under paragraph (b) to each settlor of the trust which is: 1. If an individual, living; or 2. If not an individual, in existence. (d) At least one member of each class of the qualified beneficiaries determined under ss. 736.0103 and 736.0110, other than the Attorney General, receiving the notice under paragraph (b) is: 1. If an individual, legally competent; 2. If not an individual, in existence; or 3. Represented in the manner provided in s. 738.304(2). (e) The fiduciary does not receive, by the date specified in the notice under s. 738.304(4)(e), an objection in a record to the action proposed under paragraph (b) from a person to which the notice under paragraph (b) is sent. (3) If a fiduciary receives, not later than the date stated in the notice under s. 738.304(4)(e), an objection in a record described in s. 738.304(4)(d) to a proposed action, the fiduciary or a beneficiary may request the court to have the action taken as proposed, taken with modifications, or prevented. A person described in s. 738.304(1) may oppose the proposed action in the proceeding under this subsection regardless of whether the person: (a) Consented under s. 738.304(3); or (b) Objected under s. 738.304(4)(d). (4) If, after sending a notice under paragraph (2)(b), a fiduciary decides not to take the action proposed in the notice, the fiduciary must notify in a record each person described in s. 738.304(1) of the decision not to take the action and the reasons for the decision. (5) If a beneficiary requests in a record that a fiduciary take an action described in subsection (1) and the fiduciary declines to act or does not act within 60 days after receiving the request, the beneficiary may request the court to direct the fiduciary to take the action requested. (6) In deciding whether and how to take an action authorized in subsection (1), or whether and how to respond to a request by a beneficiary under subsection (5), a fiduciary must consider all factors relevant to the trust and beneficiaries, including the relevant factors listed in s. 738.201(5). (7) A fiduciary may release or delegate the power to convert an income trust to a unitrust under paragraph (1)(a), change the percentage or method used to calculate a unitrust amount under paragraph (1)(b), or convert a unitrust to an income trust under paragraph (1)(c), for a reason described in s. 738.203(7) and in the manner described in s. 738.203(8). History. — s. 1, ch. 2002-42; s. 7, ch. 2005-85; s. 11, ch. 2012-49; s. 12, ch. 2024-216; s. 4, ch. 2025-18. 738.304 Notice. (1) A notice required by s. 738.303(2)(b) must be sent in a manner authorized under s. 736.0109 to all of the following: (a) The qualified beneficiaries determined under s. 736.0103, other than the Attorney General. (b) Each person that is granted a power over the trust by the terms of the trust, to the extent that the power is exercisable when the person is not then serving as a trustee: 1. Including all of the following: a. Power over the investment, management, or distribution of trust property or other matters of trust administration. b. Power to appoint or remove a trustee or person described in this paragraph. 2. Excluding all of the following: a. Power of appointment. b. Power of a beneficiary over the trust, to the extent that the exercise or nonexercise of the power affects the beneficial interest of the beneficiary or another beneficiary represented by the beneficiary under ss. 736.0301-736.0306 with respect to the exercise or nonexercise of the power. c. Power over the trust if the terms of the trust provide that the power is held in a nonfiduciary capacity and the power must be held in a nonfiduciary capacity to achieve a tax objective under the Internal Revenue Code. (c) Each person that is granted a power by the terms of the trust to appoint or remove a trustee or person described in paragraph (b) to the extent the power is exercisable when the person that exercises the power is not then serving as a trustee or person described in paragraph (b). (2) The representation provisions of ss. 736.0301-736.0306 apply to notice under this section. (3) A person may consent in a record at any time to action proposed under s. 738.303(2)(b). A notice required by s. 738.303(2)(b) need not be sent to a person that consents under this subsection. (4) A notice required under s. 738.303(2)(b) must include all of the following: (a) The action proposed under s. 738.303(2)(b). (b) For a conversion of an income trust to a unitrust, a copy of the unitrust policy adopted under s. 738.303(1)(a). (c) For a change in the percentage or method used to calculate the unitrust amount, a copy of the unitrust policy or amendment or replacement of the unitrust policy adopted under s. 738.303(1)(b). (d) A statement that the person to which the notice is sent may object to the proposed action by stating in a record the basis for the objection and sending or delivering the record to the fiduciary. (e) The date by which an objection under paragraph (d) must be received by the fiduciary, which must be at least 30 days after the date the notice is sent. (f) The date on which the action is proposed to be taken and the date on which the action is proposed to take effect. (g) The name and contact information of the fiduciary. (h) The name and contact information of a person that may be contacted for additional information. History. — s. 13, ch. 2024-216. 738.305 Unitrust policy. (1) In administering a unitrust under ss. 738.301-738.310, a fiduciary shall follow a unitrust policy adopted under s. 738.303(1)(a) or (b) or amended or replaced under s. 738.303(1)(b). (2) A unitrust policy must provide all of the following: (a) The unitrust rate or method for determining the unitrust rate under s. 738.306. (b) The method for determining the applicable value under s. 738.307. (c) The rules described in ss. 738.306-738.310 which apply in the administration of the unitrust, whether the rules are: 1. Mandatory as provided in ss. 738.307(1) and (3), 738.308(1), and 738.310; or 2. Optional as provided in ss. 738.306, 738.307(2), and 738.308(2), to the extent that the fiduciary elects to adopt those rules. (3) A unitrust policy may do any of the following: (a) Provide methods and standards for: 1. Determining the timing of the distributions; 2. Making distributions in cash or in kind or partly in cash and partly in kind; or 3. Correcting an underpayment or overpayment to a beneficiary based on the unitrust amount if there is an error in calculating the unitrust amount. (b) Specify sources and the order of sources, including categories of income for federal income tax purposes, from which distributions of a unitrust amount are paid. (c) Provide other standards and rules that the fiduciary determines serve the interests of the beneficiaries. History. — s. 14, ch. 2024-216. 738.306 Unitrust rate. (1) A unitrust rate must be at least 3 percent and not more than 5 percent. Within those limits, the unitrust rate may be: (a) A fixed unitrust rate; or (b)1. A unitrust rate that is determined for each period using: a. A market index or other published data; or b. A mathematical blend of market indices or other published data over a stated number of preceding periods. 2. If the rate calculated under this paragraph would be less than 3, the rate is 3; and if the rate calculated would be more than 5, the rate is 5. (2) Within the limits of subsection (1), a unitrust policy may provide for any of the following: (a) A limit on how much the unitrust rate determined under paragraph (1)(b) may increase over the unitrust rate for the preceding period or a mathematical blend of unitrust rates over a stated number of preceding periods. (b) A limit on how much the unitrust rate determined under paragraph (1)(b) may decrease below the unitrust rate for the preceding period or a mathematical blend of unitrust rates over a stated number of preceding periods. (c) A mathematical blend of any of the unitrust rates determined under paragraph (1)(b) and paragraphs (a) and (b). (3) If the fiduciary is not an independent person, the percentage used to calculate the unitrust amount is the rate determined under s. 7520(a)(2) of the Internal Revenue Code in effect for the month the conversion under this section becomes effective and for each January thereafter; however, if the rate determined under s. 7520(a)(2) of the Internal Revenue Code exceeds 5 percent, the unitrust rate is 5 percent, and if the rate determined under s. 7520(a)(2) of the Internal Revenue Code is less than 3 percent, the unitrust rate is 3 percent. History. — s. 15, ch. 2024-216. 738.307 Applicable value. (1) A unitrust policy must provide the method for determining the fair market value of an asset for the purpose of determining the unitrust amount, including all of the following: (a) The frequency of valuing the asset, which need not require a valuation in every period. (b) The date for valuing the asset in each period in which the asset is valued. (2) Except as otherwise provided in s. 738.309, a unitrust policy may provide methods for determining the amount of the net fair market value of the trust to take into account in determining the applicable value, including any of the following: (a) Obtaining an appraisal of an asset for which fair market value is not readily available. (b) Excluding specific assets or groups or types of assets in addition to those described in subsection (3). (c) Making other exceptions or modifications of the treatment of specific assets or groups or types of assets. (d) Including identification and treatment of cash or property held for distribution. (e) Using an average of fair market values over a stated number of preceding periods, not to exceed 3 calendar years. (f) Determining the reasonable known liabilities of the trust, including treatment of liabilities to conform with the treatment of assets under paragraphs (a)-(e). (3) The following property may not be included in determining the value of the trust: (a) Any residential property or any tangible personal property that, as of the first business day of the current valuation year, one or more current beneficiaries of the trust have or have had the right to occupy or have or have had the right to possess or control, other than in his or her capacity as trustee of the trust. Instead, the right of occupancy or the right to possession and control is the unitrust amount with respect to such property; however, the unitrust amount must be adjusted to take into account partial distributions from or receipt into the trust of such property during the valuation year; (b) Any asset specifically given to a beneficiary and the return on investment on such property, which return on investment must be distributable to the beneficiary; and (c) Any asset while held in an estate. History. — s. 16, ch. 2024-216. 738.308 Period. (1) A unitrust policy must provide the period used under ss. 738.306 and 738.307. The period must be the calendar year. (2) A unitrust policy may provide standards for: (a) Using fewer preceding periods under s. 738.306(1)(b)1. or (2)(a) or (b) if: 1. The trust was not in existence in a preceding period; or 2. Market indices or other published data are not available for a preceding period; (b) Using fewer preceding periods under s. 738.307(2)(e) if: 1. The trust was not in existence in a preceding period; or 2. Fair market values are not available for a preceding period; and (c) Prorating a unitrust amount on a daily basis for a part of a period in which the trust or the administration of the trust as a unitrust or the interest of any beneficiary commences or terminates. History. — s. 17, ch. 2024-216. 738.309 Express unitrust. (1) This section applies to a trust that, by its governing instrument, requires or allows income or net income to be calculated as a unitrust amount. (2) The trustee of an express unitrust may determine the unitrust amount by reference to the net fair market value of the unitrust’s assets in 1 or more years. (3) Distribution of a unitrust amount is considered a distribution of all of the net income of an express unitrust and is considered to be an income interest. (4) The unitrust amount is considered to be a reasonable apportionment of the total return of an express unitrust. (5) An express unitrust that provides or allows a distribution based on a unitrust rate in excess of 5 percent per year of the net fair market value of the unitrust assets is considered a distribution of all of the income of the unitrust and a distribution of principal of the unitrust to the extent that the distribution exceeds 5 percent per year. (6) An express unitrust may provide a mechanism for changing the unitrust rate, similar to the mechanism provided under s. 738.306, based upon the factors noted in that section, and may provide for a conversion from a unitrust to an income trust or a reconversion of an income trust to a unitrust under s. 738.303. (7) If an express unitrust does not specifically or by reference to s. 738.306 prohibit a power to change the unitrust rate or to convert to an income trust under s. 738.303, the trustee must have such power. (8) The governing instrument of an express unitrust may grant the trustee discretion to adopt a consistent practice of treating capital gains as part of the unitrust amount to the extent that the unitrust amount exceeds the income determined as if the trust were not an express unitrust, or the governing instrument may specify the ordering of classes of income. (9) Unless the terms of the express unitrust specifically provide otherwise as provided in subsection (8), the distribution of a unitrust amount is considered a distribution made from the following sources, which are listed in order of priority: (a) Net accounting income determined under this chapter as if the trust were not a unitrust; (b) Ordinary income not allocable to net accounting income; (c) Net realized short-term capital gains; (d) Net realized long-term capital gains; and (e) The principal of the trust. (10) The governing instrument of an express unitrust may provide that the trustee may exclude assets used by the unitrust’s beneficiary, including, but not limited to, a residence property or tangible personal property, from the net fair market value of the unitrust’s assets for the purposes of computing the unitrust amount. The use of these assets may be considered equivalent to income or to the unitrust amount. History. — s. 18, ch. 2024-216. 738.310 Other rules. Following the conversion of an income trust to a unitrust, the trustee shall consider the unitrust amount as paid from the following sources, which are listed in order of priority: (1) Net accounting income determined under this chapter as if the trust were not a unitrust; (2) Ordinary income not allocable to net accounting income; (3) Net realized short-term capital gains; (4) Net realized long-term capital gains; and (5) The principal of the trust. History. — s. 19, ch. 2024-216. 738.401 Character of receipts from entity. (1) For purposes of this section, the term: (a) “Capital distribution” means an entity distribution of money which is a: 1. Return of capital; or 2. Distribution in total or partial liquidation of the entity. (b) “Entity”: 1. Means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund, or any other organization or arrangement in which a fiduciary owns or holds an interest, regardless of whether the entity is a taxpayer for federal income tax purposes; and 2. Does not include: a. A trust or estate to which s. 738.402 applies; b. A business or other activity to which s. 738.403 applies which is not conducted by an entity described in subparagraph 1.; c. An asset-backed security; or d. An instrument or arrangement to which s. 738.416 applies. (c) “Entity distribution” means a payment or transfer by an entity to a person in the person’s capacity as an owner or holder of an interest in the entity. (d) “Lookback period” means the accounting period and the preceding two accounting periods or, if less, the number of accounting periods, or portion of accounting periods, that the interest in the entity has been held by the fiduciary. (2) In this section, an attribute or action of an entity includes an attribute or action of any other entity in which the initial entity owns or holds an interest, including an interest owned or held indirectly through another entity. (3) Except as otherwise provided in paragraphs (4)(b)-(d), a fiduciary shall allocate to income: (a) Money received in an entity distribution; and (b) Tangible personal property of nominal value received from the entity. (4) A fiduciary shall allocate the following to principal: (a) Property received in an entity distribution which is not: 1. Money; or 2. Tangible personal property of nominal value. (b) Money received in an entity distribution in an exchange for part or all of the fiduciary’s interest in the entity to the extent that the entity distribution reduces the fiduciary’s interest in the entity relative to the interest of other persons that own or hold interests in the entity. (c) Money received in an entity distribution that is a capital distribution, to the extent not allocated to income. (d) Money received in an entity distribution from an entity that is a regulated investment company or a real estate investment trust if the money received represents short-term or long-term capital gain realized within the entity. (5) If a fiduciary elects, or continues an election made by its predecessor, to reinvest dividends in shares of stock of a distributing corporation or fund, whether evidenced by new certificates or entries on the books of the distributing entity, the new shares retain their character as income. (6) Except as otherwise provided in subsections (10) and (11), money received in an entity distribution is a capital distribution: (a) To the extent that the entity, at or near the time of the entity distribution, indicates that such money is a capital distribution; or (b) To the extent that the total amount of money and property received by the fiduciary in the entity distribution or a series of related entity distributions is or will be greater than 20 percent of the fiduciary’s pro rata share of the entity’s gross assets, as shown by the entity’s year-end financial statements immediately preceding the initial receipt. (7) In the case of a capital distribution, the amount received in an entity distribution allocated to principal must be reduced to the extent that the cumulative distributions from the entity to the fiduciary allocated to income do not exceed the greater of: (a) A cumulative annual return of 3 percent of the entity’s carrying value computed at the beginning of each accounting period, or portion of an accounting period, during the lookback period. If a fiduciary has exercised a power to adjust under s. 738.203 during the lookback period, the fiduciary, in determining the total income distributions from that entity, must take into account the extent to which the exercise of the power resulted in income to the fiduciary from that entity for that period. If the income of a fiduciary during the lookback period has been computed under ss. 738.301-738.310, the fiduciary, in determining the total income distributions from the entity for that period, must take into account the portion of the unitrust amount paid as a result of the ownership of the trust’s interest in the entity for that period; or (b) In the case of an entity treated as a partnership, subchapter S corporation, or disregarded entity under the Internal Revenue Code, the amount of income tax attributable to the fiduciary’s ownership share of the entity, based on its pro rata share of the taxable income of the entity that distributes the money, during the lookback period, calculated as if all of the tax was incurred by the fiduciary. (8) If a fiduciary receives additional information about the application of this section to an entity distribution before the fiduciary has paid part of the entity distribution to a beneficiary, the fiduciary may consider the additional information before making the payment to the beneficiary and may change a decision to make the payment to the beneficiary. (9) If a fiduciary receives additional information about the application of this section to an entity distribution after the fiduciary has paid part of the entity distribution to a beneficiary, the fiduciary is not required to change or recover the payment to the beneficiary but may consider that information in determining whether to exercise its other powers, including, but not limited to, the power to adjust under s. 738.203. (10) The following applies to money or property received by a private trustee as a distribution from an investment entity described in this subsection: (a) The trustee shall first treat as income of the trust all of the money or property received from the investment entity in the current accounting period which would be considered income under this chapter if the trustee had directly held the trust’s pro rata share of the assets of the investment entity. For this purpose, all distributions received in the current accounting period must be aggregated. (b) The trustee shall next treat as income of the trust any additional money or property received in the current accounting period which would have been considered income in the prior two accounting periods under paragraph (a) if additional money or property had