| 1 | A bill to be entitled |
| 2 | An act relating to the Florida Uniform Principal and |
| 3 | Income Act; amending s. 738.602, F.S.; providing |
| 4 | definitions; providing requirements for the determination |
| 5 | of income from certain compensation plans, annuities, and |
| 6 | retirement plans or accounts; providing trustee |
| 7 | requirements with respect to payment allocations; |
| 8 | providing criteria for the payment of certain funds to a |
| 9 | spouse; providing applicability; providing an effective |
| 10 | date. |
| 11 |
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| 12 | Be It Enacted by the Legislature of the State of Florida: |
| 13 |
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| 14 | Section 1. Section 738.602, Florida Statutes, is amended |
| 15 | to read: |
| 16 | (Substantial rewording of section. See |
| 17 | s. 738.602, F.S., for present text.) |
| 18 | 738.602 Payments from deferred compensation plans, |
| 19 | annuities, and retirement plans or accounts.-- |
| 20 | (1) For purposes of this section: |
| 21 | (a) "Fund" means a private or commercial annuity, an |
| 22 | individual retirement account, an individual retirement annuity, |
| 23 | a deferred compensation plan, a pension plan, a profit-sharing |
| 24 | plan, a stock-bonus plan, an employee stock-ownership plan, or |
| 25 | another similar arrangement in which federal income tax is |
| 26 | deferred. |
| 27 | (b) "Income of the fund" means income that is determined |
| 28 | according to subsection (2) or subsection (3). |
| 29 | (c) "Nonseparate account" means a fund for which the value |
| 30 | of the participant's or account owner's right to receive |
| 31 | benefits can be determined only by the occurrence of a date or |
| 32 | event as defined in the instrument governing the fund. |
| 33 | (d) "Payment" means a distribution from a fund that a |
| 34 | trustee may receive over a fixed number of years or during the |
| 35 | life of one or more individuals because of services rendered or |
| 36 | property transferred to the payor in exchange for future |
| 37 | payments. The term includes a distribution made in money or |
| 38 | property from the payor's general assets or from a fund created |
| 39 | by the payor or payee. |
| 40 | (e) "Separate account" means a fund holding assets |
| 41 | exclusively for the benefit of a participant or account owner |
| 42 | and: |
| 43 | 1. The value of such assets or the value of the separate |
| 44 | account is ascertainable at any time; or |
| 45 | 2. The administrator of the fund maintains records that |
| 46 | show receipts and disbursements associated with such assets. |
| 47 | (2)(a) For a fund that is a separate account, income of |
| 48 | the fund shall be determined: |
| 49 | 1. As if the fund were a trust subject to the provisions |
| 50 | of ss. 738.401-738.706; or |
| 51 | 2. As a unitrust amount calculated by multiplying the fair |
| 52 | market value of the fund as of the first day of the first |
| 53 | accounting period and, thereafter, as of the last day of the |
| 54 | accounting period that immediately precedes the accounting |
| 55 | period during which a payment is received by the percentage |
| 56 | determined in accordance with s. 738.1041(2)(b)2.a. The trustee |
| 57 | shall determine such percentage as of the first month that the |
| 58 | trustee's election to treat the income of the fund as a unitrust |
| 59 | amount becomes effective. For purposes of this subparagraph, |
| 60 | "fair market value" means the fair market value of the assets |
| 61 | held in the fund as of the applicable valuation date determined |
| 62 | as provided in this subparagraph. The trustee is not liable for |
| 63 | good faith reliance upon any valuation supplied by the person or |
| 64 | persons in possession of the fund. If the trustee makes or |
| 65 | terminates an election under this subparagraph, the trustee |
| 66 | shall make such disclosure in a trust disclosure document that |
| 67 | satisfies the requirements of s. 736.1008(4)(a). |
| 68 | (b) The trustee shall have discretion to elect the method |
| 69 | of determining the income of the fund pursuant to this |
| 70 | subsection and may change the method of determining income of |
| 71 | the fund for any future accounting period. |
| 72 | (3) For a fund that is a nonseparate account, income of |
| 73 | the fund is a unitrust amount determined by calculating the |
| 74 | present value of the right to receive the remaining payments |
| 75 | under 26 U.S.C. s. 7520 of the Internal Revenue Code as of the |
| 76 | first day of the accounting period and multiplying it by the |
| 77 | percentage determined in accordance with s. 738.1041(2)(b)2.a. |
| 78 | The trustee shall determine the unitrust amount as of the first |
| 79 | month that the trustee's election to treat the income of the |
| 80 | fund as a unitrust amount becomes effective. |
| 81 | (4) Except for those trusts described in subsection (5), |
| 82 | the trustee shall allocate a payment from a fund as follows: |
| 83 | (a) That portion of the payment the payor characterizes as |
| 84 | income shall be allocated to income, and any remaining portion |
| 85 | of the payment shall be allocated to principal. |
| 86 | (b) To the extent that the payor does not characterize any |
| 87 | portion of a payment as income or principal and the trustee can |
| 88 | ascertain the income of the fund by the fund's account |
| 89 | statements or any other reasonable source, the trustee shall |
| 90 | allocate to income the lesser of the income of the fund or the |
| 91 | entire payment and shall allocate to principal any remaining |
| 92 | portion of the payment. |
| 93 | (c) If the trustee, acting reasonably and in good faith, |
| 94 | determines that neither paragraph (a) nor paragraph (b) applies |
| 95 | and all or part of the payment is required to be made, the |
| 96 | trustee shall allocate to income 10 percent of the portion of |
| 97 | the payment that is required to be made during the accounting |
| 98 | period and shall allocate the balance to principal. If no part |
| 99 | of a payment is required to be made or the payment received is |
| 100 | the entire amount to which the trustee is entitled, the trustee |
| 101 | shall allocate the entire payment to principal. For purposes of |
| 102 | this paragraph, a payment is not "required to be made" to the |
| 103 | extent the payment is made because the trustee exercises a right |
| 104 | of withdrawal. |
| 105 | (5) For a trust which, to qualify for the estate or gift |
| 106 | tax marital deduction under the Internal Revenue Code, entitles |
| 107 | the spouse to all of the income of the trust, and the terms of |
| 108 | the trust are silent as to the time and frequency for |
| 109 | distribution of the income of the fund, then: |
| 110 | (a) For a fund that is a separate account, unless the |
| 111 | spouse directs the trustee to leave the income of the fund in |
| 112 | the fund, the trustee shall withdraw and pay to the spouse, no |
| 113 | less frequently than annually: |
| 114 | 1. All of the income of the fund determined in accordance |
| 115 | with subparagraph (2)(a)1.; or |
| 116 | 2. The income of the fund as a unitrust amount determined |
| 117 | in accordance with subparagraph (2)(a)2. |
| 118 | (b) For a fund that is a nonseparate account, the trustee |
| 119 | shall withdraw and pay to the spouse, no less frequently than |
| 120 | annually, the income of the fund as a unitrust amount determined |
| 121 | in accordance with subsection (3). |
| 122 | (6) This section does not apply to payments to which s. |
| 123 | 738.603 applies. |
| 124 | Section 2. This act shall take effect July 1, 2009. |