Florida Senate - 2024                        COMMITTEE AMENDMENT
       Bill No. SB 1316
       
       
       
       
       
       
                                Ì1728446Î172844                         
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  02/05/2024           .                                
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       The Committee on Judiciary (Berman) recommended the following:
       
    1         Senate Amendment 
    2  
    3         Delete lines 362 - 2329
    4  and insert:
    5  which a fiduciary may or must distribute net income, regardless
    6  of whether the fiduciary also distributes principal to the
    7  beneficiary.
    8         (7) “Distribution” means a payment or transfer by a
    9  fiduciary to a beneficiary in the beneficiary’s capacity as a
   10  beneficiary, without consideration other than the beneficiary’s
   11  right to receive the payment or transfer under the terms of the
   12  trust as defined in subsection (24), or in a will, life estate,
   13  or term interest. “Distribute,” “distributed,” and “distributee”
   14  have corresponding meanings.
   15         (8) “Estate” means a decedent’s estate, including the
   16  property of the decedent as the estate is originally constituted
   17  and the property of the estate as it exists at any time during
   18  administration.
   19         (9)(4) “Fiduciary” includes means a trustee, a trust
   20  director as defined in s. 736.0103, or a personal
   21  representative, and a person acting under a delegation from a
   22  fiduciary or a trustee. The term also includes a person that
   23  holds property for a successor beneficiary whose interest may be
   24  affected by an allocation of receipts and expenditures between
   25  income and principal. If there are two or more cofiduciaries,
   26  the term includes all cofiduciaries acting under the terms of
   27  the trust and applicable law an executor, administrator,
   28  successor personal representative, special administrator, or a
   29  person performing substantially the same function.
   30         (10)(5) “Income” means money or other property that a
   31  fiduciary receives as current return from a principal asset. The
   32  term includes a part portion of receipts from a sale, exchange,
   33  or liquidation of a principal asset, to the extent provided in
   34  ss. 738.401-738.416 ss. 738.401-738.403 and s. 738.503.
   35         (6) “Income beneficiary” means a person to whom net income
   36  of a trust is or may be payable.
   37         (11)(7) “Income interest” means the right of a current an
   38  income beneficiary to receive all or part of net income, whether
   39  the terms of the trust require the net income to be distributed
   40  or authorize the net income to be distributed in the fiduciary’s
   41  trustee’s discretion. The term includes the right of a current
   42  beneficiary to use property held by a fiduciary.
   43         (12) “Independent person” means a person who is not:
   44         (a) For a trust:
   45         1. A qualified beneficiary as defined in s. 736.0103;
   46         2. A settlor of the trust;
   47         3. An individual whose legal obligation to support a
   48  beneficiary may be satisfied by a distribution from the trust;
   49  or
   50         4. Any trustee whom an interested distributee has the power
   51  to remove and replace with a related or subordinate party.
   52         (b) For an estate, a beneficiary;
   53         (c) A spouse, a parent, a brother, a sister, or an issue of
   54  an individual described in paragraph (a) or paragraph (b);
   55         (d) A corporation, a partnership, a limited liability
   56  company, or another entity in which persons described in
   57  paragraphs (a), (b), and (c), in the aggregate, have voting
   58  control; or
   59         (e) An employee of a person described in paragraph (a),
   60  paragraph (b), paragraph (c), or paragraph (d).
   61         (13) “Internal Revenue Code” means the Internal Revenue
   62  Code of 1986, as amended.
   63         (14)(8) “Mandatory income interest” means the right of a
   64  current an income beneficiary to receive net income that the
   65  terms of the trust require the fiduciary to distribute.
   66         (15)(9) “Net income” means the total allocations receipts
   67  allocated to income during an accounting period to income under
   68  the terms of a trust and this chapter minus the disbursements
   69  made from income during the period, other than distributions,
   70  allocated to income under the terms of the trust and this
   71  chapter. To the extent that the trust is a unitrust under ss.
   72  738.301-738.310, the term means the unitrust amount determined
   73  under ss. 738.301-738.310. The term includes the amount of an
   74  adjustment from principal to income under s. 738.203. The term
   75  does not include the amount of an adjustment plus or minus
   76  transfers under this chapter to or from income to principal
   77  under s. 738.203 during the period.
   78         (16)(10) “Person” means an individual, a business or a
   79  nonprofit entity, corporation, business trust, an estate, a
   80  trust, partnership, limited liability company, association,
   81  joint venture, a public corporation, or any other legal or
   82  commercial entity or a government or governmental subdivision,
   83  agency, or instrumentality, or other legal entity.
   84         (17) “Personal representative” means an executor, an
   85  administrator, a successor personal representative, a special
   86  administrator, or a person that performs substantially the same
   87  function with respect to an estate under the law governing the
   88  person’s status.
   89         (18)(11) “Principal” means property held in trust for
   90  distribution to, production of income for, or use by a current
   91  or successor a remainder beneficiary when the trust terminates.
   92         (19) “Record” means information inscribed on a tangible
   93  medium or stored in an electronic or other medium and is
   94  retrievable in perceivable form.
   95         (20) “Settlor” means a person, including a testator, who
   96  creates or contributes property to a trust. If more than one
   97  person creates or contributes property to a trust, the term
   98  includes each person, to the extent of the trust property
   99  attributable to that person’s contribution, except to the extent
  100  that another person has the power to revoke or withdraw that
  101  portion.
  102         (21) “Special tax benefit” means:
  103         (a) Exclusion of a transfer to a trust from gifts described
  104  in s. 2503(b) of the Internal Revenue Code because of the
  105  qualification of an income interest in the trust as a present
  106  interest in property;
  107         (b) Status as a qualified subchapter S trust described in
  108  s. 1361(d)(3) of the Internal Revenue Code at a time the trust
  109  holds stock of an S corporation described in s. 1361(a)(1) of
  110  the Internal Revenue Code;
  111         (c) An estate or gift tax marital deduction for a transfer
  112  to a trust under s. 2056 or s. 2523 of the Internal Revenue Code
  113  which depends or depended in whole or in part on the right of
  114  the settlor’s spouse to receive the net income of the trust;
  115         (d) Exemption in whole or in part of a trust from the
  116  federal generation-skipping transfer tax imposed by s. 2601 of
  117  the Internal Revenue Code because the trust was irrevocable on
  118  September 25, 1985, if there is any possibility that:
  119         1. A taxable distribution as defined in s. 2612(b) of the
  120  Internal Revenue Code could be made from the trust; or
  121         2. A taxable termination as defined in s. 2612(a) of the
  122  Internal Revenue Code could occur with respect to the trust; or
  123         (e) An inclusion ratio as defined in s. 2642(a) of the
  124  Internal Revenue Code of the trust which is less than one, if
  125  there is any possibility that:
  126         1. A taxable distribution as defined in s. 2612(b) of the
  127  Internal Revenue Code could be made from the trust; or
  128         2. A taxable termination as defined in s. 2612(a) of the
  129  Internal Revenue Code could occur with respect to the trust.
  130         (22) “Successive interest” means the interest of a
  131  successor beneficiary.
  132         (23)(12) “Successor Remainder beneficiary” means a person
  133  entitled to receive income or principal or to use property when
  134  an income interest or other current interest ends.
  135         (24)(13) “Terms of a trust” means:
  136         (a) Except as otherwise provided in paragraph (b), the
  137  manifestation of the settlor’s intent regarding a trust’s
  138  provisions as:
  139         1. Expressed in the will or trust instrument; or
  140         2. Established by other evidence that would be admissible
  141  in a judicial proceeding.
  142         (b) The trust’s provisions as established, determined, or
  143  amended by:
  144         1. A trustee or trust director in accordance with the
  145  applicable law;
  146         2. A court order; or
  147         3. A nonjudicial settlement agreement under s. 736.0111.
  148         (c) For an estate, a will; or
  149         (d) For a life estate or term interest, the corresponding
  150  manifestation of the rights of the beneficiaries to the extent
  151  provided in s. 738.508 the manifestation of the intent of a
  152  grantor or decedent with respect to the trust, expressed in a
  153  manner that admits of its proof in a judicial proceeding,
  154  whether by written or spoken words or by conduct.
  155         (25) “Trust” includes an express trust, whether private or
  156  charitable, with additions to the trust, wherever and however
  157  created; and a trust created or determined by a judgment or
  158  decree under which the trust is to be administered in the manner
  159  of an express trust. The term does not include a constructive
  160  trust; a resulting trust; a conservatorship; a custodial
  161  arrangement under the Florida Uniform Transfers to Minors Act; a
  162  business trust providing for certificates to be issued to
  163  beneficiaries; a common trust fund; a land trust under s.
  164  689.071; a trust created by the form of the account or by the
  165  deposit agreement at a financial institution; a voting trust; a
  166  security arrangement; a liquidation trust; a trust for the
  167  primary purpose of paying debts, dividends, interest, salaries,
  168  wages, profits, pensions, retirement benefits, or employee
  169  benefits of any kind; or an arrangement under which a person is
  170  a nominee, an escrowee, or an agent for another.
  171         (26)(14) “Trustee” means a person, other than a personal
  172  representative, that owns or holds property for the benefit of a
  173  beneficiary. The term includes an original, additional, or
  174  successor trustee, regardless of whether they are or not
  175  appointed or confirmed by a court.
  176         (27) “Will” means any testamentary instrument recognized
  177  under applicable law which makes a legally effective disposition
  178  of an individual’s property, effective at the individual’s
  179  death. The term includes a codicil or other amendment to a
  180  testamentary instrument.
  181         Section 3. Section 738.103, Florida Statutes, is amended to
  182  read:
  183         (Substantial rewording of section. See
  184         s. 738.103, F.S., for present text.)
  185         738.103 Scope.—Except as otherwise provided in the terms of
  186  a trust or this chapter, this chapter applies to all of the
  187  following:
  188         (1) A trust or an estate.
  189         (2) A life estate or other term interest in which the
  190  interest of one or more persons will be succeeded by the
  191  interest of one or more other persons to the extent provided in
  192  s. 738.508.
  193         Section 4. Section 738.104, Florida Statutes, is amended to
  194  read:
  195         (Substantial rewording of section. See
  196         s. 738.104, F.S., for present text.)
  197         738.104 Governing law.—Except as otherwise provided in the
  198  terms of a trust or this chapter, this chapter applies when this
  199  state is the principal place of administration of a trust or
  200  estate or the situs of property that is not held in a trust or
  201  estate and is subject to a life estate or other term interest
  202  described in s. 738.103(2). By accepting the trusteeship of a
  203  trust having its principal place of administration in this state
  204  or by moving the principal place of administration of a trust to
  205  this state, the trustee submits to the application of this
  206  chapter to any matter within the scope of this chapter involving
  207  the trust.
  208         Section 5. Section 738.1041, Florida Statutes, is repealed.
  209         Section 6. Section 738.105, Florida Statutes, is repealed.
  210         Section 7. Section 738.201, Florida Statutes, is amended to
  211  read:
  212         (Substantial rewording of section. See
  213         s. 738.201, F.S., for present text.)
  214         738.201 Fiduciary duties; general principles.—
  215         (1) In making an allocation or determination or exercising
  216  discretion under this chapter, a fiduciary shall do all of the
  217  following:
  218         (a) Act in good faith, based on what is a fair and
  219  reasonable fee to all beneficiaries;
  220         (b) Administer a trust or estate impartially, except to the
  221  extent that the terms of the trust manifest an intent that the
  222  fiduciary favors one or more beneficiaries;
  223         (c) Administer the trust or estate in accordance with the
  224  terms of the trust, even if there is a different provision in
  225  this chapter.
  226         (d) Administer the trust or estate in accordance with this
  227  chapter, except to the extent that the terms of the trust
  228  provide otherwise or authorize the fiduciary to determine
  229  otherwise.
  230         (2) A fiduciary’s allocation, determination, or exercise of
  231  discretion under this chapter is presumed to be fair and
  232  reasonable to all beneficiaries. A fiduciary may exercise a
  233  discretionary power of administration given to the fiduciary by
  234  the terms of the trust, and an exercise of the power that
  235  produces a result different from a result required or permitted
  236  by this chapter does not create an inference that the fiduciary
  237  abused the fiduciary’s discretion.
  238         (3) A fiduciary shall:
  239         (a) Add a receipt to principal, to the extent that the
  240  terms of the trust and this chapter do not allocate the receipt
  241  between income and principal;
  242         (b) Charge a disbursement to principal, to the extent that
  243  the terms of the trust and this chapter do not allocate the
  244  disbursement between income and principal; and
  245         (c) Within 65 days after the fiscal year ends, add any
  246  undistributed income to principal, unless otherwise provided by
  247  the terms of the trust.
  248         (4) A fiduciary may exercise the power to adjust under s.
  249  738.203(1), convert an income trust to a unitrust under ss.
  250  738.301-738.310, change the percentage or method used to
  251  calculate a unitrust amount under ss. 738.301-738.310, or
  252  convert a unitrust to an income trust under ss. 738.301-738.310
  253  if the fiduciary determines the exercise of the power will
  254  assist the fiduciary to administer the trust or estate
  255  impartially.
  256         (5) The fiduciary must consider the following factors in
  257  making the determination in subsection (4), including:
  258         (a) The terms of the trust.
  259         (b) The nature, distribution standards, and expected
  260  duration of the trust.
  261         (c) The effect of the allocation rules, including specific
  262  adjustments between income and principal, under ss. 738.301
  263  738.416.
  264         (d) The desirability of liquidity and regularity of income.
  265         (e) The desirability of the preservation and appreciation
  266  of principal.
  267         (f) The extent to which an asset is used or may be used by
  268  a beneficiary.
  269         (g) The increase or decrease in the value of principal
  270  assets, reasonably determined by the fiduciary.
  271         (h) Whether and to what extent the terms of the trust give
  272  the fiduciary power to accumulate income or invade principal or
  273  prohibit the fiduciary from accumulating income or invading
  274  principal.
  275         (i) The extent to which the fiduciary has accumulated
  276  income or invaded principal in preceding accounting periods.
  277         (j) The effect of current and reasonably expected economic
  278  conditions.
  279         (k) The reasonably expected tax consequences of the
  280  exercise of the power.
  281         (l) The identities and circumstances of the beneficiaries.
  282         (6) Except as provided in ss. 738.301-738.310, this chapter
  283  pertains to the administration of a trust and is applicable to
  284  any trust that is administered in this state or under its law.
  285  This chapter also applies to any estate that is administered in
  286  this state unless the provision is limited in application to a
  287  trustee, rather than a fiduciary.
  288         Section 8. Section 738.202, Florida Statutes, is amended to
  289  read:
  290         (Substantial rewording of section. See
  291         s. 738.202, F.S., for present text.)
  292         738.202 Judicial review of exercise of discretionary power;
  293  request for instruction.—
  294         (1) As used in this section, the term “fiduciary decision”
  295  means any of the following:
  296         (a) A fiduciary’s allocation between income and principal
  297  or other determination regarding income and principal required
  298  or authorized by the terms of the trust or this chapter.
  299         (b) The fiduciary’s exercise or nonexercise of a
  300  discretionary power regarding income and principal granted by
  301  the terms of the trust or this chapter, including the power to
  302  adjust under s. 738.203, convert an income trust to a unitrust
  303  under ss. 738.301-738.310, change the percentage or method used
  304  to calculate a unitrust amount under ss. 738.301-738.310,
  305  convert a unitrust to an income trust under ss. 738.301-738.310,
  306  or the method used to make property productive of income under
  307  s. 738.413.
  308         (c) The fiduciary’s implementation of a decision described
  309  in paragraph (a) or paragraph (b).
  310         (2) The court may not order a fiduciary to change a
  311  fiduciary decision unless the court determines that the
  312  fiduciary decision was an abuse of the fiduciary’s discretion. A
  313  court may not determine that a fiduciary abused its discretion
  314  merely because the court would have exercised the discretion in
  315  a different manner or would not have exercised the discretion.
  316         (3) If the court determines that a fiduciary decision was
  317  an abuse of the fiduciary’s discretion, the court may order a
  318  remedy authorized by law, including those prescribed under ss.
  319  736.1001 and 736.1002. Following such a determination by the
  320  court, the remedy is to place the beneficiaries in the positions
  321  the beneficiaries would have occupied if the fiduciary had not
  322  abused its discretion, as follows:
  323         (a) The court may order the fiduciary to exercise or
  324  refrain from exercising the power to adjust under s. 738.203;
  325         (b) The court may order the fiduciary to exercise or
  326  refrain from exercising the power to convert an income trust to
  327  a unitrust under ss. 738.301-738.310, change the percentage or
  328  method used to calculate a unitrust amount under ss. 738.301
  329  738.310, or convert a unitrust to an income trust under ss.
  330  738.301-738.310;
  331         (c) The court may compel the fiduciary to take any of the
  332  actions listed under s. 738.413;
  333         (d) To the extent that the abuse of discretion has resulted
  334  in no distribution to a beneficiary or a distribution that is
  335  too small, the court shall require the fiduciary to distribute
  336  from the trust to the beneficiary an amount the court determines
  337  will restore the beneficiary, in whole or in part, to his or her
  338  appropriate position;
  339         (e) To the extent that the abuse of discretion has resulted
  340  in a distribution to a beneficiary that is too large, the court
  341  shall restore the beneficiaries, the trust, or both, in whole or
  342  in part, to their appropriate positions by requiring the
  343  fiduciary to withhold an amount from one or more future
  344  distributions to the beneficiary who received the distribution
  345  that was too large or requiring that beneficiary to return some
  346  or all of the distribution to the trust; or
  347         (f) To the extent that the court is unable, after applying
  348  paragraphs (a)-(e), to restore the beneficiaries or the trust,
  349  or both, to the positions they would have occupied if the
  350  fiduciary had not abused its discretion, the court may require
  351  the fiduciary to pay an appropriate amount from its own funds to
  352  one or more of the beneficiaries or the trust or both.
  353         (4) On petition by the fiduciary for instruction, the court
  354  may determine whether a proposed fiduciary decision will result
  355  in an abuse of the fiduciary’s discretion. If the petition
  356  describes the proposed decision, contains sufficient information
  357  to inform the beneficiary of the reasons for making the proposed
  358  decision and the facts on which the fiduciary relies, and
  359  explains how the beneficiary will be affected by the proposed
  360  decision, a beneficiary who opposes the proposed decision has
  361  the burden to establish that it will result in an abuse of the
  362  fiduciary’s discretion.
  363         (5) If an action is instituted alleging an abuse of
  364  discretion in the exercise or nonexercise of the fiduciary’s
  365  discretion under this chapter and the court determines no abuse
  366  of discretion has occurred, the fiduciary’s costs and attorney
  367  fees incurred in defending the action shall be paid from the
  368  trust assets.
  369         Section 9. Section 738.203, Florida Statutes, is created to
  370  read:
  371         738.203 Fiduciary’s power to adjust.—
  372         (1) Except as otherwise provided in the terms of a trust or
  373  this section, a fiduciary, in a record without court approval,
  374  may adjust between income and principal if the fiduciary
  375  determines that the exercise of the power to adjust will assist
  376  the fiduciary in administering the trust or estate impartially.
  377         (2) This section does not create a duty to exercise or
  378  consider the power to adjust under subsection (1) or to inform a
  379  beneficiary about the applicability of this section.
  380         (3) A fiduciary that in good faith exercises or fails to
  381  exercise the power to adjust under subsection (1) is not liable
  382  to a person affected by the exercise or failure to exercise.
  383         (4) In deciding whether and to what extent to exercise the
  384  power to adjust under subsection (1), a fiduciary shall consider
  385  all factors the fiduciary considers relevant, including relevant
  386  factors in s. 738.201(5), and the application of ss. 738.401(9),
  387  738.408 and 738.413.
  388         (5) A fiduciary may not exercise the power under subsection
  389  (1) to make an adjustment or under s. 738.408 to make a
  390  determination that an allocation is insubstantial if:
  391         (a) The adjustment or determination would reduce the amount
  392  payable to a current income beneficiary from a trust that
  393  qualifies for a special tax benefit, except to the extent that
  394  the adjustment is made to provide for a reasonable apportionment
  395  of the total return of the trust between the current income
  396  beneficiary and successor beneficiaries;
  397         (b) The adjustment or determination would change the amount
  398  payable to a beneficiary, as a fixed annuity or a fixed fraction
  399  of the value of the trust assets, under the terms of the trust;
  400         (c) The adjustment or determination would reduce an amount
  401  that is permanently set aside for a charitable purpose under the
  402  terms of the trust unless both income and principal are set
  403  aside for the charitable purpose;
  404         (d) Possessing or exercising the power would cause a person
  405  to be treated as the owner of all or part of the trust for
  406  federal income tax purposes and the person would not be treated
  407  as the owner if the fiduciary did not possess the power to
  408  adjust;
  409         (e) Possessing or exercising the power would cause all or
  410  part of the value of the trust assets to be included in the
  411  gross estate of an individual for federal real estate tax
  412  purposes and the assets would not be included in the gross
  413  estate of the individual if the fiduciary did not possess the
  414  power to adjust;
  415         (f) Possessing or exercising the power would cause an
  416  individual to be treated as making a gift for federal gift tax
  417  purposes;
  418         (g) The fiduciary is not an independent person;
  419         (h) The trust is irrevocable and provides for income to be
  420  paid to the settlor, and possessing or exercising the power
  421  would cause the adjusted principal or income to be considered an
  422  available resource or available income under a public-benefit
  423  program; or
  424         (i) The trust is a unitrust under ss. 738.301-738.310.
  425         (6) If paragraph (5)(d), paragraph (5)(e), paragraph
  426  (5)(f), or paragraph (5)(g) applies to a fiduciary:
  427         (a) A cofiduciary to which paragraphs (5)(d)-(g) do not
  428  apply may exercise the power to adjust, unless the exercise of
  429  the power by the remaining cofiduciary or cofiduciaries is not
  430  permitted by the terms of the trust or law other than this
  431  chapter; or
  432         (b) If there is no cofiduciary to which paragraphs (5)(d)
  433  (g) do not apply, the fiduciary may appoint a cofiduciary to
  434  which paragraphs (5)(d)-(g) do not apply which may be a special
  435  fiduciary with limited powers, and the appointed cofiduciary may
  436  exercise the power to adjust under subsection (1), unless the
  437  appointment of a cofiduciary or the exercise of the power by a
  438  cofiduciary is not permitted by the terms of the trust or law
  439  other than this chapter.
  440         (7) A fiduciary may release or delegate to a cofiduciary
  441  the power to adjust under subsection (1) if the fiduciary
  442  determines that the fiduciary’s possession or exercise of the
  443  power will or may:
  444         (a) Cause a result described in paragraph (5)(a), paragraph
  445  (5)(b), paragraph (5)(c), paragraph (5)(d), paragraph (5)(e),
  446  paragraph (5)(f), or paragraph (5)(h); or
  447         (b) Deprive the trust of a tax benefit or impose a tax
  448  burden not described in paragraph (5)(a), paragraph (5)(b),
  449  paragraph (5)(c), paragraph (5)(d), paragraph (5)(e), or
  450  paragraph (5)(f).
  451         (8) A fiduciary’s release or delegation to a cofiduciary
  452  under subsection (7) of the power to adjust under subsection
  453  (1):
  454         (a) Must be in a record;
  455         (b) Applies to the entire power, unless the release or
  456  delegation provides a limitation, which may be a limitation to
  457  the power to adjust:
  458         1. From income to principal;
  459         2. From principal to income;
  460         3. For specified property; or
  461         4. In specified circumstances.
  462         (c) For a delegation, may be modified by a redelegation
  463  under this subsection by the cofiduciary to which the delegation
  464  is made; and
  465         (d) Subject to paragraph (c), is permanent, unless the
  466  release or delegation provides a specified period, including a
  467  period measured by the life of an individual or the lives of
  468  more than one individual.
  469         (9) Terms of a trust that deny or limit the power to adjust
  470  between income and principal do not affect the application of
  471  this section, unless the terms of the trust expressly deny or
  472  limit the power to adjust under subsection (1).
  473         (10) The exercise of the power to adjust under subsection
  474  (1) in any accounting period may apply to the current period,
  475  the immediately preceding period, and one or more subsequent
  476  periods.
  477         (11) A description of the exercise of the power to adjust
  478  under subsection (1) must be:
  479         (a) Included in a report, if any, sent to beneficiaries
  480  under s. 736.0813; or
  481         (b) Communicated at least annually to the qualified
  482  beneficiaries as defined in s. 736.0103 other than the Attorney
  483  General.
  484         (12) With respect to a trust in existence on January 1,
  485  2003:
  486         (a) A fiduciary may not have the power to adjust under this
  487  section until the statement required in subsection (13) is
  488  provided and either no objection is made or any objection which
  489  is made has been terminated.
  490         1. An objection is made if, within 60 days after the date
  491  of the statement required in subsection (13), a super majority
  492  of the eligible beneficiaries deliver to the fiduciary a written
  493  objection to the application of this section to such trust. An
  494  objection shall be deemed to be delivered to the fiduciary on
  495  the date the objection is mailed to the mailing address listed
  496  in the notice provided in subsection (13).
  497         2. An objection is terminated upon the earlier of the
  498  receipt of consent from a super majority of eligible
  499  beneficiaries of the class that made the objection, or the
  500  resolution of the objection under paragraph (c).
  501         (b) An objection or consent under this section may be
  502  executed by a legal representative or natural guardian of a
  503  beneficiary without the filing of any proceeding or approval of
  504  any court.
  505         (c) If an objection is delivered to the fiduciary, then the
  506  fiduciary may petition the circuit court for an order quashing
  507  the objection and vesting in such fiduciary the power to adjust
  508  under this section. The burden will be on the objecting
  509  beneficiaries to prove that the power to adjust would be
  510  inequitable, illegal, or otherwise in contravention of the
  511  grantor’s intent. The court may award costs and attorney fees
  512  relating to the fiduciary’s petition in the same manner as in
  513  chancery actions. When costs and attorney fees are to be paid
  514  out of the trust, the court may, in its discretion, direct from
  515  which part of the trust they shall be paid.
  516         (d) If no timely objection is made or if the fiduciary is
  517  vested with the power to adjust by court order, the fiduciary
  518  may thereafter exercise the power to adjust without providing
  519  notice of its intent to do so unless, in vesting the fiduciary
  520  with the power to adjust, the court determines that unusual
  521  circumstances require otherwise.
  522         (e)1. If a fiduciary makes a good faith effort to comply
  523  with the notice provisions of subsection (13), but fails to
  524  deliver notice to one or more beneficiaries entitled to such
  525  notice, neither the validity of the notice required under this
  526  subsection nor the fiduciary’s power to adjust under this
  527  section shall be affected until the fiduciary has actual notice
  528  that one or more beneficiaries entitled to notice were not
  529  notified. Until the fiduciary has actual notice of the notice
  530  deficiency, the fiduciary shall have all of the powers and
  531  protections granted a fiduciary with the power to adjust under
  532  this chapter.
  533         2. When the fiduciary has actual notice that one or more
  534  beneficiaries entitled to notice under subsection (13) were not
  535  notified, the fiduciary’s power to adjust under this section
  536  shall cease until all beneficiaries who are entitled to such
  537  notice, including those who were previously provided with such
  538  notice, are notified and given the opportunity to object as
  539  provided for under this subsection.
  540         (f) The objection of a super majority of eligible
  541  beneficiaries under this subsection shall be valid for a period
  542  of 1 year after the date of the notice set forth in subsection
  543  (13). Upon expiration of the objection, the fiduciary may
  544  thereafter give a new notice under subsection (13).
  545         (g) This section is not intended to create or imply a duty
  546  of the fiduciary of a trust existing on January 1, 2003, to seek
  547  a power to adjust under this subsection or to give the notice
  548  described in subsection (13) if the fiduciary does not desire to
  549  have a power to adjust under this section, and no inference of
  550  impropriety shall be made as the result of a fiduciary not
  551  seeking a power to adjust under this subsection.
  552         (13)(a) A fiduciary of a trust in existence on January 1,
  553  2003, that is not prohibited under subsection (5) from
  554  exercising the power to adjust shall, any time before initially
  555  exercising the power, provide to all eligible beneficiaries a
  556  statement containing the following:
  557         1. The name, telephone number, street address, and mailing
  558  address of the fiduciary and of any person who may be contacted
  559  for further information;
  560         2. A statement that unless a super majority of the eligible
  561  beneficiaries objects to the application of this section to the
  562  trust within 60 days after the date the statement pursuant to
  563  this subsection was served, this section shall apply to the
  564  trust; and
  565         3. A statement that, if this section applies to the trust,
  566  the fiduciary will have the power to adjust between income and
  567  principal and that such a power may have an effect on the
  568  distributions to such beneficiary from the trust.
  569         (b) The statement may contain information regarding a
  570  fiduciary’s obligation with respect to the power to adjust
  571  between income and principal under this section.
  572         (c) The statement shall be served informally, in the manner
  573  provided in the Florida Rules of Civil Procedure relating to
  574  service of pleadings subsequent to the initial pleading. The
  575  statement may be served on a legal representative or natural
  576  guardian of a beneficiary without the filing of any proceeding
  577  or approval of any court.
  578         (14) For purposes of subsections (12) and (13), the term:
  579         1. “Eligible beneficiaries” means:
  580         a. If at the time the determination is made there are one
  581  or more beneficiaries described in s. 736.0103(19)(c), the
  582  beneficiaries described in s. 736.0103(19)(a) and (c); or
  583         b. If there is no beneficiary described in s.
  584  736.0103(19)(c), the beneficiaries described in s.
  585  736.0103(19)(a) and (b).
  586         2. “Super majority of the eligible beneficiaries” means:
  587         a. If at the time the determination is made there are one
  588  or more beneficiaries described in s. 736.0103(19)(c), at least
  589  two-thirds in interest of the beneficiaries described in s.
  590  736.0103(19)(a) or two-thirds in interest of the beneficiaries
  591  described in s. 736.0103(19)(c), if the interests of the
  592  beneficiaries are reasonably ascertainable; otherwise, it means
  593  two-thirds in number of either such class; or
  594         b. If there is no beneficiary described in s.
  595  736.0103(19)(c), at least two-thirds in interest of the
  596  beneficiaries described in s. 736.0103(19)(a) or two-thirds in
  597  interest of the beneficiaries described in s. 736.0103(19)(b),
  598  if the interests of the beneficiaries are reasonably
  599  ascertainable, otherwise, two-thirds in number of either such
  600  class.
  601         (15) A trust exists on January 1, 2003, if it is not
  602  revocable on January 1, 2003. A trust is revocable if revocable
  603  by the grantor alone or in conjunction with any other person. A
  604  trust is not revocable for purposes of this section if revocable
  605  by the grantor only with the consent of all persons having a
  606  beneficial interest in the property.
  607         Section 10. Section 738.301, Florida Statutes, is amended
  608  to read:
  609         (Substantial rewording of section. See
  610         s. 738.301, F.S., for present text).
  611         738.301 Definitions.—For purposes of this section and ss.
  612  738.302-738.310:
  613         (1) “Applicable value” means the amount of the net fair
  614  market value of a trust taken into account under s. 738.307.
  615         (2) “Express unitrust” means a trust for which, under the
  616  terms of the trust without regard to this section and ss.
  617  738.302-738.310, net income must be calculated as a unitrust
  618  amount.
  619         (3) “Income trust” means a trust, created by an inter vivos
  620  or testamentary instrument, that directs or permits the trustee
  621  to distribute the net income of the trust to one or more
  622  persons, in fixed proportions or in amounts or proportions
  623  determined by the trustee and regardless of whether the trust
  624  directs or permits the trustee to distribute the principal of
  625  the trust to one or more such persons.
  626         (4) “Net fair market value of a trust” means the fair
  627  market value of the assets of the trust, less the reasonably
  628  known noncontingent liabilities of the trust.
  629         (5) “Unitrust” means a trust for which net income is a
  630  unitrust amount. The term includes an express unitrust.
  631         (6) “Unitrust amount” means an amount computed by
  632  multiplying a determined value of a trust by a determined
  633  percentage. For a unitrust administered under a unitrust policy,
  634  the term means the applicable value multiplied by the unitrust
  635  rate.
  636         (7) “Unitrust policy” means a policy described in ss.
  637  738.301-738.310 and adopted under s. 738.303.
  638         (8) “Unitrust rate” means the rate used to compute the
  639  unitrust amount for a unitrust administered under a unitrust
  640  policy.
  641         Section 11. Section 738.302, Florida Statutes, is amended
  642  to read:
  643         (Substantial rewording of section. See
  644         s. 738.302, F.S., for present text.)
  645         738.302 Applications; duties and remedies.—
  646         (1) Except as otherwise provided in subsection (2), ss.
  647  738.301-738.310 apply to all of the following:
  648         (a) An income trust, unless the terms of the trust
  649  expressly prohibit the use of ss. 738.301-738.310 by a specific
  650  reference to this paragraph or corresponding provision of prior
  651  law, or an explicit expression of intent that net income not be
  652  calculated as a unitrust amount.
  653         (b) An express unitrust, except to the extent that the
  654  terms of the trust explicitly:
  655         1. Prohibit the use of ss. 738.301-738.310 by a specific
  656  reference to this paragraph or corresponding provision of prior
  657  law;
  658         2. Prohibit conversion to an income trust; or
  659         3. Limit changes to the method of calculating the unitrust
  660  amount.
  661         (c) A unitrust that had been converted from an income
  662  trust.
  663         (2) The provisions of ss. 738.301-738.310 do not apply to a
  664  trust described in s. 170(f)(2)(B), s. 642(c)(5), s. 664(d), s.
  665  2702(a)(3)(A)(ii) or (iii), or s. 2702(b) of the Internal
  666  Revenue Code.
  667         (3) An income trust to which ss. 738.301-738.310 apply
  668  under paragraph (1)(a) may be converted to a unitrust under ss.
  669  738.301-738.310 regardless of the terms of the trust concerning
  670  distributions. Conversion to a unitrust under ss. 738.301
  671  738.310 does not affect other terms of the trust concerning
  672  distributions of income or principal.
  673         (4) Sections 738.301-738.310 apply to an estate only to the
  674  extent that a trust is a beneficiary of the estate. To the
  675  extent of the trust’s interest in the estate, the estate may be
  676  administered as a unitrust, the administration of the estate as
  677  a unitrust may be discontinued, or the percentage or method used
  678  to calculate the unitrust amount may be changed, in the same
  679  manner as for a trust under those sections.
  680         (5) The provisions of ss. 738.301-738.310 do not create a
  681  duty to take or consider action under ss. 738.301-738.310 or to
  682  inform a beneficiary about the applicability of ss. 738.301
  683  738.310.
  684         (6) A fiduciary that in good faith takes or fails to take
  685  an action under ss. 738.301-738.310 is not liable to a person
  686  affected by the action or inaction.
  687         Section 12. Section 738.303, Florida Statutes, is amended
  688  to read:
  689         (Substantial rewording of section. See
  690         s. 738.303, F.S., for present text.)
  691         738.303 Authority of fiduciary.—
  692         (1) By complying with subsections (2) and (6), and without
  693  court approval, a fiduciary may do any of the following:
  694         (a) Convert an income trust to a unitrust if the fiduciary
  695  adopts in a record a unitrust policy for the trust which
  696  provides:
  697         1. That in administering the trust, the net income of the
  698  trust will be a unitrust amount rather than net income
  699  determined without regard to ss. 738.301-738.310; and
  700         2. The percentage and method used to calculate the unitrust
  701  amount.
  702         (b) Change the percentage or method used to calculate a
  703  unitrust amount for a unitrust if the fiduciary adopts in a
  704  record a unitrust policy or an amendment or replacement of a
  705  unitrust policy providing charges in the percentage or method
  706  used to calculate the unitrust amount.
  707         (c) Convert a unitrust to an income trust if the fiduciary
  708  adopts in a record a determination that, in administering the
  709  trust, the net income of the trust will be net income determined
  710  without regard to ss. 738.301-738.310 rather than a unitrust
  711  amount.
  712         (2) A fiduciary may take an action under subsection (1) if
  713  all of the following apply:
  714         (a) The fiduciary determines that the action will assist
  715  the fiduciary to administer a trust impartially.
  716         (b) The fiduciary sends a notice in a record to the
  717  qualified beneficiaries determined under ss. 736.0103 and
  718  736.0110 in the manner required by s. 738.304, describing and
  719  proposing to take the action.
  720         (c) The fiduciary sends a copy of the notice under
  721  paragraph (b) to each settlor of the trust which is:
  722         1. If an individual, living; or
  723         2. If not an individual, in existence.
  724         (d) At least one member of each class of the qualified
  725  beneficiaries determined under ss. 736.0103 and 736.0110, other
  726  than the Attorney General, receiving the notice under paragraph
  727  (b) is:
  728         1. If an individual, legally competent;
  729         2. If not an individual, in existence; or
  730         3. Represented in the manner provided in s. 738.304(2).
  731         (e) The fiduciary does not receive, by the date specified
  732  in the notice under s. 738.304(4)(e), an objection in a record
  733  to the action proposed under paragraph (b) from a person to
  734  which the notice under paragraph (b) is sent.
  735         (3) If a fiduciary receives, not later than the date stated
  736  in the notice under s. 738.304(4)(e), an objection in a record
  737  described in s. 738.304(4)(d) to a proposed action, the
  738  fiduciary or a beneficiary may request the court to have the
  739  action taken as proposed, taken with modifications, or
  740  prevented. A person described in s. 738.304(1) may oppose the
  741  proposed action in the proceeding under this subsection
  742  regardless of whether the person:
  743         (a) Consented under s. 738.304(3); or
  744         (b) Objected under s. 738.304(4)(d).
  745         (4) If, after sending a notice under paragraph (2)(b), a
  746  fiduciary decides not to take the action proposed in the notice,
  747  the fiduciary must notify in a record each person described in
  748  s. 738.304(1) of the decision not to take the action and the
  749  reasons for the decision.
  750         (5) If a beneficiary requests in a record that a fiduciary
  751  take an action described in subsection (1) and the fiduciary
  752  declines to act or does not act within 60 days after receiving
  753  the request, the beneficiary may request the court to direct the
  754  fiduciary to take the action requested.
  755         (6) In deciding whether and how to take an action
  756  authorized in subsection (1), or whether and how to respond to a
  757  request by a beneficiary under subsection (5), a fiduciary must
  758  consider all factors relevant to the trust and beneficiaries,
  759  including the relevant factors listed in s. 738.201(5).
  760         (7) A fiduciary may release or delegate the power to
  761  convert an income trust to a unitrust under paragraph (1)(a),
  762  change the percentage or method used to calculate a unitrust
  763  amount under paragraph (1)(b), or convert a unitrust to an
  764  income trust under paragraph (1)(c), for a reason described in
  765  s. 738.203(7) and in the manner described in s. 738.203(8).
  766         Section 13. Section 738.304, Florida Statutes, is created
  767  to read:
  768         738.304 Notice.—
  769         (1) A notice required by s. 738.303(2)(b) must be sent in a
  770  manner authorized under s. 736.0109 to all of the following:
  771         (a) The qualified beneficiaries determined under s.
  772  736.0103, other than the Attorney General.
  773         (b) Each person that is granted a power over the trust by
  774  the terms of the trust, to the extent that the power is
  775  exercisable when the person is not then serving as a trustee:
  776         1. Including all of the following:
  777         a. Power over the investment, management, or distribution
  778  of trust property or other matters of trust administration.
  779         b. Power to appoint or remove a trustee or person described
  780  in this paragraph.
  781         2. Excluding all of the following:
  782         a. Power of appointment.
  783         b. Power of a beneficiary over the trust, to the extent
  784  that the exercise or nonexercise of the power affects the
  785  beneficial interest of the beneficiary or another beneficiary
  786  represented by the beneficiary under ss. 736.0301-736.0306 with
  787  respect to the exercise or nonexercise of the power.
  788         c. Power over the trust if the terms of the trust provide
  789  that the power is held in a nonfiduciary capacity and the power
  790  must be held in a nonfiduciary capacity to achieve a tax
  791  objective under the Internal Revenue Code.
  792         (c) Each person that is granted a power by the terms of the
  793  trust to appoint or remove a trustee or person described in
  794  paragraph (b) to the extent that the power is exercisable when
  795  the person that exercises the power is not serving as a trustee
  796  or person described in paragraph (b).
  797         (2) The representation provisions of ss. 736.0301-736.0306
  798  apply to notice under this section.
  799         (3) A person may consent in a record at any time to action
  800  proposed under s. 738.303(2)(b). A notice required by s.
  801  738.303(2)(b) need not be sent to a person that consents under
  802  this subsection.
  803         (4) A notice required under s. 738.303(2)(b) must include
  804  all of the following:
  805         (a) The action proposed under s. 738.303(2)(b).
  806         (b) For a conversion of an income trust to a unitrust, a
  807  copy of the unitrust policy adopted under s. 738.303(1)(a).
  808         (c) For a change in the percentage or method used to
  809  calculate the unitrust amount, a copy of the unitrust policy or
  810  amendment or replacement of the unitrust policy adopted under s.
  811  738.303(1)(b).
  812         (d) A statement that the person to which the notice is sent
  813  may object to the proposed action by stating in a record the
  814  basis for the objection and sending or delivering the record to
  815  the fiduciary.
  816         (e) The date by which an objection under paragraph (d) must
  817  be received by the fiduciary, which must be at least 30 days
  818  after the date the notice is sent.
  819         (f) The date on which the action is proposed to be taken
  820  and the date on which the action is proposed to take effect.
  821         (g) The name and contact information of the fiduciary.
  822         (h) The name and contact information of a person that may
  823  be contacted for additional information.
  824         Section 14. Section 738.305, Florida Statutes, is created
  825  to read:
  826         738.305 Unitrust policy.—
  827         (1) In administering a unitrust under ss. 738.301-738.310,
  828  a fiduciary shall follow a unitrust policy adopted under s.
  829  738.303(1)(a) or (b) or amended or replaced under s.
  830  738.303(1)(b).
  831         (2) A unitrust policy must provide all of the following:
  832         (a) The unitrust rate or method for determining the
  833  unitrust rate under s. 738.306.
  834         (b) The method for determining the applicable value under
  835  s. 738.307.
  836         (c) The rules described in ss. 738.306-738.310 which apply
  837  in the administration of the unitrust, whether the rules are:
  838         1. Mandatory as provided in ss. 738.307(1) and (3),
  839  738.308(1), and 738.310; or
  840         2. Optional as provided in ss. 738.306, 738.307(2), and
  841  738.308(2), to the extent that the fiduciary elects to adopt
  842  those rules.
  843         (3) A unitrust policy may do any of the following:
  844         (a) Provide methods and standards for:
  845         1. Determining the timing of the distributions;
  846         2. Making distributions in cash or in kind or partly in
  847  cash and partly in kind; or
  848         3. Correcting an underpayment or overpayment to a
  849  beneficiary based on the unitrust amount if there is an error in
  850  calculating the unitrust amount.
  851         (b) Specify sources and the order of sources, including
  852  categories of income for federal income tax purposes, from which
  853  distributions of a unitrust amount are paid.
  854         (c) Provide other standards and rules that the fiduciary
  855  determines serve the interests of the beneficiaries.
  856         Section 15. Section 738.306, Florida Statutes, is created
  857  to read:
  858         738.306 Unitrust rate.—
  859         (1) A unitrust rate must be at least 3 percent and not more
  860  than 5 percent. Within those limits, the unitrust rate may be:
  861         (a) A fixed unitrust rate; or
  862         (b)1. A unitrust rate that is determined for each period
  863  using:
  864         a. A market index or other published data; or
  865         b. A mathematical blend of market indices or other
  866  published data over a stated number of preceding periods.
  867         2. If the rate calculated under this paragraph would be
  868  less than 3, the rate is 3; and if the rate calculated would be
  869  more than 5, the rate is 5.
  870         (2) Within the limits of subsection (1), a unitrust policy
  871  may provide for any of the following:
  872         (a) A limit on how much the unitrust rate determined under
  873  paragraph (1)(b) may increase over the unitrust rate for the
  874  preceding period or a mathematical blend of unitrust rates over
  875  a stated number of preceding periods.
  876         (b) A limit on how much the unitrust rate determined under
  877  paragraph (1)(b) may decrease below the unitrust rate for the
  878  preceding period or a mathematical blend of unitrust rates over
  879  a stated number of preceding periods.
  880         (c) A mathematical blend of any of the unitrust rates
  881  determined under paragraph (1)(b) and paragraphs (a) and (b).
  882         (3) If the fiduciary is not an independent person, the
  883  percentage used to calculate the unitrust amount is the rate
  884  determined under s. 7520(a)(2) of the Internal Revenue Code in
  885  effect for the month the conversion under this section becomes
  886  effective and for each January thereafter; however, if the rate
  887  determined under s. 7520(a)(2) of the Internal Revenue Code
  888  exceeds 5 percent, the unitrust rate is 5 percent, and if the
  889  rate determined under s. 7520(a)(2) of the Internal Revenue Code
  890  is less than 3 percent, the unitrust rate is 3 percent.
  891         Section 16. Section 738.307, Florida Statutes, is created
  892  to read:
  893         738.307 Applicable value.—
  894         (1) A unitrust policy must provide the method for
  895  determining the fair market value of an asset for the purpose of
  896  determining the unitrust amount, including all of the following:
  897         (a) The frequency of valuing the asset, which need not
  898  require a valuation in every period.
  899         (b) The date for valuing the asset in each period in which
  900  the asset is valued.
  901         (2) Except as otherwise provided in s. 738.309, a unitrust
  902  policy may provide methods for determining the amount of the net
  903  fair market value of the trust to take into account in
  904  determining the applicable value, including any of the
  905  following:
  906         (a) Obtaining an appraisal of an asset for which fair
  907  market value is not readily available.
  908         (b) Excluding specific assets or groups or types of assets
  909  in addition to those described in subsection (3).
  910         (c) Making other exceptions or modifications of the
  911  treatment of specific assets or groups or types of assets.
  912         (d) Including identification and treatment of cash or
  913  property held for distribution.
  914         (e) Using an average of fair market values over a stated
  915  number of preceding periods, not to exceed 3 calendar years.
  916         (f) Determining the reasonable known liabilities of the
  917  trust, including treatment of liabilities to conform with the
  918  treatment of assets under paragraphs (a)-(e).
  919         (3) The following property may not be included in
  920  determining the value of the trust:
  921         (a) Any residential property or any tangible personal
  922  property that, as of the first business day of the current
  923  valuation year, one or more current beneficiaries of the trust
  924  have or have had the right to occupy or have or have had the
  925  right to possess or control, other than in his or her capacity
  926  as trustee of the trust. Instead, the right of occupancy or the
  927  right to possession and control is the unitrust amount with
  928  respect to such property; however, the unitrust amount must be
  929  adjusted to take into account partial distributions from or
  930  receipt into the trust of such property during the valuation
  931  year;
  932         (b) Any asset specifically given to a beneficiary and the
  933  return on investment on such property, which return on
  934  investment must be distributable to the beneficiary; and
  935         (c) Any asset while held in an estate.
  936         Section 17. Section 738.308, Florida Statutes, is created
  937  to read:
  938         738.308 Period.—
  939         (1) A unitrust policy must provide the period used under
  940  ss. 738.306 and 738.307. The period must be the calendar year.
  941         (2) A unitrust policy may provide standards for:
  942         (a) Using fewer preceding periods under s. 738.306(1)(b)1.
  943  or (2)(a) or (b) if:
  944         1. The trust was not in existence in a preceding period; or
  945         2. Market indices or other published data are not available
  946  for a preceding period;
  947         (b) Using fewer preceding periods under 738.307(2)(e) if:
  948         1. The trust was not in existence in a preceding period; or
  949         2. Fair market values are not available for a preceding
  950  period; and
  951         (c) Prorating a unitrust amount on a daily basis for a part
  952  of a period in which the trust or the administration of the
  953  trust as a unitrust or the interest of any beneficiary commences
  954  or terminates.
  955         Section 18. Section 738.309, Florida Statutes, is created
  956  to read:
  957         738.309 Express unitrust.—
  958         (1) This section applies to a trust that, by its governing
  959  instrument, requires or allows income or net income to be
  960  calculated as a unitrust amount.
  961         (2) The trustee of an express unitrust may determine the
  962  unitrust amount by reference to the net fair market value of the
  963  unitrust’s assets in 1 or more years.
  964         (3) Distribution of a unitrust amount is considered a
  965  distribution of all of the net income of an express unitrust and
  966  is considered to be an income interest.
  967         (4) The unitrust amount is considered to be a reasonable
  968  apportionment of the total return of an express unitrust.
  969         (5) An express unitrust that provides or allows a
  970  distribution based on a unitrust rate in excess of 5 percent per
  971  year of the net fair market value of the unitrust assets is
  972  considered a distribution of all of the income of the unitrust
  973  and a distribution of principal of the unitrust to the extent
  974  that the distribution exceeds 5 percent per year.
  975         (6) An express unitrust may provide a mechanism for
  976  changing the unitrust rate, similar to the mechanism provided
  977  under s. 738.306, based upon the factors noted in that section,
  978  and may provide for a conversion from a unitrust to an income
  979  trust or a reconversion of an income trust to a unitrust under
  980  s. 738.303.
  981         (7) If an express unitrust does not specifically or by
  982  reference to s. 738.306 prohibit a power to change the unitrust
  983  rate or to convert to an income trust under s. 738.303, the
  984  trustee must have such power.
  985         (8) The governing instrument of an express unitrust may
  986  grant the trustee discretion to adopt a consistent practice of
  987  treating capital gains as part of the unitrust amount to the
  988  extent that the unitrust amount exceeds the income determined as
  989  if the trust were not an express unitrust, or the governing
  990  instrument may specify the ordering of classes of income.
  991         (9) Unless the terms of the express unitrust specifically
  992  provide otherwise as provided in subsection (8), the
  993  distribution of a unitrust amount is considered a distribution
  994  made from the following sources, which are listed in order of
  995  priority:
  996         (a) Net accounting income determined under this chapter as
  997  if the trust were not a unitrust;
  998         (b) Ordinary income not allocable to net accounting income;
  999         (c) Net realized short-term capital gains;
 1000         (d) Net realized long-term capital gains; and
 1001         (e) The principal of the trust.
 1002         (10) The governing instrument of an express unitrust may
 1003  provide that the trustee may exclude assets used by the
 1004  unitrust’s beneficiary, including, but not limited to, a
 1005  residence property or tangible personal property, from the net
 1006  fair market value of the unitrust’s assets for the purposes of
 1007  computing the unitrust amount. The use of these assets may be
 1008  considered equivalent to income or to the unitrust amount.
 1009  
 1010         Section 19. Section 738.310, Florida Statutes, is created
 1011  to read:
 1012         738.310 Other rules.—Following the conversion of an income
 1013  trust to a unitrust, the trustee shall consider the unitrust
 1014  amount as paid from the following sources, which are listed in
 1015  order of priority:
 1016         (1) Net accounting income determined under this chapter as
 1017  if the trust were not a unitrust;
 1018         (2) Ordinary income not allocable to net accounting income;
 1019         (3) Net realized short-term capital gains;
 1020         (4) Net realized long-term capital gains; and
 1021         (5) The principal of the trust.
 1022         Section 20. Section 738.401, Florida Statutes, is amended
 1023  to read:
 1024         738.401 Character of receipts from entity.—
 1025         (1) For purposes of this section, the term:
 1026         (a) “Capital distribution” means an entity distribution of
 1027  money which is a:
 1028         1. Return of capital; or
 1029         2. Distribution in total or partial liquidation of the
 1030  entity.
 1031         (b) “Entity”:
 1032         1. Means a corporation, partnership, limited liability
 1033  company, regulated investment company, real estate investment
 1034  trust, common trust fund, or any other organization or
 1035  arrangement in which a fiduciary owns or holds has an interest,
 1036  regardless of whether the entity is a taxpayer for federal
 1037  income tax purposes; and
 1038         2. Does not include:
 1039         a. A trust or estate to which s. 738.402 applies;
 1040         b. A business or other activity to which s. 738.403 applies
 1041  which is not conducted by an entity described in subparagraph
 1042  1.;
 1043         c. An asset-backed security; or
 1044         d. An instrument or arrangement to which s. 738.416 applies
 1045  other than a trust or estate to which s. 738.402 applies, a
 1046  business or activity to which s. 738.403 applies, or an asset
 1047  backed security to which s. 738.608 applies.
 1048         (c) “Entity distribution” means a payment or transfer by an
 1049  entity to a person in the person’s capacity as an owner or
 1050  holder of an interest in the entity.
 1051         (d) “Lookback period” means the accounting period and the
 1052  preceding two accounting periods or, if less, the number of
 1053  accounting periods, or portion of accounting periods, that the
 1054  interest in the entity has been held by the fiduciary.
 1055         (2) In this section, an attribute or action of an entity
 1056  includes an attribute or action of any other entity in which the
 1057  initial entity owns or holds an interest, including an interest
 1058  owned or held indirectly through another entity.
 1059         (3) Except as otherwise provided in paragraphs (4)(b), (c),
 1060  and (d) this section, a fiduciary shall allocate to income:
 1061         (a) Money received in an entity distribution; and
 1062         (b) Tangible personal property of nominal value received
 1063  from the money received from an entity.
 1064         (4)(3) Except as otherwise provided in this section, A
 1065  fiduciary shall allocate the following receipts from an entity
 1066  to principal:
 1067         (a) Property received in an entity distribution which is
 1068  not:
 1069         1. other than Money; or
 1070         2. Tangible personal property of nominal value.
 1071         (b) Money received in an entity one distribution or a
 1072  series of related distributions in an exchange for part or all
 1073  of the fiduciary’s a trust’s or estate’s interest in the entity
 1074  to the extent that the entity distribution reduces the
 1075  fiduciary’s interest in the entity relative to the interest of
 1076  other persons that own or hold interests in the entity.
 1077         (c) Money received in an entity distribution that is a
 1078  capital distribution, to the extent not allocated to income
 1079  total or partial liquidation of the entity.
 1080         (d) Money received in an entity distribution from an entity
 1081  that is a regulated investment company or a real estate
 1082  investment trust if the money received represents short-term or
 1083  long-term capital gain realized within the entity.
 1084         (e) Money received from an entity listed on a public stock
 1085  exchange during any year of the trust or estate which exceeds 10
 1086  percent of the fair market value of the trust’s or estate’s
 1087  interest in the entity on the first day of that year. The amount
 1088  to be allocated to principal must be reduced to the extent that
 1089  the cumulative distributions from the entity to the trust or
 1090  estate allocated to income do not exceed a cumulative annual
 1091  return of 3 percent of the fair market value of the interest in
 1092  the entity at the beginning of each year or portion of a year
 1093  for the number of years or portion of years in the period that
 1094  the interest in the entity has been held by the trust or estate.
 1095  If a trustee has exercised a power to adjust under s. 738.104
 1096  during any period the interest in the entity has been held by
 1097  the trust, the trustee, in determining the total income
 1098  distributions from that entity, must take into account the
 1099  extent to which the exercise of that power resulted in income to
 1100  the trust from that entity for that period. If the income of the
 1101  trust for any period has been computed under s. 738.1041, the
 1102  trustee, in determining the total income distributions from that
 1103  entity for that period, must take into account the portion of
 1104  the unitrust amount paid as a result of the ownership of the
 1105  trust’s interest in the entity for that period.
 1106         (5)(4) If a fiduciary elects, or continues an election made
 1107  by its predecessor, to reinvest dividends in shares of stock of
 1108  a distributing corporation or fund, whether evidenced by new
 1109  certificates or entries on the books of the distributing entity,
 1110  the new shares retain their character as income.
 1111         (6)(5) Except as otherwise provided in subsections (10) and
 1112  (11), money received in an entity distribution is a capital
 1113  distribution Money is received in partial liquidation:
 1114         (a) To the extent that the entity, at or near the time of
 1115  the entity a distribution, indicates that such money is a
 1116  capital distribution in partial liquidation; or
 1117         (b) To the extent that the total amount of money and
 1118  property received by the fiduciary in the entity in a
 1119  distribution or a series of related entity distributions is or
 1120  will be greater than from an entity that is not listed on a
 1121  public stock exchange exceeds 20 percent of the fiduciary’s
 1122  trust’s or estate’s pro rata share of the entity’s gross assets,
 1123  as shown by the entity’s year-end financial statements
 1124  immediately preceding the initial receipt.
 1125  
 1126  This subsection does not apply to an entity to which subsection
 1127  (7) applies.
 1128         (7)(6) In the case of a capital distribution, the amount
 1129  received in an entity distribution allocated to principal must
 1130  be reduced to the extent that the cumulative distributions from
 1131  the entity to the fiduciary Money may not be taken into account
 1132  in determining any excess under paragraph (5)(b), to the extent
 1133  that the cumulative distributions from the entity to the trust
 1134  or the estate allocated to income do not exceed the greater of:
 1135         (a) A cumulative annual return of 3 percent of the entity’s
 1136  carrying value computed at the beginning of each accounting
 1137  period, or portion of an accounting period, during the lookback
 1138  period for the number of years or portion of years that the
 1139  entity was held by the fiduciary. If a fiduciary trustee has
 1140  exercised a power to adjust under s. 738.203 during the lookback
 1141  period, the fiduciary s. 738.104 during any period the interest
 1142  in the entity has been held by the trust, the trustee, in
 1143  determining the total income distributions from that entity,
 1144  must take into account the extent to which the exercise of the
 1145  power resulted in income to the fiduciary trust from that entity
 1146  for that period. If the income of a fiduciary during the
 1147  lookback trust for any period has been computed under ss.
 1148  738.301-738.310, the fiduciary pursuant to s. 738.1041, the
 1149  trustee, in determining the total income distributions from the
 1150  entity for that period, must take into account the portion of
 1151  the unitrust amount paid as a result of the ownership of the
 1152  trust’s interest in the entity for that period; or
 1153         (b) In If the case of an entity is treated as a
 1154  partnership, subchapter S corporation, or a disregarded entity
 1155  under pursuant to the Internal Revenue Code of 1986, as amended,
 1156  the amount of income tax attributable to the fiduciary’s trust’s
 1157  or estate’s ownership share of the entity, based on its pro rata
 1158  share of the taxable income of the entity that distributes the
 1159  money, during the lookback period for the number of years or
 1160  portion of years that the interest in the entity was held by the
 1161  fiduciary, calculated as if all of the that tax was incurred by
 1162  the fiduciary.
 1163         (8) If a fiduciary receives additional information about
 1164  the application of this section to an entity distribution before
 1165  the fiduciary has paid part of the entity distribution to a
 1166  beneficiary, the fiduciary may consider the additional
 1167  information before making the payment to the beneficiary and may
 1168  change a decision to make the payment to the beneficiary.
 1169         (9) If a fiduciary receives additional information about
 1170  the application of this section to an entity distribution after
 1171  the fiduciary has paid part of the entity distribution to a
 1172  beneficiary, the fiduciary is not required to change or recover
 1173  the payment to the beneficiary but may consider that information
 1174  in determining whether to exercise its other powers, including
 1175  but not limited to the power to adjust under s. 738.203.
 1176         (10)(7) The following applies to money or property received
 1177  by a private trustee as a distribution from an investment entity
 1178  described in this subsection:
 1179         (a) The trustee shall first treat as income of the trust
 1180  all of the money or property received from the investment entity
 1181  in the current accounting period year which would be considered
 1182  income under this chapter if the trustee had directly held the
 1183  trust’s pro rata share of the assets of the investment entity.
 1184  For this purpose, all distributions received in the current
 1185  accounting period year must be aggregated.
 1186         (b) The trustee shall next treat as income of the trust any
 1187  additional money or property received in the current accounting
 1188  period year which would have been considered income in the prior
 1189  2 accounting periods years under paragraph (a) if additional
 1190  money or property had been received from the investment entity
 1191  in any of those prior 2 accounting periods years. The amount to
 1192  be treated as income must shall be reduced by any distributions
 1193  of money or property made by the investment entity to the trust
 1194  during the current and the prior 2 accounting periods years
 1195  which were treated as income under this paragraph.
 1196         (c) The remainder of the distribution, if any, is treated
 1197  as principal.
 1198         (d) As used in this subsection, the term:
 1199         1. “Investment entity” means an entity, other than a
 1200  business activity conducted by the trustee described in s.
 1201  738.403 or an entity that is listed on a public stock exchange,
 1202  which is treated as a partnership, subchapter S corporation, or
 1203  disregarded entity under pursuant to the Internal Revenue Code
 1204  of 1986, as amended, and which normally derives 50 percent or
 1205  more of its annual cumulative net income from interest,
 1206  dividends, annuities, royalties, rental activity, or other
 1207  passive investments, including income from the sale or exchange
 1208  of such passive investments.
 1209         2. “Private trustee” means a trustee who is a natural
 1210  person, but is not an independent person as set forth in s.
 1211  738.102 only if the trustee is unable to use the power to adjust
 1212  between income and principal with respect to receipts from
 1213  entities described in this subsection pursuant to s. 738.104. A
 1214  bank, trust company, or other commercial trustee is not
 1215  considered a private trustee.
 1216         (11) A fiduciary shall allocate to principal any money and
 1217  property the fiduciary receives in a distribution or series of
 1218  related distributions from a public entity which are greater
 1219  than 10 percent of the fair market value of the fiduciary’s
 1220  interest in the public entity on the first day of the accounting
 1221  period. The amount to be allocated to principal must be reduced
 1222  to the extent that the cumulative distributions from the entity
 1223  to the fiduciary allocated to income do not exceed a cumulative
 1224  annual return of 3 percent of the fair market value of the
 1225  interest in the entity at the beginning of each accounting
 1226  period, or portion of an accounting period, during the lookback
 1227  period. If a fiduciary has exercised a power to adjust under s.
 1228  738.203 during the lookback period, the fiduciary, in
 1229  determining the total income distributions from that entity,
 1230  must take into account the extent to which the exercise of that
 1231  power resulted in income to the fiduciary from that entity for
 1232  that period. If the income of the fiduciary during the lookback
 1233  period has been computed under ss. 738.301-738.310, the
 1234  fiduciary, in determining the total income distribution from
 1235  that entity for that period, must take into account the portion
 1236  of the unitrust amount paid as a result of the ownership of the
 1237  trust’s interest in the entity for that period. As used in this
 1238  subsection, the term “public entity” means an entity listed on a
 1239  public stock exchange.
 1240         (12)(8) This section must shall be applied before ss.
 1241  738.506 and 738.507 ss. 738.705 and 738.706 and does not modify
 1242  or change any of the provisions of those sections.
 1243         Section 21. Section 738.402, Florida Statutes, is amended
 1244  to read:
 1245         738.402 Distribution from trust or estate.—A fiduciary
 1246  shall allocate to income an amount received as a distribution of
 1247  income, including a unitrust distribution under ss. 738.301
 1248  738.310, from a trust or an estate in which the fiduciary trust
 1249  has an interest, other than an interest a purchased in a trust
 1250  that is an investment entity, and shall interest and allocate to
 1251  principal an amount received as a distribution of principal from
 1252  the such a trust or estate. If a fiduciary purchases, or
 1253  receives from a settlor, an interest in a trust that is an
 1254  investment entity, or a decedent or donor transfers an interest
 1255  in such a trust to a fiduciary, s. 738.401, s. 738.415, or s.
 1256  738.416 or s. 738.608 applies to a receipt from the trust.
 1257         Section 22. Section 738.403, Florida Statutes, is amended
 1258  to read:
 1259         738.403 Business and other activity activities conducted by
 1260  fiduciary.—
 1261         (1) This section applies to If a fiduciary who conducts a
 1262  business or other activity conducted by a fiduciary if the
 1263  fiduciary determines that it is in the best interests of
 1264  interest of all the beneficiaries to account separately for the
 1265  business or other activity instead of:
 1266         (a) Accounting for the business or other activity as part
 1267  of the fiduciary’s trust’s or estate’s general accounting
 1268  records; or
 1269         (b) Conducting the business or other activity through an
 1270  entity described in s. 738.401(1)(b)., the
 1271         (2) A fiduciary may account separately under this section
 1272  maintain separate accounting records for the transactions of a
 1273  the business or another other activity, regardless of whether or
 1274  not the assets of the such business or other activity are
 1275  segregated from other trust or estate assets held by the
 1276  fiduciary.
 1277         (3)(2) A fiduciary who accounts separately under this
 1278  section for a business or other activity:
 1279         (a) May determine:
 1280         1. The extent to which the net cash receipts of the
 1281  business or other activity must be retained for:
 1282         a. Working capital;
 1283         b. The acquisition or replacement of fixed assets; and
 1284         c. Other reasonably foreseeable needs of the business or
 1285  other activity; and working capital, the acquisition or
 1286  replacement of fixed assets, and other reasonably foreseeable
 1287  needs of the business or activity, and
 1288         2. The extent to which the remaining net cash receipts are
 1289  accounted for as principal or income in the fiduciary’s trust’s
 1290  or estate’s general accounting records for the trust.
 1291         (b) May make a determination under paragraph (a) separately
 1292  and differently from the fiduciary’s decisions concerning
 1293  distributions of income or principal; and
 1294         (c) Shall account for the net amount received from the sale
 1295  of an asset of If a fiduciary sells assets of the business or
 1296  other activity, other than a sale in the ordinary course of the
 1297  business or other activity, the fiduciary must account for the
 1298  net amount received as principal in the fiduciary’s trust’s or
 1299  estate’s general accounting records for the trust, to the extent
 1300  the fiduciary determines that the net amount received is no
 1301  longer required in the conduct of the business or other
 1302  activity.
 1303         (4)(3) Activities for which a fiduciary may account
 1304  separately under this section maintain separate accounting
 1305  records include:
 1306         (a) Retail, manufacturing, service, and other traditional
 1307  business activities.
 1308         (b) Farming.
 1309         (c) Raising and selling livestock and other animals.
 1310         (d) Managing Management of rental properties.
 1311         (e) Extracting Extraction of minerals and other natural
 1312  resources.
 1313         (f) Growing and cutting timber operations.
 1314         (g) An activity Activities to which s. 738.414, s. 738.415,
 1315  or s. 738.416 s. 738.607 applies.
 1316         (h) Any other business conducted by the fiduciary.
 1317         Section 23. Section 738.404, Florida Statutes, is created
 1318  to read:
 1319         738.404 Principal receipts.—A fiduciary shall allocate to
 1320  principal:
 1321         (1) To the extent not allocated to income under this
 1322  chapter, an asset received from any of the following:
 1323         (a) An individual during the individual’s lifetime.
 1324         (b) An estate.
 1325         (c) A trust on termination of an income interest.
 1326         (d) A payor under a contract naming the fiduciary as
 1327  beneficiary.
 1328         (2) Except as otherwise provided in ss. 738.401-738.416,
 1329  money or other property received from the sale, exchange,
 1330  liquidation, or change in the form of a principal asset.
 1331         (3) An amount recovered from a third party to reimburse the
 1332  fiduciary because of a disbursement described in s. 738.502(1)
 1333  or for another reason to the extent not based on the loss of
 1334  income.
 1335         (4) Proceeds of property taken by eminent domain except
 1336  that proceeds awarded for loss of income in an accounting period
 1337  are income if a current income beneficiary had a mandatory
 1338  income interest during the period.
 1339         (5) Net income received in an accounting period during
 1340  which there is no beneficiary to which a fiduciary may or must
 1341  distribute income.
 1342         (6) Other receipts as provided in ss. 738.408-738.416.
 1343         Section 24. Section 738.405, Florida Statutes, is created
 1344  to read:
 1345         738.405 Rental property.—To the extent that a fiduciary
 1346  does not account for the management of rental property as a
 1347  business under s. 738.403, the fiduciary shall allocate to
 1348  income an amount received as rent of real or personal property,
 1349  including an amount received for cancellation or renewal of a
 1350  lease. An amount received as a refundable deposit, including a
 1351  security deposit or a deposit that is to be applied as rent for
 1352  future periods:
 1353         (1) Must be added to principal and held subject to the
 1354  terms of the lease, except as otherwise provided by law other
 1355  than this chapter; and
 1356         (2) Is not allocated to income or available for
 1357  distribution to a beneficiary until the fiduciary’s contractual
 1358  obligations have been satisfied with respect to that amount.
 1359         Section 25. Section 738.406, Florida Statutes, is created
 1360  to read:
 1361         738.406 Receipt on obligation to be paid in money.—
 1362         (1) This section does not apply to an obligation to which
 1363  s. 738.409, s. 738.410, s. 738.411, s. 738.412, s. 738.414, s.
 1364  738.415, or s. 738.416 applies.
 1365         (2) A fiduciary shall allocate to income, without provision
 1366  for amortization of premium, an amount received as interest on
 1367  an obligation to pay money to the fiduciary, including an amount
 1368  received as consideration for prepaying principal.
 1369         (3) A fiduciary shall allocate to principal an amount
 1370  received from the sale, redemption, or other disposition of an
 1371  obligation to pay money to the fiduciary.
 1372         (4) A fiduciary shall allocate to income the increment in
 1373  value of a bond or other obligation for the payment of money
 1374  bearing no stated interest but payable or redeemable, at
 1375  maturity or another future time, in an amount that exceeds the
 1376  amount in consideration of which it was issued. If the increment
 1377  in value accrues and becomes payable pursuant to a fixed
 1378  schedule of appreciation, it may be distributed to the
 1379  beneficiary who was the income beneficiary at the time of
 1380  increment from the first principal cash available or, if none is
 1381  available, when the increment is realized by sale, redemption,
 1382  or other disposition. If unrealized increment is distributed as
 1383  income but out of principal, the principal must be reimbursed
 1384  for the increment when realized. If, in the reasonable judgment
 1385  of the fiduciary, exercised in good faith, the ultimate payment
 1386  of the bond principal is in doubt, the fiduciary may withhold
 1387  the payment of incremental interest to the income beneficiary.
 1388         Section 26. Section 738.407, Florida Statutes, is created
 1389  to read:
 1390         738.407 Insurance policy or contract.—
 1391         (1) This section does not apply to a contract to which s.
 1392  738.409 applies.
 1393         (2) Except as otherwise provided in subsection (3), a
 1394  fiduciary shall allocate to principal the proceeds of a life
 1395  insurance policy or other contract received by the fiduciary as
 1396  beneficiary, including a contract that insures against damage
 1397  to, destruction of, or loss of title to an asset. The fiduciary
 1398  shall allocate dividends on an insurance policy to income to the
 1399  extent that premiums on the policy are paid from income and to
 1400  principal to the extent premiums on the policy are paid from
 1401  principal.
 1402         (3) A fiduciary shall allocate to income proceeds of a
 1403  contract that insures the fiduciary against loss of:
 1404         (a) Occupancy or other use by a current income beneficiary;
 1405         (b) Income; or
 1406         (c) Subject to s. 738.403, profits from a business.
 1407         Section 27. Section 738.408, Florida Statutes, is created
 1408  to read:
 1409         738.408 Insubstantial allocation not required.—
 1410         (1) If a fiduciary determines that an allocation between
 1411  income and principal required by s. 738.409, s. 738.410, s.
 1412  738.411, s. 738.412, or s. 738.415 is insubstantial, the
 1413  fiduciary may allocate the entire amount to principal, unless s.
 1414  738.203(5) applies to the allocation.
 1415         (2) A fiduciary may presume an allocation is insubstantial
 1416  under subsection (1) if:
 1417         (a) The amount of the allocation would increase or decrease
 1418  net income in an accounting period, as determined before the
 1419  allocation, by less than 10 percent; and
 1420         (b) The asset producing the receipt to be allocated has a
 1421  carrying value less than 10 percent of the total carrying value
 1422  of the assets owned or held by the fiduciary at the beginning of
 1423  the accounting period.
 1424         (3) The power to make a determination under subsection (1)
 1425  may be:
 1426         (a) Exercised by a cofiduciary in the manner described in
 1427  s. 738.203(6); or
 1428         (b) Released or delegated for a reason described in s.
 1429  738.203(7) and in the manner described in s. 738.203(8).
 1430         Section 28. Section 738.409, Florida Statutes, is created
 1431  to read:
 1432         738.409 Deferred compensation, annuity, or similar
 1433  payment.—
 1434         (1) As used in this section, the term:
 1435         (a) “Internal income of the separate fund” means the amount
 1436  determined under subsection (2).
 1437         (b) “Marital trust” means a trust:
 1438         1. Of which the settlor’s surviving spouse is the only
 1439  current income beneficiary and is entitled to a distribution of
 1440  all the current net income of the trust; and
 1441         2. That qualifies for a marital deduction with respect to
 1442  the settlor’s estate under the Internal Revenue Code or
 1443  comparable law of any state because:
 1444         a. An election to qualify for a marital deduction under s.
 1445  2056(b)(7) of the Internal Revenue Code has been made;
 1446         b. The trust qualified for a marital deduction under s.
 1447  2056(b)(5) of the Internal Revenue Code; or
 1448         c. The trust otherwise qualifies for a marital deduction.
 1449         (c) “Nonseparate fund” means an annuity, a deferred
 1450  compensation plan, a pension plan, or other fund for which the
 1451  value of the participant’s or account owner’s right to receive
 1452  benefits can be determined only by the occurrence of a date or
 1453  event as defined in the instrument governing the fund.
 1454         (d) “Payment” means an amount a fiduciary may receive over
 1455  a fixed number of years or during the life of one or more
 1456  individuals because of services rendered or property transferred
 1457  to the payor in exchange for future amounts the fiduciary may
 1458  receive. The term includes an amount received in money or
 1459  property from the payor’s general assets or from a separate fund
 1460  created by the payor.
 1461         (e) “Percent calculated” means a percent equal to the rate
 1462  determined under s. 7520 of the Internal Revenue Code in effect
 1463  for the month preceding the beginning of the accounting period;
 1464  however, if the percent calculated exceeds 5 percent, it must be
 1465  reduced to 5 percent, and if the percent calculated is less than
 1466  3 percent, it must be increased to 3 percent. Notwithstanding
 1467  the preceding sentence, a fiduciary who is an independent person
 1468  as defined in s. 738.102 may set the percent calculated at a
 1469  percentage no less than 3 percent and no greater than 5 percent.
 1470         (f) “Separate fund” includes a private or commercial
 1471  annuity, an individual retirement account, and a pension,
 1472  profit-sharing, stock-bonus, stock ownership plan, or other
 1473  deferred compensation fund holding assets exclusively for the
 1474  benefit of a participant or account owner.
 1475         (2) For each accounting period, the following rules apply
 1476  to a separate fund:
 1477         (a) The fiduciary may determine the internal income of the
 1478  separate fund as if the separate fund were a trust subject to
 1479  this chapter.
 1480         (b) Alternatively, the fiduciary may deem the internal
 1481  income of the separate fund to equal the percent calculated of
 1482  the value of the separate fund according to the most recent
 1483  statement of value preceding the beginning of the accounting
 1484  period. The fiduciary is not liable for good faith reliance upon
 1485  any valuation supplied by the person or persons in possession of
 1486  the fund. If the fiduciary makes or terminates an election under
 1487  this paragraph, the fiduciary must make such disclosure in a
 1488  trust disclosure document that satisfies the requirements of s.
 1489  736.1008(4)(c).
 1490         (c) If the fiduciary cannot determine the value of the
 1491  separate fund under paragraph (b), the value of the separate
 1492  fund is deemed to equal the present value of the expected future
 1493  payments, as determined under s. 7520 of the Internal Revenue
 1494  Code for the month preceding the beginning of the accounting
 1495  period for which the computation is made.
 1496         (d) The fiduciary may elect the method of determining the
 1497  income of the fund pursuant to this subsection and may change
 1498  the method of determining income of the fund for any future
 1499  accounting period.
 1500         (3) A fiduciary shall allocate a payment received from a
 1501  separate fund during an accounting period to income, to the
 1502  extent of the internal income of the separate fund during the
 1503  period, and allocate the balance to principal.
 1504         (4) The fiduciary of a marital trust shall:
 1505         (a) Withdraw from a separate fund the amount the current
 1506  income beneficiary of the trust requests the fiduciary to
 1507  withdraw, not greater than the amount by which the internal
 1508  income of the separate fund during the accounting period exceeds
 1509  the amount the fiduciary otherwise receives from the separate
 1510  fund during the period.
 1511         (b) Transfer from principal to income the amount the
 1512  current income beneficiary requests the fiduciary to transfer,
 1513  but not greater than the amount by which the internal income of
 1514  the separate fund during the period exceeds the amount the
 1515  fiduciary receives from the separate fund during the period
 1516  after the application of paragraph (a).
 1517         (c) Distribute to the current income beneficiary as income:
 1518         1. The amount of the internal income of the separate fund
 1519  received or withdrawn during the period; and
 1520         2. The amount transferred from principal to income under
 1521  paragraph (b).
 1522         (5) For a trust, other than a marital trust, of which one
 1523  or more current income beneficiaries are entitled to a
 1524  distribution of all the current net income, the fiduciary shall
 1525  transfer from principal to income the amount by which the
 1526  internal income of the separate fund during the accounting
 1527  period exceeds the amount the fiduciary receives from the
 1528  separate fund during the period.
 1529         (6) The fiduciary of a nonseparate fund shall calculate
 1530  internal income of the fund as the percent calculated of the
 1531  present value of the right to receive the remaining payments as
 1532  determined under s. 7520(a)(2) of the Internal Revenue Code for
 1533  the month preceding the beginning of the accounting period.
 1534         (7) If a fiduciary owns a separate fund or a nonseparate
 1535  fund before January 1, 2025, the fiduciary may determine
 1536  internal income, allocate payments, and account for unwithdrawn
 1537  internal income as provided in this section or in the manner
 1538  used by the fiduciary before January 1, 2025. Such fiduciary is
 1539  not required to consider subsection (5). If the fiduciary
 1540  acquires a separate fund or a nonseparate fund on or after
 1541  January 1, 2025, the fiduciary must calculate internal income,
 1542  allocate payments, and account for unwithdrawn internal income
 1543  as provided in this section.
 1544         Section 29. Section 738.603, Florida Statutes, is
 1545  transferred, renumbered as section 738.410, Florida Statutes,
 1546  and amended to read:
 1547         738.410 738.603 Liquidating asset.—
 1548         (1) As used in For purposes of this section, the term
 1549  “liquidating asset” means an asset whose value the value of
 1550  which will diminish or terminate because the asset is expected
 1551  to produce receipts for a period of limited time duration. The
 1552  term includes a leasehold, patent, copyright, royalty right, and
 1553  right to receive payments during a period of for more than 1
 1554  year under an arrangement that does not provide for the payment
 1555  of interest on the unpaid balance. The term does not include a
 1556  payment subject to s. 738.602, resources subject to s. 738.604,
 1557  timber subject to s. 738.605, an activity subject to s. 738.607,
 1558  an asset subject to s. 738.608, or any asset for which the
 1559  fiduciary establishes a reserve for depreciation under s.
 1560  738.703.
 1561         (2) This section does not apply to a receipt that is
 1562  subject to s. 738.401, s. 738.409, s. 738.411, s. 738.412, s.
 1563  738.414, s. 738.415, s. 738.416, or s. 738.503.
 1564         (3) A fiduciary shall allocate to income a receipt produced
 1565  by a liquidating asset to the extent that the receipt does not
 1566  exceed 5 percent of the receipts from the carrying value of the
 1567  asset at the beginning of the accounting period and allocate a
 1568  liquidating asset and the balance to principal the balance of
 1569  the receipt.
 1570         (4) The amount Amounts allocated to principal shall reduce
 1571  the carrying value of the liquidating asset, but not below zero.
 1572  Amounts received in excess of the remaining carrying value must
 1573  be allocated to principal.
 1574         Section 30. Section 738.604, Florida Statutes, is
 1575  transferred, renumbered as section 738.411, Florida Statutes,
 1576  and amended to read:
 1577         738.411 738.604 Minerals, water, and other natural
 1578  resources.—
 1579         (1) To the extent that If a fiduciary does not account for
 1580  a receipt accounts for receipts from an interest in minerals,
 1581  water, or other natural resources as a business under s. 738.403
 1582  pursuant to this section, the fiduciary shall allocate the
 1583  receipt such receipts as follows:
 1584         (a) To income, to the extent received:
 1585         1. If received As nominal delay rental or nominal annual
 1586  rent on a lease;
 1587         2. As a factor for interest or the equivalent of interest
 1588  under an agreement creating a production payment; or
 1589         3. On account of an interest in renewable water;, a receipt
 1590  shall be allocated to income.
 1591         (b) To principal, if received from a production payment, a
 1592  receipt shall be allocated to income if and to the extent that
 1593  subparagraph (a)2. does not apply; or the agreement creating the
 1594  production payment provides a factor for interest or its
 1595  equivalent. The balance shall be allocated to principal.
 1596         (c) Between income and principal equitably, to the extent
 1597  received:
 1598         1. On account of an interest in nonrenewable water;
 1599         2. If an amount received As a royalty, shut-in-well
 1600  payment, take-or-pay payment, or bonus; or, or delay rental is
 1601  more than nominal, 90 percent shall be allocated to principal
 1602  and the balance to income.
 1603         3.(d) If an amount is received From a working interest or
 1604  any other interest not provided for in paragraph (a) or,
 1605  paragraph (b) or subparagraph 1. or subparagraph 2., or
 1606  paragraph (c), 90 percent of the net amount received shall be
 1607  allocated to principal and the balance to income.
 1608         (2) An amount received on account of an interest in water
 1609  that is renewable shall be allocated to income. If the water is
 1610  not renewable, 90 percent of the amount shall be allocated to
 1611  principal and the balance to income.
 1612         (3) This section chapter applies to an interest owned or
 1613  held by a fiduciary regardless of whether or not a settlor
 1614  decedent or donor was extracting minerals, water, or other
 1615  natural resources before the fiduciary owned or held the
 1616  interest became subject to the trust or estate.
 1617         (3) An allocation of a receipt under paragraph (1)(c) is
 1618  presumed to be equitable if the amount allocated to principal is
 1619  equal to the amount allowed by the Internal Revenue Code as a
 1620  deduction for depletion of the interest.
 1621         (4) If a fiduciary trust or estate owns or holds an
 1622  interest in minerals, water, or other natural resources before
 1623  January 1, 2025 on January 1, 2003, the fiduciary may allocate
 1624  receipts from the interest as provided in this section chapter
 1625  or in the manner used by the fiduciary before January 1, 2025
 1626  January 1, 2003. If the fiduciary trust or estate acquires an
 1627  interest in minerals, water, or other natural resources on or
 1628  after January 1, 2025 January 1, 2003, the fiduciary must shall
 1629  allocate receipts from the interest as provided in this section
 1630  chapter.
 1631         Section 31. Section 738.605, Florida Statutes, is
 1632  transferred, renumbered as section 738.412, Florida Statutes,
 1633  and amended to read:
 1634         738.412 738.605 Timber.—
 1635         (1) To the extent that If a fiduciary does not account
 1636  accounts for receipts from the sale of timber and related
 1637  products as a business under s. 738.403 pursuant to this
 1638  section, the fiduciary shall allocate the such net receipts as
 1639  follows:
 1640         (a) To income, to the extent that the amount of timber cut
 1641  removed from the land does not exceed the rate of growth of the
 1642  timber during the accounting periods in which a beneficiary has
 1643  a mandatory income interest;
 1644         (b) To principal, to the extent that the amount of timber
 1645  cut removed from the land exceeds the rate of growth of the
 1646  timber or the net receipts are from the sale of standing timber;
 1647         (c) To or Between income and principal if the net receipts
 1648  are from the lease of land used for growing and cutting timber
 1649  timberland or from a contract to cut timber from land owned by a
 1650  trust or estate by determining the amount of timber cut removed
 1651  from the land under the lease or contract and applying the rules
 1652  in paragraphs (a) and (b); or
 1653         (d) To principal, to the extent that advance payments,
 1654  bonuses, and other payments are not allocated under pursuant to
 1655  paragraph (a), paragraph (b), or paragraph (c).
 1656         (2) In determining net receipts to be allocated under
 1657  pursuant to subsection (1), a fiduciary shall deduct and
 1658  transfer to principal a reasonable amount for depletion.
 1659         (3) This section chapter applies to land owned or held by a
 1660  fiduciary regardless of whether or not a settlor decedent or
 1661  donor was cutting harvesting timber from the land property
 1662  before the fiduciary owned or held the property became subject
 1663  to the trust or estate.
 1664         (4) If a fiduciary trust or estate owns or holds an
 1665  interest in land used for growing and cutting timber before
 1666  January 1, 2025 timberland on January 1, 2003, the fiduciary may
 1667  allocate net receipts from the sale of timber and related
 1668  products as provided in this section chapter or in the manner
 1669  used by the fiduciary before January 1, 2025 January 1, 2003. If
 1670  the fiduciary trust or estate acquires an interest in land used
 1671  for growing and cutting timber on or after January 1, 2025
 1672  timberland after January 1, 2003, the fiduciary must shall
 1673  allocate net receipts from the sale of timber and related
 1674  products as provided in this section chapter.
 1675         Section 32. Section 738.606, Florida Statutes, is
 1676  transferred, renumbered as section 738.413, Florida Statutes,
 1677  and amended to read:
 1678         738.413 738.606 Marital deduction property not productive
 1679  of income.—
 1680         (1) If a trust received property for which a gift or estate
 1681  tax marital deduction was under the Internal Revenue Code or
 1682  comparable law of any state is allowed, for all or if part of a
 1683  trust received property satisfying, or if assets are transferred
 1684  to a trust that satisfies the requirements of s. 732.2025(2)(a)
 1685  and (c), and such property has assets have been used in whole or
 1686  in part to satisfy an election by a surviving spouse under s.
 1687  732.2125, and the settlor’s spouse holds a mandatory income
 1688  interest in the trust, the spouse may require the trustee, to
 1689  the extent that the trust assets otherwise do consist of
 1690  property that, in the aggregate, does not provide the spouse
 1691  with sufficient income from or use of the trust assets to
 1692  qualify for the deduction, or to satisfy an election by a
 1693  surviving spouse under s. 732.2125, to make the property
 1694  productive of income within a reasonable time. The trustee may:
 1695         (a) Convert property to property productive of income
 1696  within a reasonable time;
 1697         (b) Exercise the power to adjust under s. 738.203;
 1698         (c) Exercise the power to convert to or from a unitrust
 1699  under s. 738.303; or
 1700         (d) Exercise the fiduciary’s authority under the terms of
 1701  the trust to otherwise provide the surviving spouse with
 1702  sufficient income from the trust assets, or the use of the trust
 1703  assets, to qualify for the marital deduction, or to satisfy an
 1704  election by a surviving spouse under s. 732.2125.
 1705         (2) The trustee may decide which action or combination of
 1706  actions listed in subsection (1) to take.
 1707         (3) Subsection (1) shall apply, and if amounts the trustee
 1708  transfers from principal to income under s. 738.104 and
 1709  distributes to the spouse from principal pursuant to the terms
 1710  of the trust are insufficient to provide the spouse with the
 1711  beneficial enjoyment required to obtain the marital deduction,
 1712  even though, in the case of an elective share trust under s.
 1713  732.2025(2), a marital deduction is not made or is only
 1714  partially made, the spouse may require the trustee of such
 1715  marital trust or elective share trust to make property
 1716  productive of income, convert property within a reasonable time,
 1717  or exercise the power conferred by ss. 738.104 and 738.1041.
 1718         (4) The terms of a trust as defined in s. 738.102 may not
 1719  supersede this section unless such terms explicitly reference
 1720  this section The trustee may decide which action or combination
 1721  of actions to take.
 1722         (2) In cases not governed by subsection (1), proceeds from
 1723  the sale or other disposition of an asset are principal without
 1724  regard to the amount of income the asset produces during any
 1725  accounting period.
 1726         Section 33. Section 738.607, Florida Statutes, is
 1727  transferred, renumbered as section 738.414, Florida Statutes,
 1728  and amended to read:
 1729         738.414 738.607 Derivatives or and options.—
 1730         (1) As used in For purposes of this section, the term
 1731  “derivative” means a contract, an or financial instrument, or
 1732  other arrangement, or a combination of contracts, and financial
 1733  instruments, or other arrangements, of which the value, rights,
 1734  and obligations are, in whole or in part, dependent on or
 1735  derived from an underlying which gives a trust the right or
 1736  obligation to participate in some or all changes in the price of
 1737  a tangible or intangible asset, a or group of tangible or
 1738  intangible assets, an index, or an occurrence of an event. The
 1739  term includes stocks, fixed income securities, and financial
 1740  instruments and arrangements based on indices, commodities,
 1741  interest rates, weather-related events, and credit-default
 1742  events assets, or changes in a rate, an index of prices or
 1743  rates, or other market indicator for an asset or a group of
 1744  assets.
 1745         (2) To the extent that a fiduciary does not account for a
 1746  transaction in derivatives as a business under s. 738.403 for
 1747  transactions in derivatives, the fiduciary shall allocate 10
 1748  percent of to principal receipts from the transaction and 10
 1749  percent of and disbursements made in connection with the
 1750  transaction to income and allocate the balance to principal
 1751  those transactions.
 1752         (3) Subsection (4) applies if:
 1753         (a) A fiduciary:
 1754         1. If a fiduciary Grants an option to buy property from a
 1755  the trust, regardless of or estate whether or not the trust or
 1756  estate owns the property when the option is granted;,
 1757         2. Grants an option that permits another person to sell
 1758  property to the trust; or
 1759         3. estate, or Acquires an option to buy property for the
 1760  trust or estate or an option to sell an asset owned by the trust
 1761  or estate;, and
 1762         (b) The fiduciary or other owner of the asset is required
 1763  to deliver the asset if the option is exercised, an amount
 1764  received for granting the option shall be allocated to
 1765  principal. An amount paid to acquire the option shall be paid
 1766  from principal.
 1767         (4) If this subsection applies, the fiduciary must allocate
 1768  10 percent to income and allocate the balance to principal of
 1769  the following amounts:
 1770         (a) An amount received for granting the option;
 1771         (b) An amount paid to acquire the option; and
 1772         (c) A Gain or loss realized on upon the exercise, exchange,
 1773  settlement, offset, closing, or expiration of the option of an
 1774  option, including an option granted to a grantor of the trust or
 1775  estate for services rendered, shall be allocated to principal.
 1776         Section 34. Section 738.608, Florida Statutes, is
 1777  transferred, renumbered as section 738.415, Florida Statutes,
 1778  and amended to read:
 1779         738.415 738.608 Asset-backed securities.—
 1780         (1) Except as otherwise provided in subsection (2), a
 1781  fiduciary shall allocate to income a receipt from or related to
 1782  an asset-backed security, as defined in s. 738.102, to the
 1783  extent that the payor identifies the payment as being from For
 1784  purposes of this section, “asset-backed security” means an asset
 1785  the value of which is based upon the right given the owner to
 1786  receive distributions from the proceeds of financial assets that
 1787  provide collateral for the security. The term includes an asset
 1788  that gives the owner the right to receive from the collateral
 1789  financial assets only the interest or other current return and
 1790  allocate to principal the balance of the receipt or only the
 1791  proceeds other than interest or current return. The term does
 1792  not include an asset to which s. 738.401 or s. 738.602 applies.
 1793         (2) If a fiduciary receives one or more payments in
 1794  exchange for part or all of the fiduciary’s interest in an
 1795  asset-backed security, including a liquidation or redemption of
 1796  the fiduciary’s interest in the security trust or estate
 1797  receives a payment from interest or other current return and
 1798  from other proceeds of the collateral financial assets, the
 1799  fiduciary must shall allocate to income 10 percent of receipts
 1800  from the transaction and 10 percent of disbursements made in
 1801  connection with the transaction, and allocate to principal the
 1802  portion of the payment which the payor identifies as being from
 1803  interest or other current return and allocate the balance of the
 1804  receipts and disbursements payment to principal.
 1805         (3) If a trust or estate receives one or more payments in
 1806  exchange for the trust’s or estate’s entire interest in an
 1807  asset-backed security during a single accounting period, the
 1808  fiduciary shall allocate the payments to principal. If a payment
 1809  is one of a series of payments that will result in the
 1810  liquidation of the trust’s or estate’s interest in the security
 1811  over more than a single accounting period, the fiduciary shall
 1812  allocate 10 percent of the payment to income and the balance to
 1813  principal.
 1814         Section 35. Section 738.416, Florida Statutes, is created
 1815  to read:
 1816         738.416 Other financial instrument or arrangement.—A
 1817  fiduciary shall allocate receipts from or related to a financial
 1818  instrument or arrangement not otherwise addressed by this
 1819  chapter. The allocation must be consistent with ss. 738.414 and
 1820  738.415.
 1821         Section 36. Section 738.501, Florida Statutes, is amended
 1822  to read:
 1823         (Substantial rewording of section. See
 1824         s. 738.501, F.S., for present text.)
 1825         738.501 Disbursement from income.—Subject to s. 738.504,
 1826  and except as otherwise provided in s. 738.601(3)(b) or (c), a
 1827  fiduciary shall disburse from income:
 1828         (1) One-half of:
 1829         (a) The regular compensation of the fiduciary and of any
 1830  person providing investment advisory, custodial, or other
 1831  services to the fiduciary to the extent that income is
 1832  sufficient; and
 1833         (b) An expense for an accounting, judicial or nonjudicial
 1834  proceeding, or other matter that involves both income and
 1835  successive interests to the extent income is sufficient.
 1836         (2) The balance of the disbursements described in
 1837  subsection (1), to the extent that a fiduciary who is an
 1838  independent person determines that making those disbursements
 1839  from income would be in the interests of the beneficiaries.
 1840         (3) Any other ordinary expense incurred in connection with
 1841  administration, management, or preservation of property and
 1842  distribution of income, including interest, an ordinary repair,
 1843  a regularly recurring tax assessed against principal, and an
 1844  expense of an accounting, judicial or nonjudicial proceeding, or
 1845  other matter that involves primarily an income interest, to the
 1846  extent that income is sufficient.
 1847         (4) A premium on insurance covering loss of a principal
 1848  asset or income from or use of the asset.
 1849         Section 37. Section 738.502, Florida Statutes, is amended
 1850  to read:
 1851         (Substantial rewording of section. See
 1852         s. 738.502, F.S., for present text.)
 1853         738.502 Disbursement from principal.—
 1854         (1) Subject to s. 738.505, and except as otherwise provided
 1855  in s. 738.601(3)(b), a fiduciary shall disburse all of the
 1856  following from principal:
 1857         (a) The balance of the disbursements described in s.
 1858  738.501(1) and (3), after application of s. 738.501(2).
 1859         (b) The fiduciary’s compensation calculated on principal as
 1860  a fee for acceptance, distribution, or termination.
 1861         (c) A payment of an expense to prepare for or execute a
 1862  sale or other disposition of property.
 1863         (d) A payment on the principal of a trust debt.
 1864         (e) A payment of an expense of an accounting, judicial or
 1865  nonjudicial proceeding, or other matter that involves primarily
 1866  principal, including a proceeding to construe the terms of the
 1867  trust or protect property.
 1868         (f) A payment of a premium for insurance, including title
 1869  insurance, not described in s. 738.501(4) of which the fiduciary
 1870  is the owner and beneficiary.
 1871         (g) A payment of estate, inheritance, and other transfer
 1872  taxes, including penalties, apportioned to the trust.
 1873         (h) A payment related to environmental matters including:
 1874         1. Reclamation;
 1875         2. Assessing environmental conditions;
 1876         3. Remedying and removing environmental contamination;
 1877         4. Monitoring remedial activities and the release of
 1878  substances;
 1879         5. Preventing future releases of substances;
 1880         6. Collecting amounts from persons liable or potentially
 1881  liable for the costs of the activities described in
 1882  subparagraphs 1.-5.;
 1883         7. Penalties imposed under environmental laws or
 1884  regulations;
 1885         8. Other actions to comply with environmental laws or
 1886  regulations;
 1887         9. Statutory or common law claims by third parties; and
 1888         10. Defending claims based on environmental matters.
 1889         (i) A payment of a premium for insurance for matters
 1890  described in paragraph (h).
 1891         (2) If a principal asset is encumbered with an obligation
 1892  that requires income from the asset to be paid directly to a
 1893  creditor, the fiduciary must transfer from principal to income
 1894  an amount equal to the income paid to the creditor in reduction
 1895  of the principal balance of the obligation.
 1896         Section 38. Section 738.503, Florida Statutes, is amended
 1897  to read:
 1898         (Substantial rewording of section. See
 1899         s. 738.503, F.S., for present text.)
 1900         738.503 Transfers from income to principal for
 1901  depreciation.—
 1902         (1) For purposes of this section, “depreciation” means a
 1903  reduction in value due to wear, tear, decay, corrosion, or
 1904  gradual obsolescence of a tangible asset having a useful life of
 1905  more than 1 year.
 1906         (2) A fiduciary may transfer to principal a reasonable
 1907  amount of the net cash receipts from a principal asset that is
 1908  subject to depreciation but may not transfer any amount for
 1909  depreciation:
 1910         (a) Of the part of real property used or available for use
 1911  by a beneficiary as a residence;
 1912         (b) Of tangible personal property held or made available
 1913  for the personal use or enjoyment of a beneficiary; or
 1914         (c) Under this section, to the extent that the fiduciary
 1915  accounts:
 1916         1. Under s. 738.410 for the asset; or
 1917         2. Under s. 738.403 for the business or other activity in
 1918  which the asset is used.
 1919         (3) An amount transferred to principal under this section
 1920  need not be separately held.
 1921         Section 39. Section 738.504, Florida Statutes, is amended
 1922  to read:
 1923         (Substantial rewording of section. See
 1924         s. 738.504, F.S., for present text.)
 1925         738.504 Reimbursement of income from principal.—
 1926         (1) If a fiduciary makes or expects to make an income
 1927  disbursement described in subsection (2), the fiduciary may
 1928  transfer an appropriate amount from principal to income in one
 1929  or more accounting periods to reimburse income.
 1930         (2) To the extent that the fiduciary has not been and does
 1931  not expect to be reimbursed by a third party, income
 1932  disbursements to which subsection (1) applies include:
 1933         (a) An amount chargeable to principal but paid from income
 1934  because principal is illiquid;
 1935         (b) A disbursement made to prepare property for sale,
 1936  including improvements and commissions; and
 1937         (c) A disbursement described in s. 738.502(1).
 1938         (3) If an asset whose ownership gives rise to an income
 1939  disbursement becomes subject to a successive interest after an
 1940  income interest ends, the fiduciary may continue to make
 1941  transfers under subsection (1).
 1942         Section 40. Section 738.704, is transferred, renumbered as
 1943  section 738.505, Florida Statutes, and amended to read:
 1944         738.505 738.704 Reimbursement of principal from income
 1945  Transfers from income to reimburse principal.—
 1946         (1) If a fiduciary makes or expects to make a principal
 1947  disbursement described in subsection (2) this section, the
 1948  fiduciary may transfer an appropriate amount from income to
 1949  principal in one or more accounting periods to reimburse
 1950  principal or to provide a reserve for future principal
 1951  disbursements.
 1952         (2) Principal disbursements to which subsection (1) applies
 1953  include the following, but only To the extent that a the
 1954  fiduciary has not been and does not expect to be reimbursed by a
 1955  third party, principal disbursements to which subsection (1)
 1956  applies include:
 1957         (a) An amount chargeable to income but paid from principal
 1958  because income is not sufficient; the amount is unusually large.
 1959         (b) The cost of an improvement to principal, whether a
 1960  change to an existing asset or the construction of a new asset,
 1961  including a special assessment; Disbursements made to prepare
 1962  property for rental, including tenant allowances, leasehold
 1963  improvements, and broker’s commissions.
 1964         (c) A disbursement made to prepare property for rental,
 1965  including tenant allowances, leasehold improvements, and
 1966  commissions; Disbursements described in s. 738.702(1)(g).
 1967         (d) A periodic payment on an obligation secured by a
 1968  principal asset, to the extent the amount transferred from
 1969  income to principal for depreciation is less than the periodic
 1970  payment; and
 1971         (e) A disbursement described in s. 738.502(1).
 1972         (3) If an the asset whose the ownership of which gives rise
 1973  to a principal disbursement the disbursements becomes subject to
 1974  a successive income interest after an income interest ends, the
 1975  a fiduciary may continue to make transfers under transfer