Florida Statutes 738.505 – Reimbursement of principal from income
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(1) If a fiduciary makes or expects to make a principal disbursement described in subsection (2), the fiduciary may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements.
(2) To the extent that a fiduciary has not been and does not expect to be reimbursed by a third party, principal disbursements to which subsection (1) applies include:
(a) An amount chargeable to income but paid from principal because income is not sufficient;
Terms Used In Florida Statutes 738.505
- Fiduciary: A trustee, executor, or administrator.
- Fiduciary: includes a trustee, a trust director as defined in…. See Florida Statutes 738.102
- Income: means money or other property a fiduciary receives as current return from principal. See Florida Statutes 738.102
- Income interest: means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciary's discretion. See Florida Statutes 738.102
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Principal: means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary. See Florida Statutes 738.102
- Successive interest: means the interest of a successor beneficiary. See Florida Statutes 738.102
(b) The cost of an improvement to principal, whether a change to an existing asset or the construction of a new asset, including a special assessment;
(c) A disbursement made to prepare property for rental, including tenant allowances, leasehold improvements, and commissions;
(d) A periodic payment on an obligation secured by a principal asset, to the extent the amount transferred from income to principal for depreciation is less than the periodic payment; and
(e) A disbursement described in s. 738.502(1).
(3) If an asset whose ownership gives rise to a principal disbursement becomes subject to a successive interest after an income interest ends, the fiduciary 1may make transfers under subsection (1).