Florida Statutes 738.601 – Determination and distribution of net income
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(1) This section applies when:
(a) The death of an individual results in the creation of an estate or trust; or
Terms Used In Florida Statutes 738.601
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Beneficiary: includes :(a) For a trust:1. See Florida Statutes 738.102
- Court: means a circuit court of this state. See Florida Statutes 738.102
- Decedent: A deceased person.
- Estate: means a decedent's estate, including the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration. See Florida Statutes 738.102
- 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
- Internal Revenue Code: means the Internal Revenue Code of 1986, as amended. See Florida Statutes 738.102
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Net income: means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. See Florida Statutes 738.102
- 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
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- Terms of a trust: means :
(a) Except as otherwise provided in paragraph (b), the manifestation of the settlor's intent regarding a trust's provisions as:1. See Florida Statutes 738.102- Trust: includes an express trust, whether private or charitable, with additions to the trust, wherever and however created; and a trust created or determined by a judgment or decree under which the trust is to be administered in the manner of an express trust. See Florida Statutes 738.102
(b) An income interest in a trust terminates, whether the trust continues or is distributed.(2) A fiduciary of an estate or trust with an income interest that terminates shall determine, under subsection (6) and ss. 738.401–738.508 and 738.701–738.703, the amount of net income and net principal receipts received from property specifically given to a beneficiary. The fiduciary shall distribute the net income and net principal receipts to the beneficiary who is to receive the specific property.(3) A fiduciary shall determine the income and net income of an estate or income interest in a trust which terminates, other than the amount of net income determined under subsection (2), under ss. 738.401–738.508 and 738.701–738.703, and by:(a) Including in net income all income from property used or sold to discharge liabilities.(b) Paying from income or principal, in the fiduciary’s discretion, fees of attorneys, accountants, and fiduciaries; court costs and other expenses of administration; and interest on estate and inheritance taxes and other taxes imposed because of the decedent‘s death, but the fiduciary may pay the expenses from income of property passing to a trust for which the fiduciary claims an estate tax marital or charitable deduction under the Internal Revenue Code or comparable law of any state only to the extent that:1. The payment of the expenses from income will not cause the reduction or loss of the deduction; or2. The fiduciary makes an adjustment under s. 738.507(2); and(c) Paying from principal other disbursements made or incurred in connection with the settlement of the estate or the winding up of an income interest that terminates, including:1. To the extent authorized by the decedent’s will, the terms of the trust, or applicable law, debts, funeral expenses, disposition of remains, family allowances, estate and inheritance taxes, and other taxes imposed because of the decedent’s death; and2. Related penalties apportioned by the decedent’s will, the terms of the trust, or applicable law to the estate or income interest that terminates.(4) If a decedent’s will or the terms of a trust provide for the payment of interest or the equivalent of interest to a beneficiary who receives a pecuniary amount outright, the fiduciary shall make the payment from net income determined under subsection (3) or from principal to the extent that net income is insufficient.(5) A fiduciary shall distribute net income remaining after payments required by subsection (4) in the manner described in s. 738.602 to all other beneficiaries, including a beneficiary who receives a pecuniary amount in trust, even if the beneficiary holds an unqualified power to withdraw assets from the trust or other presently exercisable general power of appointment over the trust.(6) A fiduciary may not reduce principal or income receipts from property described in subsection (2) because of a payment described in s. 738.501 or s. 738.502 to the extent that the decedent’s will, the terms of the trust, or applicable law requires the fiduciary to make the payment from assets other than the property or that the fiduciary recovers or expects to recover the payment from a third party. The net income and principal receipts from the property must be determined by including the amount the fiduciary receives or pays regarding the property, whether the amount accrued or became due before, on, or after the date of the decedent’s death or an income interest’s terminating event, and making a reasonable provision for an amount the estate or income interest may become obligated to pay after the property is distributed.