Florida Statutes 738.409 – Deferred compensation, annuity, or similar payment
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(1) As used in this section, the term:
(a) “Internal income of the separate fund” means the amount determined under subsection (2).
Terms Used In Florida Statutes 738.409
- Accounting period: means a calendar year unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. See Florida Statutes 738.102
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- 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
- Current income beneficiary: means a beneficiary to which a fiduciary may or must distribute net income, regardless of whether the fiduciary also distributes principal to the beneficiary. See Florida Statutes 738.102
- Distribution: means a payment or transfer by a fiduciary to a beneficiary in the beneficiary's capacity as a beneficiary, without consideration other than the beneficiary's right to receive the payment or transfer under the terms of the trust as defined in this section, will, life estate, or term interest. See Florida Statutes 738.102
- 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
- Independent person: means a person who is not:
(a) For a trust:1. See Florida Statutes 738.102- Internal Revenue Code: means the Internal Revenue Code of 1986, as amended. See Florida Statutes 738.102
- Marital deduction: The deduction(s) that can be taken in the determination of gift and estate tax liabilities because of the existence of a marriage or marital relationship.
- 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
- Person: means an individual; a business or a nonprofit entity; an estate; a trust; a public corporation; a government or governmental subdivision, agency, or instrumentality; or other legal entity. 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
- Settlor: means a person, including a testator, who creates or contributes property to a trust. 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) “Marital trust” means a trust:1. Of which the settlor‘s surviving spouse is the only current income beneficiary and is entitled to a distribution of all the current net income of the trust; and2. That qualifies for a marital deduction with respect to the settlor’s estate under the Internal Revenue Code or comparable law of any state because:a. An election to qualify for a marital deduction under s. 2056(b)(7) of the Internal Revenue Code has been made;b. The trust qualified for a marital deduction under s. 2056(b)(5) of the Internal Revenue Code; orc. The trust otherwise qualifies for a marital deduction.(c) “Nonseparate fund” means an annuity, a deferred compensation plan, a pension plan, or other fund for which the value of the participant’s or account owner’s right to receive benefits can be determined only by the occurrence of a date or event as defined in the instrument governing the fund.(d) “Payment” means an amount a fiduciary may receive over a fixed number of years or during the life of one or more individuals because of services rendered or property transferred to the payor in exchange for future amounts the fiduciary may receive. The term includes an amount received in money or property from the payor’s general assets or from a separate fund created by the payor.(e) “Percent calculated” means a percent equal to the rate determined under s. 7520 of the Internal Revenue Code in effect for the month preceding the beginning of the accounting period; however, if the percent calculated exceeds 5 percent, it must be reduced to 5 percent, and if the percent calculated is less than 3 percent, it must be increased to 3 percent. Notwithstanding the preceding sentence, a fiduciary who is an independent person as defined in s. 738.102 may set the percent calculated at a percentage no less than 3 percent and no greater than 5 percent.(f) “Separate fund” includes a private or commercial annuity, an individual retirement account, and a pension, profit-sharing, stock-bonus, stock ownership plan, or other deferred compensation fund holding assets exclusively for the benefit of a participant or account owner.(2) For each accounting period, the following rules apply to a separate fund:(a) The fiduciary may determine the internal income of the separate fund as if the separate fund were a trust subject to this chapter.(b) Alternatively, the fiduciary may deem the internal income of the separate fund to equal the percent calculated of the value of the separate fund according to the most recent statement of value preceding the beginning of the accounting period. The fiduciary is not liable for good faith reliance upon any valuation supplied by the person or persons in possession of the fund. If the fiduciary makes or terminates an election under this paragraph, the fiduciary must make such disclosure in a trust disclosure document that satisfies the requirements of s. 736.1008(4)(c).(c) If the fiduciary cannot determine the value of the separate fund under paragraph (b), the value of the separate fund is deemed to equal the present value of the expected future payments as determined under s. 7520 of the Internal Revenue Code for the month preceding the beginning of the accounting period for which the computation is made.(d) The fiduciary may elect the method of determining the income of the fund pursuant to this subsection and may change the method of determining income of the fund for any future accounting period.(3) A fiduciary shall allocate a payment received from a separate fund during an accounting period to income, to the extent of the internal income of the separate fund during the period, and allocate the balance to principal.(4) The fiduciary of a marital trust shall:(a) Withdraw from a separate fund the amount the current income beneficiary of the trust requests the fiduciary to withdraw, not greater than the amount by which the internal income of the separate fund during the accounting period exceeds the amount the fiduciary otherwise receives from the separate fund during the period.(b) Transfer from principal to income the amount the current income beneficiary requests the fiduciary to transfer, but not greater than the amount by which the internal income of the separate fund during the period exceeds the amount the fiduciary receives from the separate fund during the period after the application of paragraph (a).(c) Distribute to the current income beneficiary as income:1. The amount of the internal income of the separate fund received or withdrawn during the period; and2. The amount transferred from principal to income under paragraph (b).(5) For a trust, other than a marital trust, of which one or more current income beneficiaries are entitled to a distribution of all the current net income, the fiduciary shall transfer from principal to income the amount by which the internal income of the separate fund during the accounting period exceeds the amount the fiduciary receives from the separate fund during the period.(6) The fiduciary of a nonseparate fund shall calculate internal income of the fund as the percent calculated of the present value of the right to receive the remaining payments as determined under s. 7520(a)(2) of the Internal Revenue Code for the month preceding the beginning of the accounting period.(7) If a fiduciary owns a separate fund or a nonseparate fund before January 1, 2025, the fiduciary may determine internal income, allocate payments, and account for unwithdrawn internal income as provided in this section or in the manner used by the fiduciary before January 1, 2025. Such fiduciary is not required to consider subsection (5). If the fiduciary acquires a separate fund or a nonseparate fund on or after January 1, 2025, the fiduciary must calculate internal income, allocate payments, and account for unwithdrawn internal income as provided in this section.