Florida Statutes 738.414 – Derivatives or options
Current as of: 2024 | Check for updates
|
Other versions
(1) As used in this section, the term “derivative” means a contract, an instrument, or other arrangement, or combination of contracts, instruments, or other arrangements, of which the value, rights, and obligations are, in whole or in part, dependent on or derived from an underlying tangible or intangible asset, a group of tangible or intangible assets, an index, or an occurrence of an event. The term includes stocks, fixed income securities, and financial instruments and arrangements based on indices, commodities, interest rates, weather-related events, and credit-default events.
(2) To the extent that a fiduciary does not account for a transaction in derivatives as a business under s. 738.403, the fiduciary shall allocate 10 percent of receipts from the transaction and 10 percent of disbursements made in connection with the transaction to income and allocate the balance to principal.
(3) Subsection (4) applies if:
(a) A fiduciary:
1. Grants an option to buy property from a trust, regardless of whether the trust owns the property when the option is granted;
2. Grants an option that permits another person to sell property to the trust; or
3. Acquires an option to buy property for the trust or an option to sell an asset owned by the trust; and
Terms Used In Florida Statutes 738.414
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Contract: A legal written agreement that becomes binding when signed.
- Dependent: A person dependent for support upon another.
- 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
- 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
- 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.
- 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) The fiduciary or other owner of the asset is required to deliver the asset if the option is exercised.
(4) If this subsection applies, the fiduciary must allocate 10 percent to income and allocate the balance to principal of the following amounts:
(a) An amount received for granting the option;
(b) An amount paid to acquire the option; and
(c) Gain or loss realized on the exercise, exchange, settlement, offset, closing, or expiration of the option.