Florida Statutes 738.704 – Transfers from income to reimburse principal
Current as of: 2023 | Check for updates
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(1) If a fiduciary makes or expects to make a principal disbursement described in this section, 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) Principal disbursements to which subsection (1) applies include the following, but only to the extent the fiduciary has not been and does not expect to be reimbursed by a third party:
(a) An amount chargeable to income but paid from principal because the amount is unusually large.
Terms Used In Florida Statutes 738.704
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Fiduciary: A trustee, executor, or administrator.
- Fiduciary: means a personal representative or a trustee. See Florida Statutes 738.102
- Income: means money or property that a fiduciary receives as current return from a principal asset. See Florida Statutes 738.102
- Income interest: means the right of an 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 trustee's discretion. See Florida Statutes 738.102
- Lien: A claim against real or personal property in satisfaction of a debt.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Principal: means property held in trust for distribution to a remainder beneficiary when the trust terminates. See Florida Statutes 738.102
(b) Disbursements made to prepare property for rental, including tenant allowances, leasehold improvements, and broker’s commissions.
(c) Disbursements described in s. 738.702(1)(g).
(3) If the asset the ownership of which gives rise to the disbursements becomes subject to a successive income interest after an income interest ends, a fiduciary may continue to transfer amounts from income to principal as provided in subsection (1).
(4) To the extent principal cash is not sufficient to pay the principal balance of payments due on mortgaged property, income may be applied to such payment in order to avoid a default on any mortgage or security interest securing the property. Income shall be reimbursed for such payments out of the first available principal cash. If the asset the ownership of which gives rise to the disbursements described in this subsection becomes subject to a successive income interest after an income interest ends, all rights of the initial income interest shall lapse, and amounts remaining due from principal shall not be a lien on the assets of the trust.