The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Rules
BILL: CS/CS/SB 1316
INTRODUCER: Rules Committee; Judiciary Committee; and Senator Berman
SUBJECT: Florida Uniform Fiduciary Income and Principal Act
DATE: February 14, 2024 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Davis Cibula JU Fav/CS
2. Davis Twogood RC Fav/CS
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Technical Changes
I. Summary:
CS/CS/SB 1316 replaces the current Florida Uniform and Principal Income Act with the
Florida Uniform Fiduciary Income and Principal Act. The provisions in this bill, which are found
in ch. 738, F.S., govern the allocation of trust and estate receipts and disbursements between
principal and interest where a Florida trust does not provide its own terms for the allocation. The
new act, or FUFIPA, would, in addition to modernizing trust law generally:
 Allow for total-return investing under the “modern portfolio theory.”
 Provide for the conversion of an existing trust into a unitrust.
 Provide flexibility for more individualized estate planning.
 Provide a governing law provision to reduce jurisdictional disputes.
The bill takes effect January 1, 2025.
II. Present Situation:
Background
Trusts
A trust is a relationship in which one party, the settlor,1 gives another party, the trustee, the right
to hold title to the settlor’s assets for the benefit of a third party, the beneficiary. A trust may be
1
“Settlor” means a person, including a testator, who creates or contributes property to a trust. Section 736.0103(18), F.S.
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created and take effect during a settlor’s lifetime, which is known as a living trust, or may be
created by a will and take effect when the settlor dies, which is known as a testamentary trust.2
A trust may be revocable, so that the terms may be changed at any time before the settlor dies, or
irrevocable, so that the terms cannot be modified after the trust is created unless the beneficiaries
consent to the modifications.3 Most trusts are generally governed by the Florida Trust Code,
codified in chapter 736, F.S. However, additional provisions of Florida law may apply if the trust
has special attributes.
Uniform Fiduciary Income and Principal Act
Traditionally, many trust beneficiaries were entitled to receive either income earned by trust
investments, referred to as an income beneficiary or a share of trust principal when an income
interest ended, which is referred to as a remainder beneficiary.4 In this scenario, the trustee’s
allocation of receipts and disbursements to income or principal had a direct effect on a
beneficiary’s financial interests, and thus the financial interests of an income beneficiary were
often at odds with those of the remainder beneficiary.5
In 1931, the National Conference of Commissioners on Uniform State Laws, also known as the
Uniform Law Commission, or ULC,6 adopted the first Uniform Principal and Income Act which
was referred to as the UPIA. In pertinent part, UPIA governed the allocation of trust and estate
receipts and disbursements between income and principal where the terms of the trust or will did
not provide for the allocation or give the fiduciary a discretionary power of administration.
Forty-seven states, including Florida, subsequently adopted some form of UPIA. Florida’s
version, adopted in 2002 and known as the Florida Uniform Principal and Income Act or FUPIA,
is codified in ch. 738, F.S.
However, in recent decades, the distinction between income and principal has lost some
significance, for two reasons. First, the “modern portfolio theory” allows trustees to invest for
the maximum total return, whether the return is in the form of income or principal growth.7 This
has led to the rise in popularity of the “unitrust,” which trust allows the income beneficiary to
receive income from the trust at a set percentage of the trust’s fair market value while the
remainder beneficiary receives a fair disbursement after the income interest ends, thereby
2
See “inter vivos trust” and “testamentary trust,” Black’s Law Dictionary (11th ed. 2019).
3
Greg Depersio, Investopedia (Apr. 30, 2023), Revocable Trust v. Irrevocable Trust: What’s the Difference,
https://www.investopedia.com/ask/answers/071615/what-difference-between-revocable-trust-and-living-trust.asp (last
visited Jan. 31, 2024).
4
For example, a trust may require that all trust income be distributed to the settlor’s surviving spouse, but that trust principal be held and
accumulated for the settlor’s surviving children, to be paid after the surviving spouse’s death. Uniform Law Commission, The Uniform
Fiduciary Income and Principal Act: A Summary, https://www.uniformlaws.org/viewdocument/enactment-kit-
74?CommunityKey=1105f9bb-eb93-4d4d-a1ab-a535ef73de0c&tab=librarydocuments (last visited Jan. 25, 2024).
5
Id.
6
The NCCUSL is an association of commissioners appointed by each state, the District of Columbia, the Commonwealth of
Puerto Rico, and the U.S. Virgin Islands, that discusses and debates which areas of the law require uniformity among the
states and territories and drafts uniform acts accordingly. Legal Information Institute, National Conference of Commissioners
on Uniform State Laws,
https://www.law.cornell.edu/wex/national_conference_of_commissioners_on_uniform_state_laws_(nccusl) (last visited Jan.
25, 2024).
7
Uniform Law Commission, supra note 4.
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reducing the likelihood that the financial interests of the income beneficiary and the remainder
beneficiary will be at odds.8 In other words, under a unitrust, both the income beneficiary and
remainder beneficiary benefit from an increase in the value of a trust’s assets.9 Second, modern
trusts are often drafted with more flexible terms, thereby giving trustees discretion to accumulate
income or invade principal when advantageous to further the trust’s overall purposes.10
In 2018, the ULC adopted the Uniform Fiduciary Income and Principal Act (UFIPA) to account
for these developments, provide additional flexibility in tailoring individual trusts to meet a
settlor’s specific needs, provide for the conversion of older trusts into unitrusts, and provide a
governing law section to help avoid jurisdictional disputes.11 Seven states have since enacted
some form of UFIPA.12
In response to UFIPA’s adoption, the Real Property, Probate and Trust Law Section of The
Florida Bar asked its Principal and Income Committee to review UFIPA and consider whether
Florida should adopt the new model law. The Committee ultimately proposed a revision to
FUPIA, known as the Florida Uniform Fiduciary Income and Principal Act (FUFIPA), that
would incorporate UFIPA language wherever possible while preserving certain public policy
choices found in existing Florida law that continue to make sense for the state.
III. Effect of Proposed Changes:
The bill codifies FUFIPA into ch. 738, F.S., replacing FUPIA as the law governing the allocation
of trust and estate receipts and disbursements between principal and interest where a Florida trust
does not provide its own terms for such an allocation. FUFIPA would, in addition to
modernizing Florida trust law generally:
 Allow for total-return investing under the “modern portfolio theory.”
 Further develop the unitrust concept to promote uniformity among the states.
 Provide flexibility for more individualized estate planning.
 Provide a governing law provision to reduce jurisdictional disputes.
Definitions
The bill revises s. 738.102, F.S., to modify existing definitions and provide new definitions to
incorporate UFIPA terminology and concepts. Under the bill, the definitions of “accounting
period,” “income,” “mandatory income interest,” and “person” remain unchanged, while
definitions for new terms, including “court,” “estate,” “personal representative,” and “record,”
were added without impacting current policy. However, the bill modifies the following
definitions in a substantive way:
 “Beneficiary” is redefined to distinguish between current income beneficiaries and current
remainder beneficiaries, as well as to encompass persons holding life estates or term
interests.
8
Id.; Rod Fluck, What is a Unitrust and Why is it Used, http://buteralaw.com/newsletters/estate/what-is-a-unitrust-and-why-
is-it-used/ (last visited Jan. 25, 2024).
9
Fluck, supra note 8.
10
Uniform Law Commission, supra note 4.
11
Id.
12
Uniform Law Commission, supra note 4.
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 “Fiduciary” is broadened to apply not only to the personal representative and trustee, as
under current law, but also to those with a power to direct, those under a fiduciary’s
delegation, and those holding property for a successor beneficiary who may be impacted by
principal or income allocations.
 “Income interest” is redefined as a right of a current income beneficiary and includes a
current beneficiary’s use of property held by a fiduciary.
 “Net income” is broadened to include application to a unitrust and an adjustment from
principal to income.
 “Principal” is modified from meaning that which is distributed to a remainder beneficiary to
that which is held for distribution to, for production of income for, or for use by, a current or
successor beneficiary.
 “Terms of the trust” is broadened to extend to wills, life estates, and term interests, and thus
more closely follows the definition of the term in the Florida Trust Code.
Additionally, the bill adds the following new definitions, which modify Florida law in a
substantive way:
 “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, will, life estate, or term
interest.
 “Independent person,” means a person that is not:
o For a trust, a qualified beneficiary; a settlor; an individual whose legal obligation to
support a beneficiary may be satisfied by a trust distribution; or any trustee whom an
interested distributee may remove and replace with a related or subordinate party.
o For an estate, a beneficiary; a spouse, parent, brother, sister, or issue of specified persons;
a corporation, partnership, limited liability company, or other entity in which specified
persons have voting control; or an employee of a specified person.
 “Personal representative,” means an executor, administrator, successor personal
representative, special administrator, or person that performs substantially the same function
with respect to an estate under the law governing the person’s status.
 “Record,” means information that is inscribed on a tangible medium or stored in an
electronic or other medium and is retrievable in perceivable form.
 “Settlor,” means a person, including a testator, that creates or contributes property to a trust.
 “Special tax benefit,” means the annual gift tax exclusion,13 qualified subchapter S status,14
federal marital tax deduction,15 and generation-skipping transfer tax exemption.16
13 The Internal Revenue Service allows individuals to give away up to a specific amount of assets each year tax-free under the annual gift
tax exclusion. Jean Gordon Carter and Janice L. Davies, Gift Tax, the Annual Exclusion and Estate Planning,
https://www.actec.org/resource-center/video/gift-tax-the-annual-exclusion-and-estate-planning/ (last visited Jan. 25, 2024).
14 A trust with qualified subchapter S status is eligible to own stock in an S corporation. A settlor can use this type of trust to make a gift of
all or a part of the S corporation stock and retain voting power while the beneficiary receives the income and the tax burden. Rebecca C.
Bowen, Trusts as Eligible Shareholders of an S Corporation, https://www.t-mlaw.com/commentary/trusts-as-eligible-shareholders-of-an-s-
corporation/ (last visited Jan. 25, 2024).
15 The Internal Revenue Service allows a spouse to leave property of unlimited value to his or her surviving spouse tax-free. Such assets
may be distributed by a direct transfer from the decedent to the surviving spouse or by an indirect transfer to a qualifying trust for the
surviving spouse’s benefit. Peter B. von Stein, Basic Estate Tax Planning for Married Couples: Opportunities for Use of Estate Tax
Exemptions, https://www.wardandsmith.com/articles/basic-estate-tax-planning-married-couples-use-estate-tax-exemptions (last visited Jan.
25, 2024).
16 The generation-skipping transfer tax is a federal tax on a gift or an inheritance that prevents the donor from avoiding estate taxes by
skipping over children in favor of grandchildren. However, the Internal Revenue Service allows a person to give up to a certain amount to a
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 “Successive interest,” means the interest of a successor beneficiary.
 “Successor beneficiary,” means a person entitled to receive income or principal or to use
property when an income interest or other current interest ends.
 “Trust,” means an express trust, whether private or charitable, with additions to the trust,
wherever and however created, and a trust created or determined by judgment or decree
under which the trust is to be administered in the manner of an express trust.
 “Trustee,” means a person, other than a personal representative, that owns or holds property
for the benefit of a beneficiary.
 “Will,” means any testamentary instrument recognized by applicable law which makes a
legally effective disposition of an individual’s property, effective at the individual’s death,
and includes a codicil or other amendment to a testamentary instrument.
Scope
The bill amends s. 738.103, F.S., to provide FUFIPA’s scope. Specifically, the bill states that,
except as otherwise provided by the terms of a trust or FUFIPA, FUFIPA applies to a trust or
estate and to a life estate or other term interest in which someone’s interest will be succeeded by
another’s interest under s. 738.508, F.S.
Governing Law
The bill adds a new governing law provision to renumbered s. 738.104, F.S. Specifically, the bill
provides that, if the principal place of administration of a trust or estate or the situs of property
not held in trust or an estate is Florida, the trustee is governed by FUFIPA, except as otherwise
provided in the terms of the trust or elsewhere in that chapter.
General Principles of Fiduciary Duties
The bill renumbers from s. 738.103, F.S., to s. 738.201, F.S., a provision setting forth a trustee’s
fiduciary duties, including the duty to administer a trust or estate impartially based on what is
fair and reasonable to all beneficiaries. Current law also establishes the general principles for
allocating receipts and disbursements to or between principal and income, specifying that,
generally speaking, receipts and disbursements be allocated to principal, and establishes a
presumption that a determination made in accordance with ch. 738 is fair and reasonable.
The bill substantially preserves current law, with four exceptions. Specifically, the bill:
 Incorporates the revised definition of “terms of the trust.”
 Adds an express requirement that a fiduciary act in good faith.
 Requires a fiduciary to add undistributed income to principal within a specified time period.
 Incorporates the factors currently set out in s. 738.104(2), F.S., applicable in exercising the
adjustment power, and making such factors applicable to all fiduciary decisions under
FUFIPA.
qualified recipient to avoid this tax. Troy Segal, What is the Generation-Skipping Transfer Tax, Investopedia (Feb. 7, 2023),
https://www.investopedia.com/terms/g/generation-skipping-transfer-tax.asp (last visited Jan. 25, 2024).
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The factors incorporated from s. 738.104(2), F.S., remain largely the same as in current law,