The Florida Uniform Fiduciary Income and Principal Act (“FIPA” or the “Act”), effective January 1, 2025, introduces revisions to Florida Statutes Chapter 738. The Act provides a comprehensive update to the state's trust and estate administration laws, which govern the allocation of receipts and disbursements between income and principal when the governing document does not specify. Superseding the Florida’s Uniform Principal and Income Act of 2002 (“FUPIA”), the Act aligns Florida with contemporary fiduciary practices while addressing the evolving trust environment, which is characterized by longer and more adaptable trusts. The Act primarily incorporates the Uniform Law Commissioner’s Uniform Fiduciary Income and Principal Act of 2018 (“UFIPA”) while retaining essential Florida-specific provisions that ensure its relevance and applicability within the current legal framework.
This article highlights (1) some key changes under FIPA, (2) some of its key deviations from UFIPA and examines the impact on fiduciaries and trust administration in Florida.
FIPA represents Florida’s latest effort to modernize trust and estate administration. Rooted in the 1997 Uniform Principal and Income Act (“1997 Act”), Florida enacted its version (FUPIA) in 2002. Over the past two decades, evolving investment strategies, extended trust durations, and blurred distinction between income and principal resulting from flexible drafting, have created challenges to trust administration under current law.
Accordingly, in 2018, the Uniform Law Commission updated their 1997 Act by enacting UFIPA, providing greater flexibility for fiduciaries. Florida adopted UFIPA’s framework within FIPA while retaining its unique policy choices that ensure continuity for existing trusts and preserve Florida specific provisions, such as the use of carrying value in asset valuation. This update to Florida law aims to improve trust administration in Florida and resolve issues within the current law.
Enhanced Flexibility for Fiduciaries with the Power to Adjust – Fla. Stat. § 738.203
FIPA adopts UFIPA’s expanded power to adjust, allowing fiduciaries to reallocate income and principal to achieve impartiality. Under FUPIA, this power was restricted by an “impossibility” standard, often discouraging its use. FIPA replaces this with a standard of “assistance,” empowering fiduciaries to act when adjustments support equitable administration.
Restructured Unitrust Provisions – Fla. Stat. §§ 738.301 – 738.310
Unitrust provisions, previously consolidated in one dense section, are now distributed across ten specific sections. This structural change simplifies the administration of unitrusts and aligns Florida law with UFIPA. The Act also maintains Florida’s 3–5% safe harbor for unitrust payouts, offering consistency and tax compliance benefits.
Modernized Income and Principal Definitions – Fla. Stat. § 738.102
FIPA introduces nuanced definitions that reflect modern trust structures. Terms such as “capital distribution” replace outdated concepts like “partial liquidation,” and definitions for “income interest” and “successive interest” clarify beneficiary rights.
Governing Law and Portability – Fla. Stat. § 738.104
Under FIPA, Florida law applies to trusts administered in the state, even if created elsewhere. This rule enhances predictability for trustees managing multi-jurisdictional trusts and reinforces Florida’s appeal as a trust administration hub.
Although FIPA adopts much of UFIPA’s modern framework, several Florida-specific provisions remain, reflecting the state’s distinct policy choices and historical preferences.
Carrying Value for Asset Valuation – Fla. Stat. § 738.104(4)
Unlike UFIPA, which utilizes the current fair market value of assets, Florida retains the use of carrying value for certain calculations. Carrying value, representing the book value of an asset, reduces the need for frequent and costly appraisals, simplifying trust administration. This approach offers fiduciaries a consistent and accessible baseline for determining allocations, minimizing disputes while aligning with Florida’s preference for practicality over uniformity.
Entity Distribution Rules – Fla. Stat. § 738.401
Florida maintains its detailed and objective rules governing distributions from private and public entities, which differ from UFIPA’s broader discretionary framework. For example, capital distributions exceeding specific thresholds—such as 20% of an entity’s gross assets for private entities or 10% of the fiduciary’s fair market value interest in public entities—require a portion to be allocated to both income and principal. Florida continues to use a lookback rule to allocate between income and principal on capital distributions; however, FIPA introduces a limitation on the lookback period. Fiduciaries only need to look at the cumulative annual return (or flow through income tax) for the current accounting period and the prior two accounting periods instead of the unlimited look back of the prior act. The new limited 3-year lookback period makes this rule a little easier for fiduciaries to follow and administer, providing clear guidance and preventing beneficiaries from being disadvantaged due to long gaps in distributions.
Life Estate Expense Apportionment – Fla. Stat. § 738.508
Florida’s unique treatment of life estates remains a vital provision under FIPA. Particularly relevant in a state where homestead laws often create life estates for surviving spouses, this rule ensures that expenses are fairly apportioned between life tenants and remaindermen. By addressing the allocation of costs such as taxes, maintenance, and insurance, this provision protects the interests of both parties and provides clarity for fiduciaries navigating the complexities of life estate management in Florida.
These deviations from UFIPA demonstrate Florida’s commitment to preserving practical and equitable solutions tailored to its legal landscape. By maintaining these provisions while embracing the broader flexibility and modernization offered by UFIPA, FIPA strikes a balance between tradition and progress, ensuring the state remains a leader in trust and estate administration.
FIPA brings significant benefits to trustees and fiduciaries, fostering a more flexible and modern approach to trust management. By prioritizing total return investment strategies, FIPA reduces tension between income and principal beneficiaries. Key provisions, such as the power to adjust and the refined unitrust framework, support the application of Modern Portfolio Theory, enabling fiduciaries to manage trusts with a comprehensive, balanced perspective.
FIPA also streamlines trust administration by restructuring sections and aligning definitions with UFIPA, making its navigation easier for fiduciaries familiar with national standards. The updated unitrust provisions, in particular, offer enhanced clarity and simplicity, promoting efficient administration.
Finally, FIPA provides a critical safeguard by presuming that fiduciary actions are fair and reasonable unless proven otherwise. This presumption protects fiduciaries acting in good faith while reinforcing FIPA’s emphasis on impartiality and equitable trust administration.
FIPA marks a significant milestone in Florida’s trust and estate administration laws. By balancing uniformity among jurisdictions with Florida-specific nuances, the Act ensures the state remains a premier jurisdiction for fiduciary services. Fiduciaries and practitioners must familiarize themselves with FIPA’s provisions to leverage its flexibility and comply with its mandates.
As Florida continues to attract wealth and multi-generational trusts, FIPA provides the tools necessary to navigate modern trust complexities effectively.
Republished with permission of the Florida Bankers Association from the February/March 2025 issue of Florida Banking Magazine.
The information provided in this article does not, and is not intended to, constitute legal advice; it is for general informational purposes only. No reader of this article should act or refrain from acting on the basis of this information without first seeking legal advice from counsel in the relevant jurisdiction to ensure the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.
Jones Foster attorney Alex Parthemer is a member of the Corporate & Tax and Private Wealth, Wills, Trusts & Estates teams who focuses his practice in the areas of estate planning, probate and trust administration, tax planning, business planning, and transactional corporate law.
He represents business owners and family offices in a wide range of corporate matters, including corporation, LLC, and LP entity formation, mergers and acquisitions, buy-sell agreements, dissolutions, tax-free reorganizations, conversions, and annual filings.
Alex holds a Master of Laws degree (LL.M.) in Taxation from the Graduate Tax Program at the University of Florida.
Jones Foster is a full-service commercial and private client law firm headquartered in West Palm Beach, Florida, with offices in Palm Beach and Jupiter. Tracing its roots back to 1924, the firm has served as an integral part of South Florida’s growth and prosperity. Through a relentless pursuit of excellence, Jones Foster delivers original legal solutions that help clients, colleagues, and the community to move forward. A significant number of attorneys have received the designation of Board-Certified Specialist by The Florida Bar in their specific practice area. The firm’s practice groups include Complex Litigation & Dispute Resolution; Corporate & Tax; Land Use & Governmental; Private Wealth, Wills, Trusts & Estates; Real Estate; and Trust & Estate Litigation. For more information, please visit www.jonesfoster.com.
