Florida has become one of a growing number of states to adopt a more flexible approach to dividing receipts and disbursements between income and principal by fiduciaries. The Florida Uniform Fiduciary Income and Principal Act (FIPA), 2025 Florida Statutes Chapter 738, is based on the structure of the 2018 Uniform Law Commissioners’ Uniform Principal and Income Act. Still, it also retains certain Florida-specific provisions from its predecessor, the Florida Uniform Principal and Income Act (FUPIA). FIPA went into effect on January 1, 2025, and instantly made Florida a more attractive place for trust administration.
At Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A., our Aventura estate planning lawyers can evaluate whether any changes to your estate plan are needed, particularly considering new legislation. Together, we can create a comprehensive estate plan that is most effective in terms of achieving your long-term goals.
FIPA generally applies in two situations: 1) when Florida is either the principal place of trust or estate administration; or 2) the location of property outside a trust or estate and subject to a life estate or similar interest. The basis of FIPA is that trustees should be able to select reasonable standards as needed to adjust income and principal.
Adjustments to the Allocation of Income
At FIPA’s core is the flexibility for fiduciaries to adjust the allocation of income and principal as needed to assist in administration and balance the interests of trust beneficiaries. FIPA contains detailed technical default rules for fiduciaries to follow when administering trusts and estates.
In extending this flexibility, FIPA also increases oversight by allowing the appointment of a co-fiduciary who may exercise adjustment powers in some situations, as well as the delegation and/or release of those adjustment powers. Furthermore, FIPA continues to contain prohibitions against adjustments that might create adverse tax consequences. Annual disclosure requirements also aid in oversight and transparency.
Conversion into Unitrusts
FIPA permits fiduciaries to convert some trusts into unitrusts, treating the unitrust amount as trust income for distribution purposes. This conversion enables the trusts to distribute a fixed annual percentage of the total asset value, ranging from 3 – 5%, to keep distributions within the federal tax safe harbor that applies to certain benefits, such as charitable and marital deductions. Among the other provisions relating to unitrusts are tax-ordering rules that specify the distribution order for unitrusts, the ability to convert a trust to a unitrust without court approval, and the ability to account for future federal tax changes to preserve tax benefits.
Receipts and Disbursements
FIPA also updates and structures the guidelines for receipts and disbursements for trusts and estates to more closely mirror the 2018 Uniform Act. The default position is that if a fiduciary cannot determine how to allocate a receipt or disbursement properly, they should apply it to the principal. Although FIPA preserves Florida’s lookback rule applicable to large receipts, it is limited to three accounting periods or the time that the fiduciary has held the interest in the entity, whichever is less.
Furthermore, FIPA incorporates an accounting period to more effectively balance income and principal allocations and allow for the transfer of assets from principal to income as needed. FIPA maintains flexibility for both disbursements and reimbursements between income and principal.
Digital Assets
To modernize estates and trusts, FIPA now specifically recognizes digital assets such as cryptocurrency, NFTs, and online royalties. FIPA also clarifies how to allocate these assets.
Frequently Asked Questions About the Florida Uniform Fiduciary Income and Principal Act
How does FIPA affect trustees who are already administering an existing Florida trust?
FIPA applies automatically to trusts administered in Florida beginning January 1, 2025, including those that are already being administered, unless the trust instrument expressly opts out of certain provisions. For many trustees, this change means greater flexibility in allocating income and principal, along with new oversight and disclosure obligations. Trustees may need to update internal accounting practices, review delegation authority, and ensure they understand when adjustments are permitted or prohibited. A legal review can help determine whether amendments to the trust document or administrative procedures are advisable.
Can a trust be drafted to limit or expand a fiduciary’s adjustment powers under FIPA?
Yes. While FIPA provides default rules, it also allows settlors to customize or restrict a fiduciary’s adjustment authority through the trust instrument. Some settlors may want to preserve strict income/principal distinctions, while others may prefer broader discretion to promote long‑term investment growth or beneficiary fairness. Because FIPA interacts with federal tax rules, any modification should be drafted carefully to avoid unintended tax consequences.
Why does FIPA make Florida more attractive for trust administration?
FIPA modernizes Florida trust law by offering fiduciaries greater administrative flexibility, clearer statutory guidance, and updated rules for emerging asset classes, such as cryptocurrency. The ability to convert to a unitrust without court involvement, rely on structured default allocation rules, and use adjustment powers to balance beneficiary interests makes Florida a more efficient and predictable jurisdiction. These features can reduce administrative burdens, enhance tax planning opportunities, and provide a more stable environment for long‑term trust management.
Greater Flexibility in Using Trusts to Protect Your Assets Legally
Understanding changes to Florida law governing the administration of trusts and estates is crucial to creating a strong, effective estate plan that protects your family and furthers your ultimate goals. The trust and estate administration process can be complex. Our attorneys stay abreast of constantly changing state and federal laws to ensure that your estate plan achieves your objectives and maximizes the benefits that the law allows.
The Florida estate planning attorneys at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. help clients understand legal changes and how they might affect their estate plans. With the right guidance, you can take proactive steps to protect what you’ve worked hard to build.