Taxation & Estate Planning

Things That May Surprise You About Florida's Principal and Income Act and Related Accounting Law, Part II

By Juan C. Antúnez

Accounting concepts are dull in the abstract, it's only in application to a real live set of facts that they become interesting. Ask the folks at Enron/Arthur Anderson if they think accounting is boring?! And ask your clients if they think accounting is boring the next time you double a trust's income distribution or deliver a huge tax savings based on nothing other than a working knowledge of Florida's fiduciary accounting principals? (P.S. Think you'll have trouble getting that bill paid?)

So I think we can all agree it's worth your while to at least know how to spot a fiduciary-accounting issue when it's staring you in the face. And the best way to tackle that problem is to have a list of hot-button fiduciary accounting scenarios to be on the look out for. Which is what William C. Carroll and John W. Randolph, Jr., deliver in an excellent two-part series on Florida's version of the Uniform Principal and Income Act. I wrote here on Part I of this series. In Things That May Surprise You About Florida's Principal and Income Act and Related Accounting Law, Part II, the authors move up the complexity scale by tackling the following scenarios:

1. Life Estate in Real Property
2. Mutual Fund Capital Gain Distributions
3. Bond Discounts and Premiums
4. Determination of Net Income of an Estate in Marital Deduction Instances
5. Establishing a Principal Reserve for Future Income Expenses 

Here's an excerpt from the article's introduction:

Part one of this two-part article introduced the reader to the provisions of the Florida Uniform Principal and Income Act. In part two, the authors continue using examples to explore the more complex workings of the act and how those provisions allocate trust and estate receipts and disbursements between income and principal of an estate or trust. As in part one, these examples assume that the will or trust is silent as to allocating the receipt or disbursement at issue to either income or principal, and does not give the personal representative and/or trustee a discretionary power of administration.

Full post as published by Florida Probate Litigation Blog on April 02, 2009 (boomark / email).