CS/CS/HB 501

1	A bill to be entitled
2	An act relating to estates and trusts; amending s.
3	518.112, F.S.; providing additional delegable investment
4	functions for fiduciaries relating to life insurance
5	contract administration; revising notice requirements and
6	criteria for delegation by a fiduciary of investment
7	functions to an investment agent; creating s. 736.0902,
8	F.S.; specifying certain activities trustees are under no
9	duty to undertake relating to administration of certain
10	contracts for life insurance; specifying absence of
11	liability of trustees to trust beneficiaries for certain
12	losses; specifying criteria for application of certain
13	provisions; providing for certain notice requirements;
14	specifying nonapplication to certain contracts of life
15	insurance; providing definitions; providing for
16	nonapplication of certain delegable investment functions
17	by a trustee under certain circumstances; specifying
18	certain activities for which a trustee may not be
19	compensated; providing an effective date.
20
21	Be It Enacted by the Legislature of the State of Florida:
22
23	Section 1.  Paragraph (b) of subsection (2) and paragraph
24	(b) of subsection (3) of section 518.112, Florida Statutes, are
25	amended to read:
26	518.112  Delegation of investment functions.-
27	(2)
28	(b)  The delegable investment functions under this
29	subsection include:
30	1.  A determination of whether any insurance contract is or
31	remains a proper investment;
32	2.  A determination of whether or not to exercise any
33	policy option available under any insurance such contracts;
34	3.  A determination of whether or not to diversify such
35	contracts relative to one another or to other assets, if any,
36	administered by the fiduciary; or
37	4.  An inquiry about changes in the health or financial
38	condition of the insured or insureds relative to any such
39	contract;.
40	5.  A determination of whether the insurance contract was
41	procured or effected in compliance with s. 627.404; or
42	6.  An investigation of the financial strength of the life
43	insurance company.
44	(3)  A fiduciary may delegate investment functions to an
45	investment agent under subsection (1) or subsection (2), if:
46	(b)  In the case of a trust or estate, the fiduciary has
47	given written notice, of its intention to begin delegating
48	investment functions under this section, to all beneficiaries,
49	or their legal representative, eligible to receive distributions
50	from the trust or estate within 30 days of the delegation unless
51	such notice is waived by the eligible beneficiaries entitled to
52	receive such notice. This notice shall thereafter, until or
53	unless the beneficiaries eligible to receive income from the
54	trust or distributions from the estate at the time are notified
55	to the contrary, authorize the trustee or legal representative
56	to delegate investment functions pursuant to this subsection.
57	This discretion to revoke the delegation does not imply under
58	subsection (2) any continuing obligation to review the agent's
59	actions.
60	1.  Notice to beneficiaries eligible to receive
61	distributions from the trust from the estate, or their legal
62	representatives shall be sufficient notice to all persons who
63	may join the eligible class of beneficiaries in the future.
64	2.  Additionally, as used herein, legal representative
65	includes one described in s. 731.303, without any requirement of
66	a court order, an attorney-in-fact under a durable power of
67	attorney sufficient to grant such authority, a legally appointed
68	guardian, or equivalent under applicable law, any living,
69	natural guardian of a minor child, or a guardian ad litem.
70	3.  Written notice shall be given as provided in part III
71	of chapter 731 as to an estate and as provided in s. 736.0109
72	and part III of chapter 736 as to a trust.:
73	a.  By any form of mail or by any commercial delivery
74	service, approved for service of process by the chief judge of
75	the judicial circuit in which the trust has its principal place
76	of business at the date of notice, requiring a signed receipt;
77	b.  As provided by law for service of process; or
78	c.  By an elisor as may be provided in the Florida Rules of
79	Civil Procedure.
80
81	Notice by mail or by approved commercial delivery service is
82	complete on receipt of notice. Proof of notice must be by
83	verified statement of the person mailing or sending notice, and
84	there must be attached thereto the signed receipt or other
85	satisfactory evidence that delivery was effected on the
86	addressee or on the addressee's agent. Proof of notice must be
87	maintained among the trustee's permanent records.
88	Section 2.  Section 736.0902, Florida Statutes, is created
89	to read:
90	736.0902  Nonapplication of prudent investor rule.-
91	(1)  Notwithstanding the provisions of s. 518.11 or s.
92	736.0804, with respect to any contract of life insurance
93	acquired or retained on the life of a qualified person, a
94	trustee has no duty to:
95	(a)  Determine whether the contract of life insurance is or
96	was procured or effected in compliance with s. 627.404;
97	(b)  Determine whether any contract of life insurance is or
98	remains a proper investment;
99	(c)  Investigate the financial strength of the life
100	insurance company;
101	(d)  Determine whether to exercise any policy option
102	available under the contract of life insurance;
103	(e)  Diversify any such contract of life insurance or
104	diversify the assets of the trust with respect to the contract
105	of life insurance; or
106	(f)  Inquire about or investigate the health or financial
107	condition of any insured or insureds.
108	(2)  As used in this section, the term "qualified person"
109	means a person who is insured or is a proposed insured, or the
110	spouse of that person, who has provided the trustee with the
111	funds that are used to acquire or pay premiums with respect to a
112	policy of insurance on the life of that person or the spouse of
113	that person, or on the lives of that person and the spouse of
114	that person.
115	(3)  In all cases in which this section applies, the
116	trustee is not liable to the beneficiaries of the trust or any
117	other person for any loss sustained with respect to such
118	contract of life insurance.
119	(4)  Unless otherwise provided in the trust instrument,
120	paragraph (1)(a) applies to any contract of life insurance on
121	the life of a qualified person.
122	(5)  Unless otherwise provided in the trust instrument,
123	paragraphs (1)(b)-(f) apply if:
124	(a)  The trust instrument, by reference to this section,
125	makes this section applicable to contracts of life insurance
126	held by the trust; or
127	(b)  The trustee has provided notice that this section
128	applies to a contract of life insurance held by the trust. For
129	any notice provided under this paragraph:
130	1.  The notice shall be given to the qualified
131	beneficiaries and shall contain a copy or restatement of this
132	section.
133	2.  A notice given to a person who represents the interests
134	of any of the persons set forth in subparagraph 1., pursuant to
135	any of the provisions of part III of this chapter, shall be
136	treated as notice to the person so represented.
137	3.  The notice shall be provided pursuant to s. 736.0109.
138	4.  If any person notified pursuant to this paragraph
139	objects to the application of this section in a writing
140	delivered to the trustee within 30 days after the date such
141	notice was received, paragraphs (1)(b)-(f) shall not apply until
142	the objection is withdrawn.
143	5.  There is a rebuttable presumption that any notice sent
144	by United States mail is received 3 days after placing the
145	notice in the United States mail with proper postage paid.
146	(6)  This section does not apply to any contract of life
147	insurance purchased from any affiliate of the trustee or with
148	respect to which the trustee or any affiliate of the trustee
149	receives any commission unless the trustee's duties have been
150	delegated to another person in accordance with s. 518.112. For
151	purposes of this subsection, the term "affiliate" of the trustee
152	means any person who controls, is controlled by, or is under
153	common control with the trustee.
154	(7)  Paragraph (1)(a) shall not apply if the trustee
155	applied for or accepted ownership of a contract of life
156	insurance and the trustee had knowledge that:
157	(a)  The benefits were not payable to a person specified in
158	s. 627.404 when the contract of life insurance was issued; or
159	(b)  The contract of life insurance is or was purchased
160	with resources or guarantees directly or indirectly provided by
161	a person who, at the time of the inception of the contract of
162	life insurance, did not have an insurable interest in the
163	insured as defined by s. 627.404, and, at the time of the
164	inception of the contract of life insurance, there is a verbal
165	or written arrangement, agreement, or plan with a third party to
166	transfer ownership of the policy or policy benefits in a manner
167	that would be in violation of the laws of this state.
168	(8)  A trustee who performs fiduciary or advisory services
169	related to a policy of life insurance to which subsection (1)
170	applies may not be compensated for performing the applicable
171	service to which subsection (1) applies.
172	Section 3.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.