January 24, 2021
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HB 501

A bill to be entitled
2An act relating to administration of life insurance
3contracts; amending s. 518.112, F.S.; providing additional
4delegable investment functions for fiduciaries relating to
5life insurance contract administration; revising notice
6requirements and criteria for delegation by a fiduciary of
7investment functions to an investment agent; creating s.
8736.0902, F.S.; specifying certain activities trustees are
9under no duty to undertake relating to administration of
10certain contracts for life insurance; specifying absence
11of liability of trustees to trust beneficiaries for
12certain losses; specifying criteria for application of
13certain provisions; providing for certain notice
14requirements; specifying nonapplication to certain
15contracts of life insurance; providing definitions;
16providing an effective date.
18Be It Enacted by the Legislature of the State of Florida:
20     Section 1.  Paragraph (b) of subsection (2) and paragraph
21(b) of subsection (3) of section 518.112, Florida Statutes, are
22amended to read:
23     518.112  Delegation of investment functions.-
24     (2)
25     (b)  The delegable investment functions under this
26subsection include:
27     1.  A determination of whether any insurance contract is or
28remains a proper investment;
29     2.  A determination of whether or not to exercise any
30policy option available under any insurance such contracts;
31     3.  A determination of whether or not to diversify such
32contracts relative to one another or to other assets, if any,
33administered by the fiduciary; or
34     4.  An inquiry about changes in the health or financial
35condition of the insured or insureds relative to any such
37     5.  A determination of whether the owner of any insurance
38contract has an insurable interest in the life of the insured;
40     6.  An investigation of the financial strength of the life
41insurance company.
42     (3)  A fiduciary may delegate investment functions to an
43investment agent under subsection (1) or subsection (2), if:
44     (b)  In the case of a trust or estate, the fiduciary has
45given written notice, of its intention to begin delegating
46investment functions under this section, to all beneficiaries,
47or their legal representative, eligible to receive distributions
48from the trust or estate within 30 days of the delegation unless
49such notice is waived by the eligible beneficiaries entitled to
50receive such notice. This notice shall thereafter, until or
51unless the beneficiaries eligible to receive income from the
52trust or distributions from the estate at the time are notified
53to the contrary, authorize the trustee or legal representative
54to delegate investment functions pursuant to this subsection.
55This discretion to revoke the delegation does not imply under
56subsection (2) any continuing obligation to review the agent's
58     1.  Notice to beneficiaries eligible to receive
59distributions from the trust from the estate, or their legal
60representatives shall be sufficient notice to all persons who
61may join the eligible class of beneficiaries in the future.
62     2.  Additionally, as used herein, legal representative
63includes one described in s. 731.303, without any requirement of
64a court order, an attorney-in-fact under a durable power of
65attorney sufficient to grant such authority, a legally appointed
66guardian, or equivalent under applicable law, any living,
67natural guardian of a minor child, or a guardian ad litem.
68     3.  Written notice shall be given as provided in part III
69of chapter 731 as to an estate and as provided in s. 736.0109
70and part III of chapter 736 as to a trust.:
71     a.  By any form of mail or by any commercial delivery
72service, approved for service of process by the chief judge of
73the judicial circuit in which the trust has its principal place
74of business at the date of notice, requiring a signed receipt;
75     b.  As provided by law for service of process; or
76     c.  By an elisor as may be provided in the Florida Rules of
77Civil Procedure.
79Notice by mail or by approved commercial delivery service is
80complete on receipt of notice. Proof of notice must be by
81verified statement of the person mailing or sending notice, and
82there must be attached thereto the signed receipt or other
83satisfactory evidence that delivery was effected on the
84addressee or on the addressee's agent. Proof of notice must be
85maintained among the trustee's permanent records.
86     Section 2.  Section 736.0902, Florida Statutes, is created
87to read:
88     736.0902  Nonapplication of prudent investor rule.-
89     (1)  Notwithstanding the provisions of s. 518.11 or s.
90736.0804, with respect to any contract of life insurance
91acquired or retained on the life of a qualified person, a
92trustee has no duty to:
93     (a)  Determine whether the trust has an insurable interest
94in the life of the insured;
95     (b)  Determine whether any contract of life insurance is or
96remains a proper investment;
97     (c)  Investigate the financial strength of the life
98insurance company;
99     (d)  Determine whether to exercise any policy option
100available under the contract of life insurance;
101     (e)  Diversify any such contract of life insurance or
102diversify the assets of the trust with respect to the contract
103of life insurance; or
104     (f)  Inquire about or investigate the health or financial
105condition of any insured or insureds.
106     (2)  For purposes of this section, the term "qualified
107person" means any person, or the spouse of any person, who has
108provided the trustee with funds that are used to acquire or pay
109premiums with respect to a policy of insurance on the life of
110that person, on the life of the spouse of that person, or on the
111lives of that person and the spouse of that person.
112     (3)  In all cases in which this section applies, the
113trustee is not liable to the beneficiaries of the trust or any
114other person for any loss sustained with respect to such
115contract of life insurance.
116     (4)  Unless otherwise provided in the trust instrument,
117paragraph (1)(a) applies to any contract of life insurance on
118the life of a qualified person.
119     (5)  Unless otherwise provided in the trust instrument,
120paragraphs (1)(b)-(f) apply if:
121     (a)  The trust instrument, by reference to this section,
122makes this section applicable to contracts of life insurance
123held by the trust; or
124     (b)  The trustee has provided notice that this section
125applies to a contract of life insurance held by the trust. For
126any notice provided under this paragraph:
127     1.  The notice shall be given to the qualified
128beneficiaries and shall contain a copy or restatement of this
130     2.  A notice given to a person who represents the interests
131of any of the persons set forth in subparagraph 1., pursuant to
132any of the provisions of part III of this chapter, shall be
133treated as notice to the person so represented.
134     3.  The notice shall be provided pursuant to s. 736.0109.
135     4.  If any person notified pursuant to this paragraph
136objects to the application of this section in a writing
137delivered to the trustee within 30 days after the date such
138notice was received, paragraphs (1)(b)-(f) shall not apply until
139the objection is withdrawn.
140     5.  There is a rebuttable presumption that any notice sent
141by United States mail is received 3 days after placing the
142notice in the United States mail with proper postage paid.
143     (6)  This section does not apply to any contract of life
144insurance purchased from any affiliate of the trustee or with
145respect to which the trustee or any affiliate of the trustee
146receives any commission unless the trustee's duties have been
147delegated to another person in accordance with s. 518.112. For
148purposes of this subsection, the term "affiliate" of the trustee
149means any person who controls, is controlled by, or is under
150common control with the trustee.
151     Section 3.  This act shall take effect upon becoming a law.

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