January 24, 2021
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CS/HB 501

A bill to be entitled
2An act relating to estates and trusts; amending s.
3518.112, F.S.; providing additional delegable investment
4functions for fiduciaries relating to life insurance
5contract administration; revising notice requirements and
6criteria for delegation by a fiduciary of investment
7functions to an investment agent; creating s. 736.0902,
8F.S.; specifying certain activities trustees are under no
9duty to undertake relating to administration of certain
10contracts for life insurance; specifying absence of
11liability of trustees to trust beneficiaries for certain
12losses; specifying criteria for application of certain
13provisions; providing for certain notice requirements;
14specifying nonapplication to certain contracts of life
15insurance; providing definitions; providing for
16nonapplication of certain delegable investment functions
17by a trustee under certain circumstances; providing an
18effective date.
20Be It Enacted by the Legislature of the State of Florida:
22     Section 1.  Paragraph (b) of subsection (2) and paragraph
23(b) of subsection (3) of section 518.112, Florida Statutes, are
24amended to read:
25     518.112  Delegation of investment functions.-
26     (2)
27     (b)  The delegable investment functions under this
28subsection include:
29     1.  A determination of whether any insurance contract is or
30remains a proper investment;
31     2.  A determination of whether or not to exercise any
32policy option available under any insurance such contracts;
33     3.  A determination of whether or not to diversify such
34contracts relative to one another or to other assets, if any,
35administered by the fiduciary; or
36     4.  An inquiry about changes in the health or financial
37condition of the insured or insureds relative to any such
39     5.  A determination of whether the insurance contract was
40procured or effected in compliance with s. 627.404; or
41     6.  An investigation of the financial strength of the life
42insurance company.
43     (3)  A fiduciary may delegate investment functions to an
44investment agent under subsection (1) or subsection (2), if:
45     (b)  In the case of a trust or estate, the fiduciary has
46given written notice, of its intention to begin delegating
47investment functions under this section, to all beneficiaries,
48or their legal representative, eligible to receive distributions
49from the trust or estate within 30 days of the delegation unless
50such notice is waived by the eligible beneficiaries entitled to
51receive such notice. This notice shall thereafter, until or
52unless the beneficiaries eligible to receive income from the
53trust or distributions from the estate at the time are notified
54to the contrary, authorize the trustee or legal representative
55to delegate investment functions pursuant to this subsection.
56This discretion to revoke the delegation does not imply under
57subsection (2) any continuing obligation to review the agent's
59     1.  Notice to beneficiaries eligible to receive
60distributions from the trust from the estate, or their legal
61representatives shall be sufficient notice to all persons who
62may join the eligible class of beneficiaries in the future.
63     2.  Additionally, as used herein, legal representative
64includes one described in s. 731.303, without any requirement of
65a court order, an attorney-in-fact under a durable power of
66attorney sufficient to grant such authority, a legally appointed
67guardian, or equivalent under applicable law, any living,
68natural guardian of a minor child, or a guardian ad litem.
69     3.  Written notice shall be given as provided in part III
70of chapter 731 as to an estate and as provided in s. 736.0109
71and part III of chapter 736 as to a trust.:
72     a.  By any form of mail or by any commercial delivery
73service, approved for service of process by the chief judge of
74the judicial circuit in which the trust has its principal place
75of business at the date of notice, requiring a signed receipt;
76     b.  As provided by law for service of process; or
77     c.  By an elisor as may be provided in the Florida Rules of
78Civil Procedure.
80Notice by mail or by approved commercial delivery service is
81complete on receipt of notice. Proof of notice must be by
82verified statement of the person mailing or sending notice, and
83there must be attached thereto the signed receipt or other
84satisfactory evidence that delivery was effected on the
85addressee or on the addressee's agent. Proof of notice must be
86maintained among the trustee's permanent records.
87     Section 2.  Section 736.0902, Florida Statutes, is created
88to read:
89     736.0902  Nonapplication of prudent investor rule.-
90     (1)  Notwithstanding the provisions of s. 518.11 or s.
91736.0804, with respect to any contract of life insurance
92acquired or retained on the life of a qualified person, a
93trustee has no duty to:
94     (a)  Determine whether the contract of life insurance is or
95was procured or effected in compliance with s. 627.404;
96     (b)  Determine whether any contract of life insurance is or
97remains a proper investment;
98     (c)  Investigate the financial strength of the life
99insurance company;
100     (d)  Determine whether to exercise any policy option
101available under the contract of life insurance;
102     (e)  Diversify any such contract of life insurance or
103diversify the assets of the trust with respect to the contract
104of life insurance; or
105     (f)  Inquire about or investigate the health or financial
106condition of any insured or insureds.
107     (2)  As used in this section, the term "qualified person"
108means a person who is insured or is a proposed insured, or the
109spouse of that person, who has provided the trustee with the
110funds that are used to acquire or pay premiums with respect to a
111policy of insurance on the life of that person or the spouse of
112that person, or on the lives of that person and the spouse of
113that person.
114     (3)  In all cases in which this section applies, the
115trustee is not liable to the beneficiaries of the trust or any
116other person for any loss sustained with respect to such
117contract of life insurance.
118     (4)  Unless otherwise provided in the trust instrument,
119paragraph (1)(a) applies to any contract of life insurance on
120the life of a qualified person.
121     (5)  Unless otherwise provided in the trust instrument,
122paragraphs (1)(b)-(f) apply if:
123     (a)  The trust instrument, by reference to this section,
124makes this section applicable to contracts of life insurance
125held by the trust; or
126     (b)  The trustee has provided notice that this section
127applies to a contract of life insurance held by the trust. For
128any notice provided under this paragraph:
129     1.  The notice shall be given to the qualified
130beneficiaries and shall contain a copy or restatement of this
132     2.  A notice given to a person who represents the interests
133of any of the persons set forth in subparagraph 1., pursuant to
134any of the provisions of part III of this chapter, shall be
135treated as notice to the person so represented.
136     3.  The notice shall be provided pursuant to s. 736.0109.
137     4.  If any person notified pursuant to this paragraph
138objects to the application of this section in a writing
139delivered to the trustee within 30 days after the date such
140notice was received, paragraphs (1)(b)-(f) shall not apply until
141the objection is withdrawn.
142     5.  There is a rebuttable presumption that any notice sent
143by United States mail is received 3 days after placing the
144notice in the United States mail with proper postage paid.
145     (6)  This section does not apply to any contract of life
146insurance purchased from any affiliate of the trustee or with
147respect to which the trustee or any affiliate of the trustee
148receives any commission unless the trustee's duties have been
149delegated to another person in accordance with s. 518.112. For
150purposes of this subsection, the term "affiliate" of the trustee
151means any person who controls, is controlled by, or is under
152common control with the trustee.
153     (7)  Paragraph (1)(a) shall not apply if the trustee
154applied for or accepted ownership of a contract of life
155insurance and the trustee had knowledge that:
156     (a)  The benefits were not payable to a person specified in
157s. 627.404 when the contract of life insurance was issued; or
158     (b)  The contract of life insurance is or was purchased
159with resources or guarantees directly or indirectly provided by
160a person who, at the time of the inception of the contract of
161life insurance, did not have an insurable interest in the
162insured as defined by s. 627.404, and, at the time of the
163inception of the contract of life insurance, there is a verbal
164or written arrangement, agreement, or plan with a third party to
165transfer ownership of the policy or policy benefits in a manner
166that would be in violation of the laws of this state.
167     Section 3.  This act shall take effect upon becoming a law.

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