January 24, 2021
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CS/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; specifying
18certain activities for which a trustee may not be
19compensated; providing an effective date.
21Be It Enacted by the Legislature of the State of Florida:
23     Section 1.  Paragraph (b) of subsection (2) and paragraph
24(b) of subsection (3) of section 518.112, Florida Statutes, are
25amended to read:
26     518.112  Delegation of investment functions.-
27     (2)
28     (b)  The delegable investment functions under this
29subsection include:
30     1.  A determination of whether any insurance contract is or
31remains a proper investment;
32     2.  A determination of whether or not to exercise any
33policy option available under any insurance such contracts;
34     3.  A determination of whether or not to diversify such
35contracts relative to one another or to other assets, if any,
36administered by the fiduciary; or
37     4.  An inquiry about changes in the health or financial
38condition of the insured or insureds relative to any such
40     5.  A determination of whether the insurance contract was
41procured or effected in compliance with s. 627.404; or
42     6.  An investigation of the financial strength of the life
43insurance company.
44     (3)  A fiduciary may delegate investment functions to an
45investment agent under subsection (1) or subsection (2), if:
46     (b)  In the case of a trust or estate, the fiduciary has
47given written notice, of its intention to begin delegating
48investment functions under this section, to all beneficiaries,
49or their legal representative, eligible to receive distributions
50from the trust or estate within 30 days of the delegation unless
51such notice is waived by the eligible beneficiaries entitled to
52receive such notice. This notice shall thereafter, until or
53unless the beneficiaries eligible to receive income from the
54trust or distributions from the estate at the time are notified
55to the contrary, authorize the trustee or legal representative
56to delegate investment functions pursuant to this subsection.
57This discretion to revoke the delegation does not imply under
58subsection (2) any continuing obligation to review the agent's
60     1.  Notice to beneficiaries eligible to receive
61distributions from the trust from the estate, or their legal
62representatives shall be sufficient notice to all persons who
63may join the eligible class of beneficiaries in the future.
64     2.  Additionally, as used herein, legal representative
65includes one described in s. 731.303, without any requirement of
66a court order, an attorney-in-fact under a durable power of
67attorney sufficient to grant such authority, a legally appointed
68guardian, or equivalent under applicable law, any living,
69natural guardian of a minor child, or a guardian ad litem.
70     3.  Written notice shall be given as provided in part III
71of chapter 731 as to an estate and as provided in s. 736.0109
72and part III of chapter 736 as to a trust.:
73     a.  By any form of mail or by any commercial delivery
74service, approved for service of process by the chief judge of
75the judicial circuit in which the trust has its principal place
76of 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
79Civil Procedure.
81Notice by mail or by approved commercial delivery service is
82complete on receipt of notice. Proof of notice must be by
83verified statement of the person mailing or sending notice, and
84there must be attached thereto the signed receipt or other
85satisfactory evidence that delivery was effected on the
86addressee or on the addressee's agent. Proof of notice must be
87maintained among the trustee's permanent records.
88     Section 2.  Section 736.0902, Florida Statutes, is created
89to read:
90     736.0902  Nonapplication of prudent investor rule.-
91     (1)  Notwithstanding the provisions of s. 518.11 or s.
92736.0804, with respect to any contract of life insurance
93acquired or retained on the life of a qualified person, a
94trustee has no duty to:
95     (a)  Determine whether the contract of life insurance is or
96was procured or effected in compliance with s. 627.404;
97     (b)  Determine whether any contract of life insurance is or
98remains a proper investment;
99     (c)  Investigate the financial strength of the life
100insurance company;
101     (d)  Determine whether to exercise any policy option
102available under the contract of life insurance;
103     (e)  Diversify any such contract of life insurance or
104diversify the assets of the trust with respect to the contract
105of life insurance; or
106     (f)  Inquire about or investigate the health or financial
107condition of any insured or insureds.
108     (2)  As used in this section, the term "qualified person"
109means a person who is insured or is a proposed insured, or the
110spouse of that person, who has provided the trustee with the
111funds that are used to acquire or pay premiums with respect to a
112policy of insurance on the life of that person or the spouse of
113that person, or on the lives of that person and the spouse of
114that person.
115     (3)  In all cases in which this section applies, the
116trustee is not liable to the beneficiaries of the trust or any
117other person for any loss sustained with respect to such
118contract of life insurance.
119     (4)  Unless otherwise provided in the trust instrument,
120paragraph (1)(a) applies to any contract of life insurance on
121the life of a qualified person.
122     (5)  Unless otherwise provided in the trust instrument,
123paragraphs (1)(b)-(f) apply if:
124     (a)  The trust instrument, by reference to this section,
125makes this section applicable to contracts of life insurance
126held by the trust; or
127     (b)  The trustee has provided notice that this section
128applies to a contract of life insurance held by the trust. For
129any notice provided under this paragraph:
130     1.  The notice shall be given to the qualified
131beneficiaries and shall contain a copy or restatement of this
133     2.  A notice given to a person who represents the interests
134of any of the persons set forth in subparagraph 1., pursuant to
135any of the provisions of part III of this chapter, shall be
136treated 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
139objects to the application of this section in a writing
140delivered to the trustee within 30 days after the date such
141notice was received, paragraphs (1)(b)-(f) shall not apply until
142the objection is withdrawn.
143     5.  There is a rebuttable presumption that any notice sent
144by United States mail is received 3 days after placing the
145notice in the United States mail with proper postage paid.
146     (6)  This section does not apply to any contract of life
147insurance purchased from any affiliate of the trustee or with
148respect to which the trustee or any affiliate of the trustee
149receives any commission unless the trustee's duties have been
150delegated to another person in accordance with s. 518.112. For
151purposes of this subsection, the term "affiliate" of the trustee
152means any person who controls, is controlled by, or is under
153common control with the trustee.
154     (7)  Paragraph (1)(a) shall not apply if the trustee
155applied for or accepted ownership of a contract of life
156insurance and the trustee had knowledge that:
157     (a)  The benefits were not payable to a person specified in
158s. 627.404 when the contract of life insurance was issued; or
159     (b)  The contract of life insurance is or was purchased
160with resources or guarantees directly or indirectly provided by
161a person who, at the time of the inception of the contract of
162life insurance, did not have an insurable interest in the
163insured as defined by s. 627.404, and, at the time of the
164inception of the contract of life insurance, there is a verbal
165or written arrangement, agreement, or plan with a third party to
166transfer ownership of the policy or policy benefits in a manner
167that would be in violation of the laws of this state.
168     (8)  A trustee who performs fiduciary or advisory services
169related to a policy of life insurance to which subsection (1)
170applies may not be compensated for performing the applicable
171service 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.
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