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       Florida Senate - 2010                                     SB 926
       By Senator Richter
       37-00833A-10                                           2010926__
    1                        A bill to be entitled                      
    2         An act relating to trusts; creating s. 736.0902, F.S.;
    3         limiting the duties and liability of certain trustees
    4         with respect to contracts for life insurance; defining
    5         the term “qualified person”; providing for the
    6         application and nonapplication of certain provisions
    7         of state law; requiring that notice of such provisions
    8         be given under certain circumstances; providing
    9         requirements for such notice; providing that such
   10         provisions do not apply if a party notified of the
   11         application of certain provisions of state law objects
   12         in writing; creating a rebuttable presumption of
   13         delivery of notice; defining the term “affiliate” for
   14         specified purposes; amending s. 518.112, F.S.;
   15         expanding the list of delegable investment functions
   16         for certain fiduciaries; revising requirements for the
   17         provision of written notice by a trustee of an intent
   18         to begin delegating investment functions; providing an
   19         effective date.
   21  Be It Enacted by the Legislature of the State of Florida:
   23         Section 1. Section 736.0902, Florida Statutes, is created
   24  to read:
   25         736.0902Nonapplication of prudent investor rule.—
   26         (1) Notwithstanding the provisions of s. 518.11 or s.
   27  736.0804, with respect to any contract for life insurance
   28  acquired or retained on the life of a qualified person, a
   29  trustee has no duty to:
   30         (a) Determine whether the trust has an insurable interest
   31  in the life of the insured;
   32         (b) Determine whether any contract of life insurance is, or
   33  remains, a proper investment;
   34         (c) Investigate the financial strength of the life
   35  insurance company;
   36         (d) Determine whether to exercise any policy option
   37  available under the contract for life insurance;
   38         (e) Diversify any such contract for life insurance or the
   39  assets of the trust with respect to the contract for life
   40  insurance; or
   41         (f) Inquire about or investigate the health or financial
   42  condition of any insureds.
   43         (2) For purposes of this section, a “qualified person” is
   44  any person, or the spouse of any person, who has provided the
   45  trustee with funds used to acquire or pay premiums with respect
   46  to a policy of insurance on the life of that person or the
   47  spouse of that person, or on the lives of that person and the
   48  spouse of that person.
   49         (3) The trustee is not liable to the beneficiaries of the
   50  trust or any other person for any loss sustained with respect to
   51  a contract for life insurance to which this section applies.
   52         (4) Unless otherwise provided in the trust instrument,
   53  paragraph (1)(a) applies to any contract for life insurance on
   54  the life of a qualified person.
   55         (5) Unless otherwise provided in the trust instrument,
   56  paragraphs (1)(b)-(f) apply if:
   57         (a) The trust instrument, by reference to this section,
   58  makes this section applicable to contracts for life insurance
   59  held by the trust; or
   60         (b) The trustee gives notice that this section applies to a
   61  contract for life insurance held by the trust.
   62         1. The notice of the application of this section shall be
   63  given to the qualified beneficiaries and shall contain a copy or
   64  restatement of this section.
   65         2. Notice given pursuant to any of the provisions of part
   66  III of this chapter to a person who represents the interests of
   67  any of the persons set forth in subparagraph 1. shall be treated
   68  as notice to the person so represented.
   69         3. Notice shall be given in the manner provided in s.
   70  736.0109.
   71         4. If any person notified pursuant to this paragraph
   72  delivers a written objection to the application of this section
   73  to the trustee within 30 days after the date on which the
   74  objector received such notice, paragraphs (1)(b)-(f) shall not
   75  apply until the objection is withdrawn.
   76         5. There shall exist a rebuttable presumption that any
   77  notice sent by United States mail is received 3 days after
   78  depositing the notice in the United States mail system with
   79  proper postage prepaid.
   80         (6) This section does not apply to any contract for life
   81  insurance purchased from any affiliate of the trustee, or with
   82  respect to which the trustee or any affiliate of the trustee
   83  receives any commission unless the duties have been delegated to
   84  another person in accordance with s. 518.112. For purposes of
   85  this subsection, an “affiliate” is any person who controls, is
   86  controlled by, or is under common control with the trustee.
   87         Section 2. Paragraph (b) of subsection (2) and paragraph
   88  (b) of subsection (3) of section 518.112, Florida Statutes, are
   89  amended to read:
   90         518.112 Delegation of investment functions.—
   91         (2)
   92         (b) The delegable investment functions under this
   93  subsection include:
   94         1. A determination of whether the owner of any insurance
   95  contract has an insurable interest in the life of the insured;
   96         2.1. A determination of whether any insurance contract is
   97  or remains a proper investment;
   98         3. The investigation of the financial strength of the life
   99  insurance company;
  100         4.2. A determination of whether or not to exercise any
  101  policy option available under any insurance such contracts;
  102         5.3. A determination of whether or not to diversify such
  103  contracts relative to one another or to other assets, if any,
  104  administered by the fiduciary; or
  105         6.4. An inquiry about changes in the health or financial
  106  condition of the insured or insureds relative to any such
  107  contract.
  108         (3) A fiduciary may delegate investment functions to an
  109  investment agent under subsection (1) or subsection (2), if:
  110         (b) In the case of a trust or estate, the fiduciary has
  111  given written notice, of its intention to begin delegating
  112  investment functions under this section, to all beneficiaries,
  113  or their legal representative, eligible to receive distributions
  114  from the trust or estate within 30 days of the delegation unless
  115  such notice is waived by the eligible beneficiaries entitled to
  116  receive such notice. This notice shall thereafter, until or
  117  unless the beneficiaries eligible to receive income from the
  118  trust or distributions from the estate at the time are notified
  119  to the contrary, authorize the trustee or legal representative
  120  to delegate investment functions pursuant to this subsection.
  121  This discretion to revoke the delegation does not imply under
  122  subsection (2) any continuing obligation to review the agent’s
  123  actions.
  124         1. Notice to beneficiaries eligible to receive
  125  distributions from the trust from the estate, or their legal
  126  representatives shall be sufficient notice to all persons who
  127  may join the eligible class of beneficiaries in the future.
  128         2. Additionally, as used herein, legal representative
  129  includes one described in s. 731.303, without any requirement of
  130  a court order, an attorney-in-fact under a durable power of
  131  attorney sufficient to grant such authority, a legally appointed
  132  guardian, or equivalent under applicable law, any living,
  133  natural guardian of a minor child, or a guardian ad litem.
  134         3. Written notice shall be given as provided in part III of
  135  chapter 731 as to an estate, and as provided in s. 736.0109 and
  136  part III of chapter 736 as to a trust.:
  137         a.By any form of mail or by any commercial delivery
  138  service, approved for service of process by the chief judge of
  139  the judicial circuit in which the trust has its principal place
  140  of business at the date of notice, requiring a signed receipt;
  141         b.As provided by law for service of process; or
  142         c.By an elisor as may be provided in the Florida Rules of
  143  Civil Procedure.
  145  Notice by mail or by approved commercial delivery service is
  146  complete on receipt of notice. Proof of notice must be by
  147  verified statement of the person mailing or sending notice, and
  148  there must be attached thereto the signed receipt or other
  149  satisfactory evidence that delivery was effected on the
  150  addressee or on the addressee’s agent. Proof of notice must be
  151  maintained among the trustee’s permanent records.
  152         Section 3. This act shall take effect July 1, 2010.

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