October 16, 2019
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       Florida Senate - 2010                       CS for CS for SB 926
       
       
       
       By the Committees on Judiciary; and Banking and Insurance; and
       Senator Richter
       
       
       
       590-03775A-10                                          2010926c2
    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; providing that certain provisions
   15         of state law do not apply under specified
   16         circumstances; prohibiting the compensation of a
   17         trustee for the performance of certain activities;
   18         amending s. 518.112, F.S.; expanding the list of
   19         delegable investment functions for certain
   20         fiduciaries; revising requirements for the provision
   21         of written notice by a trustee of an intent to begin
   22         delegating investment functions; providing an
   23         effective date.
   24  
   25  Be It Enacted by the Legislature of the State of Florida:
   26  
   27         Section 1. Section 736.0902, Florida Statutes, is created
   28  to read:
   29         736.0902Nonapplication of prudent investor rule.—
   30         (1) Notwithstanding the provisions of s. 518.11 or s.
   31  736.0804, with respect to any contract for life insurance
   32  acquired or retained on the life of a qualified person, a
   33  trustee has no duty to:
   34         (a) Determine whether the contract of life insurance is or
   35  was procured or effected in compliance with s. 627.404;
   36         (b) Determine whether any contract of life insurance is, or
   37  remains, a proper investment;
   38         (c) Investigate the financial strength of the life
   39  insurance company;
   40         (d) Determine whether to exercise any policy option
   41  available under the contract for life insurance;
   42         (e) Diversify any such contract for life insurance or the
   43  assets of the trust with respect to the contract for life
   44  insurance; or
   45         (f) Inquire about or investigate the health or financial
   46  condition of any insureds.
   47         (2) For purposes of this section, a “qualified person” is a
   48  person who is insured or a proposed insured, or the spouse of
   49  that person, who has provided the trustee with the funds used to
   50  acquire or pay premiums with respect to a policy of insurance on
   51  the life of that person or the spouse of that person, or on the
   52  lives of that person and the spouse of that person.
   53         (3) The trustee is not liable to the beneficiaries of the
   54  trust or any other person for any loss sustained with respect to
   55  a contract for life insurance to which this section applies.
   56         (4) Unless otherwise provided in the trust instrument,
   57  paragraph (1)(a) applies to any contract for life insurance on
   58  the life of a qualified person.
   59         (5) Unless otherwise provided in the trust instrument,
   60  paragraphs (1)(b)-(f) apply if:
   61         (a) The trust instrument, by reference to this section,
   62  makes this section applicable to contracts for life insurance
   63  held by the trust; or
   64         (b) The trustee gives notice that this section applies to a
   65  contract for life insurance held by the trust.
   66         1. The notice of the application of this section shall be
   67  given to the qualified beneficiaries and shall contain a copy or
   68  restatement of this section.
   69         2. Notice given pursuant to any of the provisions of part
   70  III of this chapter to a person who represents the interests of
   71  any of the persons set forth in subparagraph 1. shall be treated
   72  as notice to the person so represented.
   73         3. Notice shall be given in the manner provided in s.
   74  736.0109.
   75         4. If any person notified pursuant to this paragraph
   76  delivers a written objection to the application of this section
   77  to the trustee within 30 days after the date on which the
   78  objector received such notice, paragraphs (1)(b)-(f) shall not
   79  apply until the objection is withdrawn.
   80         5. There shall exist a rebuttable presumption that any
   81  notice sent by United States mail is received 3 days after
   82  depositing the notice in the United States mail system with
   83  proper postage prepaid.
   84         (6) This section does not apply to any contract for life
   85  insurance purchased from any affiliate of the trustee, or with
   86  respect to which the trustee or any affiliate of the trustee
   87  receives any commission unless the duties have been delegated to
   88  another person in accordance with s. 518.112. For purposes of
   89  this subsection, an “affiliate” is any person who controls, is
   90  controlled by, or is under common control with the trustee.
   91         (7) Paragraph (1)(a) does not apply if the trustee applied
   92  for or accepted ownership of a contract of life insurance and
   93  the trustee had knowledge that:
   94         (a) The benefits were not payable to a person specified in
   95  s. 627.404 when the contract of life insurance was issued; or
   96         (b) The contract of life insurance is or was purchased with
   97  resources or guarantees directly or indirectly provided by a
   98  person who, at the time of the inception of such contract, did
   99  not have an insurable interest in the insured as defined by s.
  100  627.404, and, at the time of the inception of such contract,
  101  there is a verbal or written arrangement, agreement, or plan
  102  with a third party to transfer ownership of the policy or policy
  103  benefits in a manner that would be in violation of state law.
  104         (8) A trustee who performs fiduciary or advisory services
  105  related to a policy of life insurance to which subsection (1)
  106  applies shall not be compensated for performing the applicable
  107  service to which subsection (1) applies.
  108         Section 2. Paragraph (b) of subsection (2) and paragraph
  109  (b) of subsection (3) of section 518.112, Florida Statutes, are
  110  amended to read:
  111         518.112 Delegation of investment functions.—
  112         (2)
  113         (b) The delegable investment functions under this
  114  subsection include:
  115         1. A determination of whether the insurance contract was
  116  procured or effected in compliance with s. 627.404;
  117         2.1. A determination of whether any insurance contract is
  118  or remains a proper investment;
  119         3. The investigation of the financial strength of the life
  120  insurance company;
  121         4.2. A determination of whether or not to exercise any
  122  policy option available under any insurance such contracts;
  123         5.3. A determination of whether or not to diversify such
  124  contracts relative to one another or to other assets, if any,
  125  administered by the fiduciary; or
  126         6.4. An inquiry about changes in the health or financial
  127  condition of the insured or insureds relative to any such
  128  contract.
  129         (3) A fiduciary may delegate investment functions to an
  130  investment agent under subsection (1) or subsection (2), if:
  131         (b) In the case of a trust or estate, the fiduciary has
  132  given written notice, of its intention to begin delegating
  133  investment functions under this section, to all beneficiaries,
  134  or their legal representative, eligible to receive distributions
  135  from the trust or estate within 30 days of the delegation unless
  136  such notice is waived by the eligible beneficiaries entitled to
  137  receive such notice. This notice shall thereafter, until or
  138  unless the beneficiaries eligible to receive income from the
  139  trust or distributions from the estate at the time are notified
  140  to the contrary, authorize the trustee or legal representative
  141  to delegate investment functions pursuant to this subsection.
  142  This discretion to revoke the delegation does not imply under
  143  subsection (2) any continuing obligation to review the agent’s
  144  actions.
  145         1. Notice to beneficiaries eligible to receive
  146  distributions from the trust from the estate, or their legal
  147  representatives shall be sufficient notice to all persons who
  148  may join the eligible class of beneficiaries in the future.
  149         2. Additionally, as used herein, legal representative
  150  includes one described in s. 731.303, without any requirement of
  151  a court order, an attorney-in-fact under a durable power of
  152  attorney sufficient to grant such authority, a legally appointed
  153  guardian, or equivalent under applicable law, any living,
  154  natural guardian of a minor child, or a guardian ad litem.
  155         3. Written notice shall be given as provided in part III of
  156  chapter 731 as to an estate, and as provided in s. 736.0109 and
  157  part III of chapter 736 as to a trust.:
  158         a.By any form of mail or by any commercial delivery
  159  service, approved for service of process by the chief judge of
  160  the judicial circuit in which the trust has its principal place
  161  of business at the date of notice, requiring a signed receipt;
  162         b.As provided by law for service of process; or
  163         c.By an elisor as may be provided in the Florida Rules of
  164  Civil Procedure.
  165  
  166  Notice by mail or by approved commercial delivery service is
  167  complete on receipt of notice. Proof of notice must be by
  168  verified statement of the person mailing or sending notice, and
  169  there must be attached thereto the signed receipt or other
  170  satisfactory evidence that delivery was effected on the
  171  addressee or on the addressee’s agent. Proof of notice must be
  172  maintained among the trustee’s permanent records.
  173         Section 3. This act shall take effect July 1, 2010.

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