Senate Bill sb0660c1
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Florida Senate - 2005 CS for SB 660
By the Committee on Banking and Insurance; and Senator Carlton
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1 A bill to be entitled
2 An act relating to assets held in benefit
3 plans; amending s. 222.21, F.S.; exempting
4 certain tax-exempt funds or accounts from legal
5 process in favor of creditors; amending s.
6 222.22, F.S.; exempting from legal process in
7 favor of creditors or other claimants assets
8 held in qualified tuition programs, in certain
9 health savings accounts and medical savings
10 accounts, in Coverdell education savings
11 accounts, or in hurricane savings accounts;
12 defining the term "hurricane savings account";
13 amending s. 710.102, F.S.; redefining the term
14 "benefit plan," and defining the term
15 "qualified minor's trust," as used in the
16 Florida Uniform Transfers to Minors Act;
17 amending s. 710.104, F.S.; including benefit
18 plans in the types of property that a custodian
19 may be named to receive on behalf of a minor;
20 amending s. 710.108, F.S.; allowing a benefit
21 plan to be transferred to a custodian of a
22 minor who does not have a conservator by an
23 obligor of the minor; amending s. 710.116,
24 F.S.; allowing a minor's custodian, without
25 court order, to transfer custodial property to
26 a qualified minor's trust; providing
27 implications of the transfer; amending s.
28 733.808, F.S.; providing for the disposition of
29 benefits under a benefit plan after the death
30 of an owner of or participant in the plan;
31 amending s. 744.301, F.S.; providing for the
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1 parents or natural guardians of a minor child
2 to collect, receive, manage, and dispose of and
3 make elections regarding the proceeds of an
4 annuity contract payable to a minor child or of
5 a benefit plan of which the minor is a
6 beneficiary, participant, or owner, without
7 appointment, authority, or bond, if the
8 proceeds equal less than a specified maximum
9 amount; providing an effective date.
10
11 Be It Enacted by the Legislature of the State of Florida:
12
13 Section 1. Section 222.21, Florida Statutes, is
14 amended to read:
15 222.21 Exemption of pension money and certain
16 tax-exempt funds or accounts retirement or profit-sharing
17 benefits from legal processes.--
18 (1) Money received by any debtor as pensioner of the
19 United States within 3 months next preceding the issuing of an
20 execution, attachment, or garnishment process may not be
21 applied to the payment of the debts of the pensioner when it
22 is made to appear by the affidavit of the debtor or otherwise
23 that the pension money is necessary for the maintenance of the
24 debtor's support or a family supported wholly or in part by
25 the pension money. The filing of the affidavit by the debtor,
26 or the making of such proof by the debtor, is prima facie
27 evidence; and it is the duty of the court in which the
28 proceeding is pending to release all pension moneys held by
29 such attachment or garnishment process, immediately, upon the
30 filing of such affidavit or the making of such proof.
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1 (2)(a) Except as provided in paragraph (d) (b), any
2 money or other assets payable to an owner, a participant, or a
3 beneficiary from, or any interest of any owner, participant,
4 or beneficiary in, a fund or account retirement or
5 profit-sharing plan that is qualified under s. 401(a), s.
6 403(a), s. 403(b), s. 408, s. 408A, or s. 409 of the Internal
7 Revenue Code of 1986, as amended, is exempt from all claims of
8 creditors of the owner, beneficiary, or participant if the
9 fund or account is:.
10 1. Maintained in accordance with a master plan, volume
11 submitter plan, prototype plan, or any other plan or governing
12 instrument that has been preapproved by the Internal Revenue
13 Service as exempt from taxation under s. 401(a), s. 403(a), s.
14 403(b), s. 408, s. 408A, s. 409, s. 414, s. 457(b), or s.
15 501(a) of the Internal Revenue Code of 1986, as amended,
16 unless it has been subsequently determined that the plan or
17 governing instrument is not exempt from taxation in a
18 proceeding that has become final and nonappealable;
19 2. Maintained in accordance with a plan or governing
20 instrument that has been determined by the Internal Revenue
21 Service to be exempt from taxation under s. 401(a), s. 403(a),
22 s. 403(b), s. 408, s. 408A, s. 409, s. 414, s. 457(b), or s.
23 501(a) of the Internal Revenue Code of 1986, as amended,
24 unless it has been subsequently determined that the plan or
25 governing instrument is not exempt from taxation in a
26 proceeding that has become final and nonappealable; or
27 3. Not maintained in accordance with a plan or
28 governing instrument described in subparagraph 1. or 2. if the
29 person claiming exemption under this paragraph proves by a
30 preponderance of the evidence that the fund or account is
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1 maintained in accordance with a plan or governing instrument
2 that:
3 a. Is in substantial compliance with the applicable
4 requirements for tax exemption under s. 401(a), s. 403(a), s.
5 403(b), s. 408, s. 408A, s. 409, s. 414, s. 457(b), or s.
6 501(a) of the Internal Revenue Code of 1986, as amended; or
7 b. Would have been in substantial compliance with the
8 applicable requirements for tax exemption under s. 401(a), s.
9 403(a), s. 403(b), s. 408, s. 408A, s. 409, s. 414, s. 457(b),
10 or s. 501(a) of the Internal Revenue Code of 1986, as amended,
11 but for the negligent or wrongful conduct of a person or
12 persons other than the person who is claiming the exemption
13 under this section.
14 (b) It is not necessary that a fund or account that is
15 described in paragraph (a) be maintained in accordance with a
16 plan or governing instrument that is covered by any part of
17 the Employee Retirement Income Security Act for money or
18 assets payable from or any interest in that fund or account to
19 be exempt from claims of creditors under that paragraph.
20 (c) Any money or other assets that are exempt from
21 claims of creditors under paragraph (a) do not cease to
22 qualify for exemption by reason of a direct transfer or
23 eligible rollover that is excluded from gross income under s.
24 402(c) of the Internal Revenue Code of 1986 or by distribution
25 from any such fund or account as long as such money or assets
26 are not commingled with other money or assets that are not
27 exempt from claims of creditors under that paragraph.
28 (d)(b) Any fund or account plan or arrangement
29 described in paragraph (a) is not exempt from the claims of an
30 alternate payee under a qualified domestic relations order.
31 However, the interest of any alternate payee under a qualified
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1 domestic relations order is exempt from all claims of any
2 creditor, other than the Department of Children and Family
3 Services, of the alternate payee. As used in this paragraph,
4 the terms "alternate payee" and "qualified domestic relations
5 order" have the meanings ascribed to them in s. 414(p) of the
6 Internal Revenue Code of 1986.
7 (e)(c) This subsection applies The provisions of
8 paragraphs (a) and (b) apply to any proceeding that is filed
9 on or after the effective date of this act October 1, 1987.
10 Section 2. Section 222.22, Florida Statutes, is
11 amended to read:
12 222.22 Exemption of assets in qualified tuition
13 programs, medical savings accounts, and Coverdell education
14 savings accounts moneys in the Prepaid College Trust Fund or
15 in a Medical Savings Account from legal process.--
16 (1)(a) Moneys paid into or out of, the assets of, and
17 the income of any validly existing qualified tuition program
18 authorized by s. 529 of the Internal Revenue Code of 1986, as
19 amended, including, but not limited to, the Florida Prepaid
20 College Trust Fund advance payment contracts under s. 1009.98
21 and Florida Prepaid College Trust Fund participation
22 agreements under s. 1009.981 the Florida Prepaid College Trust
23 Fund by or on behalf of a purchaser or qualified beneficiary
24 pursuant to an advance payment contract made under part IV of
25 chapter 1009, which contract has not been terminated, are not
26 liable to attachment, levy, garnishment, or legal process in
27 the state in favor of any creditor of or claimant against any
28 program participant, purchaser, owner or contributor, or
29 program beneficiary the purchaser or beneficiary of such
30 advance payment contract.
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1 (2)(b) Moneys paid into or out of, the assets of, and
2 the income of a health savings account or medical savings
3 account authorized under ss. 220 and 223 of the Internal
4 Revenue Code of 1986, as amended, are not liable to
5 attachment, levy, garnishment, or legal process in this state
6 in favor of any creditor of or claimant against any account
7 participant, purchaser, owner or contributor, or account
8 beneficiary.
9 (3) Moneys paid into or out of, the assets of, and the
10 income of any Coverdell education savings account, also known
11 as an educational IRA, established or existing in accordance
12 with s. 530 of the Internal Revenue Code of 1986, as amended,
13 are not liable to attachment, levy, garnishment, or legal
14 process in this state in favor of any creditor of or claimant
15 against any account participant, purchaser, owner or
16 contributor, or account beneficiary. the Prepaid College Trust
17 Fund by or on behalf of a benefactor or designated beneficiary
18 pursuant to a participation agreement made under s. 1009.981,
19 which agreement has not been terminated, are not liable to
20 attachment, garnishment, or legal process in the state in
21 favor of any creditor of the purchaser or beneficiary of such
22 participation agreement.
23 (2) Moneys paid into or out of a Medical Savings
24 Account by or on behalf of a person depositing money into such
25 account or a qualified beneficiary are not liable to
26 attachment, garnishment, or legal process in the state in
27 favor of any creditor of such person or beneficiary of such
28 Medical Savings Account.
29 (4)(a) Moneys paid into or out of, the assets of, and
30 the income of any hurricane savings account established by an
31 insurance policyholder for residential property in this state
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1 equal to twice the deductible sum of such insurance to cover
2 an insurance deductible or other uninsured portion of the
3 risks of loss from a hurricane, rising floodwaters, or other
4 catastrophic windstorm event are not liable to attachment,
5 levy, garnishment, or legal process in this state in favor of
6 any creditor of or claimant against any account participant,
7 purchaser, owner or contributor, or account beneficiary. As
8 used in this subsection, the term "hurricane savings account"
9 means an account established by the owner of residential real
10 estate in this state who specifies that the purpose of the
11 account is to cover the amount of insurance deductibles and
12 other uninsured portions of the risks of loss from hurricanes,
13 rising floodwaters, or other catastrophic windstorm events.
14 (b) For purposes of this subsection, the term
15 "hurricane savings account" means a trust created or organized
16 in the United States exclusively for the purpose of paying an
17 insurance deductible or other uninsured portion of the risk of
18 loss on residential property from a hurricane, rising
19 floodwaters, or other catastrophic windstorm event, but only
20 if the written governing instrument creating the trust meets
21 the following requirements:
22 1. No contribution will be accepted unless such
23 contribution, when added to previous contributions to the
24 trust, does not exceed twice the windstorm deductible amount
25 on residential property.
26 2. The trustee is a bank, as defined by s. 658.12,
27 which will administer the trust consistent with the
28 requirements of this subsection.
29 3. The assets of the trust may not be commingled with
30 other property except in a common trust fund or common
31 investment fund.
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1 (c) The term "residential property" as used in this
2 subsection means property that meets the requirements of a
3 homestead exemption under s. 4, Art. X of the Florida
4 Constitution.
5 Section 3. Section 710.102, Florida Statutes, is
6 amended to read:
7 710.102 Definitions.--As used in this act, the term:
8 (1) "Adult" means an individual who has attained the
9 age of 21 years.
10 (2) "Benefit plan" means a retirement plan and may
11 include, but is not limited to, any pension, profit-sharing,
12 stock-bonus, or stock-ownership plan or individual retirement
13 account an employer's plan for the benefit of an employee or
14 partner.
15 (3) "Broker" means a person lawfully engaged in the
16 business of effecting transactions in securities or
17 commodities for the person's own account or for the account of
18 others.
19 (4) "Conservator" means a person appointed or
20 qualified by a court to act as general, limited, or temporary
21 guardian of a minor's property or a person legally authorized
22 to perform substantially the same functions.
23 (5) "Court" means the circuit court.
24 (6) "Custodial property" means any interest in
25 property transferred to a custodian under this act and the
26 income from and proceeds of that interest in property.
27 (7) "Custodian" means a person so designated under s.
28 710.111 or a successor or substitute custodian designated
29 under s. 710.121.
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1 (8) "Financial institution" means a bank, trust
2 company, savings institution, or credit union, chartered and
3 supervised under state or federal law.
4 (9) "Legal representative" means an individual's
5 personal representative or conservator.
6 (10) "Member of the minor's family" means the minor's
7 parent, stepparent, spouse, grandparent, brother, sister,
8 uncle, or aunt, whether of the whole or half blood or by
9 adoption.
10 (11) "Minor" means an individual who has not attained
11 the age of 21 years.
12 (12) "Person" means an individual, corporation,
13 organization, or other legal entity.
14 (13) "Personal representative" means an executor,
15 administrator, successor personal representative, or special
16 administrator of a decedent's estate or a person legally
17 authorized to perform substantially the same functions.
18 (14) "Qualified minor's trust" means a trust that
19 meets the requirements of s. 2503(c) of the Internal Revenue
20 Code of 1986, as amended.
21 (15)(14) "State" includes any state of the United
22 States, the District of Columbia, the Commonwealth of Puerto
23 Rico, and any territory or possession subject to the
24 legislative authority of the United States.
25 (16)(15) "Transfer" means a transaction that creates
26 custodial property under s. 710.111.
27 (17)(16) "Transferor" means a person who makes a
28 transfer under this act.
29 (18)(17) "Trust company" means a financial
30 institution, corporation, or other legal entity, authorized to
31 exercise general trust powers.
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1 Section 4. Subsection (1) of section 710.104, Florida
2 Statutes, is amended to read:
3 710.104 Nomination of custodian.--
4 (1) A person having the right to designate the
5 recipient of property transferable upon the occurrence of a
6 future event may revocably nominate a custodian to receive the
7 property for a minor beneficiary upon the occurrence of the
8 event by naming the custodian followed in substance by the
9 words: "as custodian for (name of minor) under the Florida
10 Uniform Transfers to Minors Act." The nomination may name one
11 or more persons as substitute custodians to whom the property
12 must be transferred, in the order named, if the first
13 nominated custodian dies before the transfer or is unable,
14 declines, or is ineligible to serve. The nomination may be
15 made in a will, a trust, a deed, an instrument exercising a
16 power of appointment, or in a writing designating a
17 beneficiary of contractual rights, including, but not limited
18 to, the right to a benefit plan, which is registered with or
19 delivered to the payor, issuer, or other obligor of the
20 contractual rights.
21 Section 5. Section 710.108, Florida Statutes, is
22 amended to read:
23 710.108 Transfer by obligor.--
24 (1) Subject to subsections (2) and (3), a person not
25 subject to s. 710.106 or s. 710.107 who holds property,
26 including, but not limited to, a benefit plan, of a minor not
27 having a conservator, or who owes a liquidated debt to, a
28 minor not having a conservator, may make an irrevocable
29 transfer to a custodian for the benefit of the minor pursuant
30 to s. 710.111.
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1 (2) If a person having the right to do so under s.
2 710.104 has nominated a custodian under that section to
3 receive the custodial property, the transfer must be made to
4 that person.
5 (3) If no custodian has been nominated under s.
6 710.104, or all persons so nominated as custodian die before
7 the transfer or are unable, decline, or are ineligible to
8 serve, a transfer under this section may be made to an adult
9 member of the minor's family or to a trust company unless the
10 property exceeds $15,000 $10,000 in value.
11 Section 6. Section 710.116, Florida Statutes, is
12 amended to read:
13 710.116 Use of custodial property.--
14 (1) A custodian may deliver or pay to the minor or
15 expend for the minor's benefit so much of the custodial
16 property as the custodian considers advisable for the use and
17 benefit of the minor, without court order and without regard
18 to the duty or ability of the custodian personally or of any
19 other person to support the minor, or to any other income or
20 property of the minor which may be applicable or available for
21 that purpose.
22 (2) A custodian may, without court order, transfer all
23 or part of the custodial property to a qualified minor's
24 trust. A transfer of property pursuant to this subsection
25 terminates the custodianship to the extent of the property
26 transferred.
27 (3)(2) On petition of an interested person or the
28 minor if the minor has attained the age of 14 years, the court
29 may order the custodian to deliver or pay to the minor or
30 expend for the minor's benefit so much of the custodial
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1 property as the court considers advisable for the use and
2 benefit of the minor.
3 (4)(3) A delivery, payment, or expenditure under this
4 section is in addition to, not in substitution for, and does
5 not affect any obligation of a person to support the minor.
6 Section 7. Section 733.808, Florida Statutes, is
7 amended to read:
8 733.808 Death benefits; disposition of proceeds.--
9 (1) Death benefits of any kind, including, but not
10 limited to, proceeds of:
11 (a) An individual life insurance policy;
12 (b) A group life insurance policy;
13 (c) A benefit plan as defined by s. 710.102 An
14 employees' trust or under a contract purchased by an
15 employees' trust forming part of a pension, stock bonus, or
16 profit-sharing plan;
17 (d) An annuity or endowment contract; and
18 (e) A health or and accident policy,
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20 may be made payable to the trustee under a trust agreement or
21 declaration of trust in existence at the time of the death of
22 the insured, employee, or annuitant or the owner of or
23 participant in the benefit plan. The death benefits shall be
24 held and disposed of by the trustee in accordance with the
25 terms of the trust as they appear in writing on the date of
26 the death of the insured, employee, or annuitant, owner, or
27 participant. It shall not be necessary to the validity of the
28 trust agreement or declaration of trust, whether revocable or
29 irrevocable, that it have a trust corpus other than the right
30 of the trustee to receive death benefits.
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1 (2) Death benefits of any kind, including, but not
2 limited to, proceeds of:
3 (a) An individual life insurance policy;
4 (b) A group life insurance policy;
5 (c) A benefit plan as defined in s. 710.102 An
6 employees' trust, or under a contract purchased by an
7 employees' trust, forming part of a pension, stock bonus, or
8 profit-sharing plan;
9 (d) An annuity or endowment contract; and
10 (e) A health or and accident policy,
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12 may be made payable to the trustee named, or to be named, in a
13 written instrument that is admitted to probate as the last
14 will of the insured, the owner of the policy, the employee,
15 owner, or participant covered by the plan or contract, or any
16 other person, whether or not the will is in existence at the
17 time of designation. Upon the admission of the will to
18 probate, the death benefits shall be paid to the trustee, to
19 be held, administered, and disposed of in accordance with the
20 terms of the trust or trusts created by the will.
21 (3) In the event no trustee makes proper claim to the
22 proceeds from the insurance company or other obligor within a
23 period of 6 months after the date of the death of the insured,
24 employee, or annuitant, owner, or participant, or if
25 satisfactory evidence is furnished to the insurance company or
26 obligor within that period that there is, or will be, no
27 trustee to receive the proceeds, payment shall be made by the
28 insurance company or obligor to the personal representative of
29 the person making the designation, unless otherwise provided
30 by agreement with the insurer or obligor during the lifetime
31 of the insured, employee, or annuitant, owner, or participant.
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1 (4) Death benefits payable as provided in subsection
2 (1), subsection (2), or subsection (3), unless paid to a
3 personal representative under the provisions of subsection
4 (3), shall not be deemed to be part of the decedent's estate,
5 and shall not be subject to any obligation to pay the expenses
6 of the administration and obligations of the decedent's estate
7 or for contribution required from a trust under s. 733.607(2)
8 to any greater extent than if the proceeds were payable
9 directly to the beneficiaries named in the trust.
10 (5) The death benefits held in trust may be commingled
11 with any other assets that may properly come into the trust.
12 (6) Nothing in This section does not shall affect the
13 validity of any designation of a beneficiary of proceeds
14 previously made that designates as beneficiary the trustee of
15 any trust established under a trust agreement or declaration
16 of trust or by will.
17 Section 8. Subsection (2) of section 744.301, Florida
18 Statutes, is amended to read:
19 744.301 Natural guardians.--
20 (2) The natural guardian or guardians are authorized,
21 on behalf of any of their minor children, to:
22 (a) Settle and consummate a settlement of any claim or
23 cause of action accruing to any of their minor children for
24 damages to the person or property of any of said minor
25 children; and to
26 (b) Collect, receive, manage, and dispose of the
27 proceeds of any such settlement; and
28 (c) Collect, receive, manage, and dispose of any other
29 real or personal property distributed from an estate or trust;
30 or
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1 (d) Collect, receive, manage, and dispose of and make
2 elections regarding the proceeds from a life insurance policy
3 or annuity contract payable to, or otherwise accruing to the
4 benefit of, the child; and
5 (e) Collect, receive, manage, dispose of, and make
6 elections regarding the proceeds of any benefit plan as
7 defined by s. 710.102, of which the minor is a beneficiary,
8 participant, or owner,
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10 without appointment, authority, or bond during minority, when
11 the amount involved in any instance does not exceed $15,000,
12 without appointment, authority, or bond.
13 Section 9. This act shall take effect upon becoming a
14 law.
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16 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
17 Senate Bill 660
18
19 The committee substitute increases the creditor protection
afforded individual retirement accounts and tax-qualified
20 employee benefit plans. Tax-exempt status is sufficient to
qualify for protection from creditors and the fund or account
21 need not be ERISA qualified to receive the creditor exemption.
The committee substitute also included governmental and church
22 plans that are tax-exempt to the exemption from creditor
claims.
23
The committee substitute also provides that the moneys or
24 assets contained in a hurricane savings account are exempt
from creditor's claims. The hurricane savings account must be
25 created by the owner of residential real estate in Florida in
trust form exclusively for the purpose of paying an insurance
26 deductible or other uninsured portion of the risk of loss on
homestead residential property resulting from a hurricane,
27 rising floodwater, or other catastrophic windstorm event. The
trust account can only be created to cover the insurance
28 deductible on a person's homestead property. The amount of
contributions into the hurricane savings trust account cannot
29 exceed twice the windstorm deductible on the homestead
property. The trustee must be a bank as defined by s. 658.12,
30 F.S., which will administer the trust consistent with
requirements of this section. The assets of the trust cannot
31 be commingled with other property except in a common trust
fund or common investment fund.
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