HB 501

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

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