| 1 | A bill to be entitled |
| 2 | An act relating to estates and trusts; amending s. |
| 3 | 518.112, F.S.; providing additional delegable investment |
| 4 | functions for fiduciaries relating to life insurance |
| 5 | contract administration; revising notice requirements and |
| 6 | criteria for delegation by a fiduciary of investment |
| 7 | functions to an investment agent; creating s. 736.0902, |
| 8 | F.S.; specifying certain activities trustees are under no |
| 9 | duty to undertake relating to administration of certain |
| 10 | contracts for life insurance; specifying absence of |
| 11 | liability of trustees to trust beneficiaries for certain |
| 12 | losses; specifying criteria for application of certain |
| 13 | provisions; providing for certain notice requirements; |
| 14 | specifying nonapplication to certain contracts of life |
| 15 | insurance; providing definitions; providing for |
| 16 | nonapplication of certain delegable investment functions |
| 17 | by a trustee under certain circumstances; providing an |
| 18 | effective date. |
| 19 |
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| 20 | Be It Enacted by the Legislature of the State of Florida: |
| 21 |
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| 22 | Section 1. Paragraph (b) of subsection (2) and paragraph |
| 23 | (b) of subsection (3) of section 518.112, Florida Statutes, are |
| 24 | amended to read: |
| 25 | 518.112 Delegation of investment functions.- |
| 26 | (2) |
| 27 | (b) The delegable investment functions under this |
| 28 | subsection include: |
| 29 | 1. A determination of whether any insurance contract is or |
| 30 | remains a proper investment; |
| 31 | 2. A determination of whether or not to exercise any |
| 32 | policy option available under any insurance such contracts; |
| 33 | 3. A determination of whether or not to diversify such |
| 34 | contracts relative to one another or to other assets, if any, |
| 35 | administered by the fiduciary; or |
| 36 | 4. An inquiry about changes in the health or financial |
| 37 | condition of the insured or insureds relative to any such |
| 38 | contract;. |
| 39 | 5. A determination of whether the insurance contract was |
| 40 | procured or effected in compliance with s. 627.404; or |
| 41 | 6. An investigation of the financial strength of the life |
| 42 | insurance company. |
| 43 | (3) A fiduciary may delegate investment functions to an |
| 44 | investment agent under subsection (1) or subsection (2), if: |
| 45 | (b) In the case of a trust or estate, the fiduciary has |
| 46 | given written notice, of its intention to begin delegating |
| 47 | investment functions under this section, to all beneficiaries, |
| 48 | or their legal representative, eligible to receive distributions |
| 49 | from the trust or estate within 30 days of the delegation unless |
| 50 | such notice is waived by the eligible beneficiaries entitled to |
| 51 | receive such notice. This notice shall thereafter, until or |
| 52 | unless the beneficiaries eligible to receive income from the |
| 53 | trust or distributions from the estate at the time are notified |
| 54 | to the contrary, authorize the trustee or legal representative |
| 55 | to delegate investment functions pursuant to this subsection. |
| 56 | This discretion to revoke the delegation does not imply under |
| 57 | subsection (2) any continuing obligation to review the agent's |
| 58 | actions. |
| 59 | 1. Notice to beneficiaries eligible to receive |
| 60 | distributions from the trust from the estate, or their legal |
| 61 | representatives shall be sufficient notice to all persons who |
| 62 | may join the eligible class of beneficiaries in the future. |
| 63 | 2. Additionally, as used herein, legal representative |
| 64 | includes one described in s. 731.303, without any requirement of |
| 65 | a court order, an attorney-in-fact under a durable power of |
| 66 | attorney sufficient to grant such authority, a legally appointed |
| 67 | guardian, or equivalent under applicable law, any living, |
| 68 | natural guardian of a minor child, or a guardian ad litem. |
| 69 | 3. Written notice shall be given as provided in part III |
| 70 | of chapter 731 as to an estate and as provided in s. 736.0109 |
| 71 | and part III of chapter 736 as to a trust.: |
| 72 | a. By any form of mail or by any commercial delivery |
| 73 | service, approved for service of process by the chief judge of |
| 74 | the judicial circuit in which the trust has its principal place |
| 75 | of business at the date of notice, requiring a signed receipt; |
| 76 | b. As provided by law for service of process; or |
| 77 | c. By an elisor as may be provided in the Florida Rules of |
| 78 | Civil Procedure. |
| 79 |
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| 80 | Notice by mail or by approved commercial delivery service is |
| 81 | complete on receipt of notice. Proof of notice must be by |
| 82 | verified statement of the person mailing or sending notice, and |
| 83 | there must be attached thereto the signed receipt or other |
| 84 | satisfactory evidence that delivery was effected on the |
| 85 | addressee or on the addressee's agent. Proof of notice must be |
| 86 | maintained among the trustee's permanent records. |
| 87 | Section 2. Section 736.0902, Florida Statutes, is created |
| 88 | to read: |
| 89 | 736.0902 Nonapplication of prudent investor rule.- |
| 90 | (1) Notwithstanding the provisions of s. 518.11 or s. |
| 91 | 736.0804, with respect to any contract of life insurance |
| 92 | acquired or retained on the life of a qualified person, a |
| 93 | trustee has no duty to: |
| 94 | (a) Determine whether the contract of life insurance is or |
| 95 | was procured or effected in compliance with s. 627.404; |
| 96 | (b) Determine whether any contract of life insurance is or |
| 97 | remains a proper investment; |
| 98 | (c) Investigate the financial strength of the life |
| 99 | insurance company; |
| 100 | (d) Determine whether to exercise any policy option |
| 101 | available under the contract of life insurance; |
| 102 | (e) Diversify any such contract of life insurance or |
| 103 | diversify the assets of the trust with respect to the contract |
| 104 | of life insurance; or |
| 105 | (f) Inquire about or investigate the health or financial |
| 106 | condition of any insured or insureds. |
| 107 | (2) As used in this section, the term "qualified person" |
| 108 | means a person who is insured or is a proposed insured, or the |
| 109 | spouse of that person, who has provided the trustee with the |
| 110 | funds that are used to acquire or pay premiums with respect to a |
| 111 | policy of insurance on the life of that person or the spouse of |
| 112 | that person, or on the lives of that person and the spouse of |
| 113 | that person. |
| 114 | (3) In all cases in which this section applies, the |
| 115 | trustee is not liable to the beneficiaries of the trust or any |
| 116 | other person for any loss sustained with respect to such |
| 117 | contract of life insurance. |
| 118 | (4) Unless otherwise provided in the trust instrument, |
| 119 | paragraph (1)(a) applies to any contract of life insurance on |
| 120 | the life of a qualified person. |
| 121 | (5) Unless otherwise provided in the trust instrument, |
| 122 | paragraphs (1)(b)-(f) apply if: |
| 123 | (a) The trust instrument, by reference to this section, |
| 124 | makes this section applicable to contracts of life insurance |
| 125 | held by the trust; or |
| 126 | (b) The trustee has provided notice that this section |
| 127 | applies to a contract of life insurance held by the trust. For |
| 128 | any notice provided under this paragraph: |
| 129 | 1. The notice shall be given to the qualified |
| 130 | beneficiaries and shall contain a copy or restatement of this |
| 131 | section. |
| 132 | 2. A notice given to a person who represents the interests |
| 133 | of any of the persons set forth in subparagraph 1., pursuant to |
| 134 | any of the provisions of part III of this chapter, shall be |
| 135 | treated as notice to the person so represented. |
| 136 | 3. The notice shall be provided pursuant to s. 736.0109. |
| 137 | 4. If any person notified pursuant to this paragraph |
| 138 | objects to the application of this section in a writing |
| 139 | delivered to the trustee within 30 days after the date such |
| 140 | notice was received, paragraphs (1)(b)-(f) shall not apply until |
| 141 | the objection is withdrawn. |
| 142 | 5. There is a rebuttable presumption that any notice sent |
| 143 | by United States mail is received 3 days after placing the |
| 144 | notice in the United States mail with proper postage paid. |
| 145 | (6) This section does not apply to any contract of life |
| 146 | insurance purchased from any affiliate of the trustee or with |
| 147 | respect to which the trustee or any affiliate of the trustee |
| 148 | receives any commission unless the trustee's duties have been |
| 149 | delegated to another person in accordance with s. 518.112. For |
| 150 | purposes of this subsection, the term "affiliate" of the trustee |
| 151 | means any person who controls, is controlled by, or is under |
| 152 | common control with the trustee. |
| 153 | (7) Paragraph (1)(a) shall not apply if the trustee |
| 154 | applied for or accepted ownership of a contract of life |
| 155 | insurance and the trustee had knowledge that: |
| 156 | (a) The benefits were not payable to a person specified in |
| 157 | s. 627.404 when the contract of life insurance was issued; or |
| 158 | (b) The contract of life insurance is or was purchased |
| 159 | with resources or guarantees directly or indirectly provided by |
| 160 | a person who, at the time of the inception of the contract of |
| 161 | life insurance, did not have an insurable interest in the |
| 162 | insured as defined by s. 627.404, and, at the time of the |
| 163 | inception of the contract of life insurance, there is a verbal |
| 164 | or written arrangement, agreement, or plan with a third party to |
| 165 | transfer ownership of the policy or policy benefits in a manner |
| 166 | that would be in violation of the laws of this state. |
| 167 | Section 3. This act shall take effect upon becoming a law. |