Bill Text: FL S0926 | 2010 | Regular Session | Comm Sub

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Trusts [CPSC]

Spectrum: Partisan Bill (Republican 1-0)

Status: (Passed) 2010-06-01 - Approved by Governor; Chapter No. 2010-172 [S0926 Detail]

Download: Florida-2010-S0926-Comm_Sub.html

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Florida Senate - 2010                              CS for SB 926 
 
By the Committee on Banking and Insurance; and Senator Richter 
597-02815-10                                           2010926c1 
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; amending s. 518.112, F.S.; expanding 
17         the list of delegable investment functions for certain 
18         fiduciaries; revising requirements for the provision 
19         of written notice by a trustee of an intent to begin 
20         delegating investment functions; providing an 
21         effective date. 
22 
23  Be It Enacted by the Legislature of the State of Florida: 
24 
25         Section 1. Section 736.0902, Florida Statutes, is created 
26  to read: 
27         736.0902 Nonapplication of prudent investor rule.— 
28         (1) Notwithstanding the provisions of s. 518.11 or s. 
29  736.0804, with respect to any contract for life insurance 
30  acquired or retained on the life of a qualified person, a 
31  trustee has no duty to: 
32         (a) Determine whether the contract of life insurance is or 
33  was procured or effected in compliance with s. 627.404; 
34         (b) Determine whether any contract of life insurance is, or 
35  remains, a proper investment; 
36         (c) Investigate the financial strength of the life 
37  insurance company; 
38         (d) Determine whether to exercise any policy option 
39  available under the contract for life insurance; 
40         (e) Diversify any such contract for life insurance or the 
41  assets of the trust with respect to the contract for life 
42  insurance; or 
43         (f) Inquire about or investigate the health or financial 
44  condition of any insureds. 
45         (2) For purposes of this section, a “qualified person” is a 
46  person who is insured or a proposed insured, or the spouse of 
47  that person, who has provided the trustee with the funds used to 
48  acquire or pay premiums with respect to a policy of insurance on 
49  the life of that person or the spouse of that person, or on the 
50  lives of that person and the spouse of that person. 
51         (3) The trustee is not liable to the beneficiaries of the 
52  trust or any other person for any loss sustained with respect to 
53  a contract for life insurance to which this section applies. 
54         (4) Unless otherwise provided in the trust instrument, 
55  paragraph (1)(a) applies to any contract for life insurance on 
56  the life of a qualified person. 
57         (5) Unless otherwise provided in the trust instrument, 
58  paragraphs (1)(b)-(f) apply if: 
59         (a) The trust instrument, by reference to this section, 
60  makes this section applicable to contracts for life insurance 
61  held by the trust; or 
62         (b) The trustee gives notice that this section applies to a 
63  contract for life insurance held by the trust. 
64         1. The notice of the application of this section shall be 
65  given to the qualified beneficiaries and shall contain a copy or 
66  restatement of this section. 
67         2. Notice given pursuant to any of the provisions of part 
68  III of this chapter to a person who represents the interests of 
69  any of the persons set forth in subparagraph 1. shall be treated 
70  as notice to the person so represented. 
71         3. Notice shall be given in the manner provided in s. 
72  736.0109. 
73         4. If any person notified pursuant to this paragraph 
74  delivers a written objection to the application of this section 
75  to the trustee within 30 days after the date on which the 
76  objector received such notice, paragraphs (1)(b)-(f) shall not 
77  apply until the objection is withdrawn. 
78         5. There shall exist a rebuttable presumption that any 
79  notice sent by United States mail is received 3 days after 
80  depositing the notice in the United States mail system with 
81  proper postage prepaid. 
82         (6) This section does not apply to any contract for life 
83  insurance purchased from any affiliate of the trustee, or with 
84  respect to which the trustee or any affiliate of the trustee 
85  receives any commission unless the duties have been delegated to 
86  another person in accordance with s. 518.112. For purposes of 
87  this subsection, an “affiliate” is any person who controls, is 
88  controlled by, or is under common control with the trustee. 
89         (7) Paragraph (1)(a) does not apply if the trustee applied 
90  for or accepted ownership of a contract of life insurance and 
91  the trustee had knowledge that: 
92         (a) The benefits were not payable to a person specified in 
93  s. 627.404 when the contract of life insurance was issued; or 
94         (b) The contract of life insurance is or was purchased with 
95  resources or guarantees directly or indirectly provided by a 
96  person who, at the time of the inception of such contract, did 
97  not have an insurable interest in the insured as defined by s. 
98  627.404, and, at the time of the inception of such contract, 
99  there is a verbal or written arrangement, agreement, or plan 
100  with a third party to transfer ownership of the policy or policy 
101  benefits in a manner that would be in violation of state law. 
102         Section 2. Paragraph (b) of subsection (2) and paragraph 
103  (b) of subsection (3) of section 518.112, Florida Statutes, are 
104  amended to read: 
105         518.112 Delegation of investment functions.— 
106         (2) 
107         (b) The delegable investment functions under this 
108  subsection include: 
109         1. A determination of whether the insurance contract was 
110  procured or effected in compliance with s. 627.404; 
111         2.1. A determination of whether any insurance contract is 
112  or remains a proper investment; 
113         3. The investigation of the financial strength of the life 
114  insurance company; 
115         4.2. A determination of whether or not to exercise any 
116  policy option available under any insurance such contracts; 
117         5.3. A determination of whether or not to diversify such 
118  contracts relative to one another or to other assets, if any, 
119  administered by the fiduciary; or 
120         6.4. An inquiry about changes in the health or financial 
121  condition of the insured or insureds relative to any such 
122  contract. 
123         (3) A fiduciary may delegate investment functions to an 
124  investment agent under subsection (1) or subsection (2), if: 
125         (b) In the case of a trust or estate, the fiduciary has 
126  given written notice, of its intention to begin delegating 
127  investment functions under this section, to all beneficiaries, 
128  or their legal representative, eligible to receive distributions 
129  from the trust or estate within 30 days of the delegation unless 
130  such notice is waived by the eligible beneficiaries entitled to 
131  receive such notice. This notice shall thereafter, until or 
132  unless the beneficiaries eligible to receive income from the 
133  trust or distributions from the estate at the time are notified 
134  to the contrary, authorize the trustee or legal representative 
135  to delegate investment functions pursuant to this subsection. 
136  This discretion to revoke the delegation does not imply under 
137  subsection (2) any continuing obligation to review the agent’s 
138  actions. 
139         1. Notice to beneficiaries eligible to receive 
140  distributions from the trust from the estate, or their legal 
141  representatives shall be sufficient notice to all persons who 
142  may join the eligible class of beneficiaries in the future. 
143         2. Additionally, as used herein, legal representative 
144  includes one described in s. 731.303, without any requirement of 
145  a court order, an attorney-in-fact under a durable power of 
146  attorney sufficient to grant such authority, a legally appointed 
147  guardian, or equivalent under applicable law, any living, 
148  natural guardian of a minor child, or a guardian ad litem. 
149         3. Written notice shall be given as provided in part III of 
150  chapter 731 as to an estate, and as provided in s. 736.0109 and 
151  part III of chapter 736 as to a trust.: 
152         a. By any form of mail or by any commercial delivery 
153  service, approved for service of process by the chief judge of 
154  the judicial circuit in which the trust has its principal place 
155  of business at the date of notice, requiring a signed receipt; 
156         b. As provided by law for service of process; or 
157         c. By an elisor as may be provided in the Florida Rules of 
158  Civil Procedure. 
159 
160  Notice by mail or by approved commercial delivery service is 
161  complete on receipt of notice. Proof of notice must be by 
162  verified statement of the person mailing or sending notice, and 
163  there must be attached thereto the signed receipt or other 
164  satisfactory evidence that delivery was effected on the 
165  addressee or on the addressee’s agent. Proof of notice must be 
166  maintained among the trustee’s permanent records. 
167         Section 3. This act shall take effect July 1, 2010.