Insurance Companies, Agents, Brokers, Policies - As enacted, clarifies that the exemption from claims of creditors for the net amount payable under a policy of life insurance or under an annuity contract upon the life of, the official text

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~tate of \JLennessee

PUBLIC CHAPTER NO. 150

                                                 HOUSE BILL NO. 1045

                                                By Representative Shaw

                                       Substituted for: Senate Bill No. 1106

                                                      By Senator Kyle

         AN ACT to amend Tennessee Code Annotated, Title 56, relative to creditor claims to
insurance proceeds.

          WHEREAS, the Tennessee Supreme Court has repeatedly advised that "each word in a
statute has a specific purpose and meaning" in cases such as State v. Gevedon, 671 S.W.3d
537 (Tenn. 2023), Arden v. Kozawa, 466 S.W.3d 758 (Tenn. 2015), Cunningham v. Williamson
Cnty. Hosp. Dist., 405 S.W.3d 41 (Tenn. 2013), and Lee Med., Inc. v. Beecher, 312 S.W.3d 515
(Tenn. 201 O); and

          WHEREAS, certain members of the Tennessee bar and judiciary have questioned the
meaning of the phrase "for the benefit of' and, if this conduct continues, retirees will be
discouraged from moving into Tennessee; and

          WHEREAS, the phrase "for the benefit of' is used to indicate that something is done for
the advantage of someone or something. In finanoial and legal contexts, FBO stands for "for the
benefit of' and is often used in living trust documents or accounts with beneficiary designations;
and

          WHEREAS, per the Merriam-Webster dictionary, the plain definition of the word
"beneficiary" is "the person named (as in an insurance policy or annuity) to receive the proceeds
or benefits"; and

          WHEREAS, the definition of the word "all" has been questioned and restricted by certain
members of the Tennessee bar and judiciary, despite the clear directive of the Tennessee
Supreme Court to use the plain meaning of each word in a statute without restriction in
decisions such as Lind v. Beaman Dodge, Inc., 356 S.W.3d 889 (Tenn. 2011), and if this
conduct continues, retirees will be discouraged from moving into Tennessee; and

          WHEREAS, per the Merriam-Webster dictionary, the plain definition of the word "all": as
an adjective, is "the whole amount, quantity, or extent of; as much as possible; every member or
 individual component of; the whole number or sum of; every, any whatever, completely taken up
with, given to, or absorbed by"; as a pronoun, is "the whole number, quantity or amount; totality,
 everybody, everything"; and as a noun, is "the whole of one's possessions, resources or
 energy"; and

           WHEREAS, Black's Law Dictionary defines "all" as "the whole of - used with a singular
 noun or pronoun, and referring to the amount, quantity, extent, duration, quality or degree. The
 whole number or sum of - used collectively, with a plural noun or pronoun expressing an
 aggregate. Every member of an individual of (sic) individual component of; each one of - used
 with a plural noun. In this sense, all is used generically and distributively (sic). 'All' refers rather
 to the aggregate under which the individuals are subsumed than to the individuals themselves.";
 and

           WHEREAS, Tennessee Code Annotated, Section 56-7-203, was introduced in 1925 and
 last modified in 1932, prior to the introduction of the "Personal Property Owner's Rights and
 Garnishment Act of 1978", compiled in Tennessee Code Annotated, Title 26, Chapter 2, Part 1;
 and

           WHEREAS, these questions bring uncertainty to Tennesseans trying to plan for
 retirement and may be a deciding factor among those seeking retirement in the Southeast when
 choosing a state to which to retire; now, therefore,
HB1045
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:

          SECTION 1. Tennessee Code Annotated, Section 56-7-203, is amended by deleting the
section and substituting:

                    The net amount payable under any policy of life insurance or under any annuity
          contract upon the life of any person made for the benefit of, or assigned to, the spouse
          or children, or dependent relatives of the persons, is exempt from all claims of the
          creditors, including execution, attachment, seizure, and garnishment, of the person
          arising out of or based upon any obligation created after January 1, 1932, whether or not
          the right to change the named beneficiary is reserved by or permitted to that person. Use
          of exempt funds does not change the classification of the funds used from exempt to
          nonexempt.
          SECTION 2. This act takes effect July 1, 2025, the public welfare requiring it.

                                                                 2
                    HOUSE BILL NO. 1045

PASSED:  March 24, 2025

                                            CAMEROlrSEXTON,SPEAKER
                                           HOUSE OF REPRESENTATIVES

                         Q

                                                               RANDY M(INALLY
                                                  SPEAKER OF THE SENATE

::f' APPROVED this  day of &r:j \        2025

BILL LEE, GOVERNOR