ENGROSSED
Senate Bill No. 274
(By Senators Wooton, Anderson, Bowman, Buckalew, Deem, Dittmar,
Grubb, Miller, Ross, Scott, Wagner, Wiedebusch and Yoder)
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[Originating in the Committee on the Judiciary;
reported January 31, 1996.]
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A BILL to amend and reenact section eleven, article five, chapter
forty-four of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to clarifying the
duties of the trustee of an irrevocable life insurance
trust.
Be it enacted by the Legislature of West Virginia:
That section eleven, article five, chapter forty-four of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 5. GENERAL PROVISIONS AS TO FIDUCIARIES.
§44-5-11. Designation of testamentary trustee as beneficiary
of
insurance; duties of the trustee of an irrevocable
life insurance trust.
(a) A policy of life insurance may designate as beneficiary
a trustee or trustees named or to be named by will, if the designation is made in accordance with the provisions of the
policy and the requirements of the insurer. The proceeds of such
insurance shall be paid to the trustee or trustees to be held and
disposed of under the terms of the will as they exist at the
death of the testator; but if no trustee or trustees make claim
to the proceeds from the insurance company within one year after
the death of the insured, or if satisfactory evidence is
furnished the insurance company within such one-year period
showing that no trustee can qualify to receive the proceeds,
payment shall be made by the insurance company to the executors,
administrators or assigns of the insured, unless otherwise
provided by agreement with the insurance company during the
lifetime of the insured. The proceeds of the insurance as
collected by the trustee or trustees shall not be subject to
debts of the insured or to inheritance tax to any greater extent
than if such proceeds were payable to any other named beneficiary
other than the estate of the insured, and shall not be considered
as payable to the estate of the insured for any purpose. Such
insurance proceeds so held in trust may be commingled with any
other assets which may properly come into such trust as provided
in the will. Enactment of this section shall not invalidate
previous life insurance policy designations naming trustees of
trusts established by will.
(b) Unless otherwise directed by the terms of the trust
instrument, the duties of a trustee of an irrevocable life
insurance trust with respect to acquiring or retaining a contract
of insurance upon the life of the settlor, or the lives of the
settlor and the settlor's spouse, do not include a duty: (i) To
determine whether any such contract is or remains a proper
investment; (ii) to exercise policy options available under any
such contract in the event the policy lapses or is terminated due
to failure to pay premiums; or (iii) to diversify any such
contract. A trustee is not liable to the beneficiaries of the
trust or to any other party for any loss arising from the absence
of those duties upon the trustee.
(c) The trustee of a trust described under subsection (b) of
this section established prior to the effective date of this
section, shall notify the settlor in writing that, unless the
settlor provides written notice to the contrary to the trustee
within sixty days of the trustee's notice, the provisions of said
subsection shall apply to the trust. Subsection (b) of this
section shall not apply if, within sixty days of the trustee's
notice, the settlor notifies the trustee that said subsection
does not apply.