| Statute Comparison (with some drafts) | RHJ 8/10/08 (rev. 8/28/08) |
| Statutory summary | Comments |
| Delaware | |
| 2704 | |
| t-ee of trust created by grantor has ins int in: | |
| a. Life of grantor | |
| b. In life of anyone in whom grantor (for fed Y tax purposes) has ins in | tcould get tangled in tax rules |
| c. Anyone else to extent that person has ins int w/ respect to proceeds of ins on life | |
| of such person (i.e., CQV) that are allocable to person's interest in such trust | |
| c1. (aggregate for multiple bens of the trust) | this is essentially same allocation provision as GA and SD |
| Florida | |
| 627.404 | |
| sub 5: t-ee of trust has an ins int in life of ind id under life ins pol owne | d by trust IFsub (5) is same as MD statute |
| a. ID is grantor of the trust | |
| b. An ind-al closely related by blood or law to grantor | |
| c. Or an ind in whom grantor otherwise has an ins int | |
| IF in each of situations in subsection | |
| i. Life ins proceeds are primarily for benefit of trust bens having an ins int in life of IDinsproceeds primarily for benefit of having an life ID | |
| sub 6: t-ee has ins int in life for whose benefit t-ee holds property, | up to "so long as" is same as Washington statute |
| and in anyone else in whose life the person has an ins int | after "so long as" is an addition from Maryland statute |
| SO LONG AS | unclear whether post-"so long as" language modifies only text before comma |
| the proceeds are primarily for benefit of persons having ins int in life of | IDor modifies everything before "so long as" |
| punctuation implies former; probable that drafting history would imply latter was | |
| intended | |
| Georgia | |
| 33-24-3 | |
| t-ee of trust created by grantor has ins int in: | |
| a. Life of grantor | |
| b. In life of anyone in whom grantor has ins int | |
| c. In life of anyone else to extent any ben of trust has ins int w/ respect to proceeds | |
| of ins on life of such person | t-ee has ins int in life of each ben to extent proceeds of policy will be allocated |
| c1. (aggregate for multiple bens of the trust) | to that ben's "interest in such trust" |
| This presumably reflects desire to limit c insurable interest to extent of the ben's | |
| ins int in life of other person, and not allow creation of small economic interest | |
| to be parlayed into a basis for insuring more than the amt of that interest | |
| prob: trust for lifetime benefit, with provision for disposition of proceeds at ID's | |
| death, might not be deemed to have an ins int in ID merely bec/ of ID's status as | |
| ben, bec/ proceeds could never be allocable to insured's beneficial interest in | |
| trust | |
| (SD is same as GA except for addition of a proviso) | |
| Maine | |
| 2404 | |
| any rev or irrev trust has an ins int in other individuals provided: | |
| Any grantor or any ben of trust has an ins int as provided in A, B, C, or D | |
| A. Substantial interest by love and affection | [what about second-to-die? Probably covered by "ben of trust" provision] |
| B. Lawful and substantial econ interest | if ben of trust has ins int in CQV, does not matter that grantor does not have ins |
| C. Party to contract for purchase or sale of interest in a business, etc. | int in life of ben of trust; proceeds could go to someone w/o ins int |
| D. Corp has ins int in lives of its employees, etc. | |
| any p-ship has an ins int provided any partner has an ins int | |
| Maryland | |
| 12-201 | |
| a t-ee has ins int (on date on which the policy is issued) in life of ind-al insured | |
| under policy owned by trust or t-ee owned by trust if ID | |
| a. is the grantor of the trust | 2-pronged test |
| b. an individual related closely by blood or law to the grantor | NOTE: language after "and" (II in statute) applies to all 3 clauses, unlike |
| c. an individual in whom grantor otherwise has an ins int | structure of statute in other states |
| AND | |
| lifeinsproceedsareprimarilyforbenefitoftrustbenshavinganinsint | inlifeoftheIDwhatdoes"primarily"mean?;manyirrevlifeinstrustswholdproceedsforbenefit |
| of broad class of beneficiaries, some of whom may not have ins int in grantor; full | |
| ins int found if "primarily" test met; will lead trusts in MD to limit t-ee's allocation | |
| of life ins proceeds to beneficiaries who lack ins int | |
| South Dakota | |
| 58-10-4 | |
| a trustee has ins int: | |
| a. In life of grantor | t-ee automatically has ins int in grantor |
| b. In life of anyone in whom grantor has ins int | plus life of anyone else grantor has ins int, subject to conditions |
| PROVIDED: | [SD is same as GA, except SD adds proviso, or "however" clause," and adds |
| grantor is the insured OR | business trust provision] |
| grantor has an ins int like others in statute | |
| c. In life of anyone else to extent trust ben has ins int in life of the "any | one else"this gives ins int in anyone else to extent trust ben who gets proceeds of ins |
| has int in anyone else; does not reach trust ben not designated to get proceeds | |
| c1. if mult ben have insurable int in same individual, t-ee has same ag | gregatelimits t-ee's interest to portion of death benefits that benefit trust bens; thus, |
| interest in such individual's life as such bens have | does not give ins int to t-ee who has discretionary power to allocate proceeds |
| d. T-ee of bus trust has same ins int in life of any individual as does an | y beneficialapplies to traditional trusts and business trusts |
| owner (or owners in the aggregate) in such individual | |
| Utah | |
| 31A-21-104(3)(c) | |
| trust has ins int in subject of the insurance to extent that the ben of the trust | |
| has the ins int | limits trusts ins int to extent of interests of bens who have an ins int |
| earlier: ins int is engendered by love or affection, or | Problem: if trust is for benefit of close family members and |
| a lawful & substantial interest in having the life, health & bodily safety o | f themore distant (no ins int) bens, trust may not have ins int in the entire policy |
| person continue | |
| Virginia | |
| 38.2-301 | |
| a t-ee has ins int: | |
| a. In life of grantor | |
| b. In life of anyone in whom grantor (for Fed Y tax purposes) has ins in | tt-ee automatically has ins int in grantor |
| unlike S Dak, does not limit bens to those who will share in proceeds of pol | |
| c. In life of each person in whose life a trust ben has an ins int | does not require any particular percentage of the bens to have an ins int |
| [this will usually cover trusts that hold second-to-die policies insuring grantor & | |
| grantor's spouse] | |
| Washington | |
| 48.18.030 | |
| a trustee has ins int: | |
| a.InsintinthelifeofAPERSONforwhosebenefitthet-eeholdspropertya. t-ee | t-eehasinsintineachtrustbeneficiaryt-ee |
| b. Ins int in the life of anyone else in whose life the PERSON has an in | s intand each person in whom each trust beneficiary has an ins int |
| note: trustee in Chawla would have had ins int bec ID was one of trust ben | |
| note: does "the person" refer to each trust ben or the fiduciary? Unclear |