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Title XXVIII CONTRACTS AND CONTRACTUAL RELATIONS

Chapter 436

previous next Effective - 28 Aug 2009bottom

  436.435.  Compliance of contracts entered into prior to effective date — investment of trust property and assets — loans against assets prohibited. — 1.  To the extent that any provisions in this chapter which come into effect on August 28, 2009, apply to trusts governed under this chapter which are in existence on August 28, 2009, such trusts shall be in compliance with this chapter no later than July 1, 2010.

  2.  All property held in a preneed trust, including principal and undistributed income, shall be invested and reinvested by the trustee thereof and shall only be invested and reinvested in investments which have reasonable potential for growth or producing income.  Funds in, or belonging to, a preneed trust shall not be invested in any term life insurance product.

  3.  A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust.  In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.  A trustee who has special skills or expertise, or is named trustee in reliance upon the trustee's representation that the trustee has special skills or expertise, has a duty to use those special skills or expertise when investing and managing trust assets.

  4.  A trustee shall diversify the investments of the trust unless the trustee reasonably determines that, because of special circumstances, the purpose of the trust is better served without diversification.

  5.  In investing and managing trust assets, a trustee shall consider the following as are relevant to the trust:

  (1)  General economic conditions;

  (2)  The possible effect of inflation or deflation;

  (3)  The expected tax consequences of investment decisions or strategies;

  (4)  The role that each investment or course of action plays within the overall trust portfolio;

  (5)  The expected total return from income and the appreciation of capital;

  (6)  Needs for liquidity, regularity of income, and preservation or appreciation of capital.

  6.  No seller, provider, or preneed agent shall procure or accept a loan against any investment or asset of or belonging to a preneed trust.  As of August 29, 2009, no preneed seller, provider, or agent shall use any existing preneed contract as collateral or security pledged for a loan or take preneed funds of any existing preneed contract as a loan or for any purpose other than as authorized by this chapter.

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(L. 2009 S.B. 1)


---- end of effective   28 Aug 2009 ----

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