(1)Notwithstanding any other provision of law and the provisions of the Colorado
Uniform Prudent Investor Act, article 1.1 of this title 15, a trustee may not acquire or
hold as a trust asset a life insurance policy on the life of a person unless the trustee
has an insurable interest, as described in section 15-5-114, in the person. A trustee
who acquires as a trust asset a life insurance policy on the life of a person in whom
the trustee has an insurable interest may continue to hold the life insurance policy
without liability for loss arising from the trustee's failure to:
(a)Determine whether the policy is or remains a proper investment;
(b)Investigate the financial strength of the life insurance company;
(c)Exercise or not exercise any option, right, or privilege availab
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(1)
Notwithstanding any other provision of law and the provisions of the Colorado
Uniform Prudent Investor Act, article 1.1 of this title 15, a trustee may not acquire or
hold as a trust asset a life insurance policy on the life of a person unless the trustee
has an insurable interest, as described in section 15-5-114, in the person. A trustee
who acquires as a trust asset a life insurance policy on the life of a person in whom
the trustee has an insurable interest may continue to hold the life insurance policy
without liability for loss arising from the trustee's failure to:
(a) Determine whether the policy is or remains a proper investment;
(b) Investigate the financial strength of the life insurance company;
(c) Exercise or not exercise any option, right, or privilege available under the
policy, including financing the payment of premiums, unless there is sufficient cash
or there are other readily marketable trust assets from which to pay premiums,
regardless of whether the exercise or nonexercise of these powers results in the
lapse or termination of the policy;
(d) Inquire about or investigate the health or financial condition of any
insured under the policy; or
(e) Retain the policy without regard to any lack of diversification of trust
assets resulting from ownership of such policy and without regard to the terms and
conditions of the policy.
(2) (a) This section does not relieve a trustee of liability with respect to any
life insurance policy purchased from an affiliated company, or with respect to which
the trustee or any affiliated company of the trustee receives any commission,
unless either:
(I) The trustee has given written notice of such intended purchase to all
qualified beneficiaries of the trust as defined in section 15-5-103 (16), or to their
legal representatives, and either receives written consent to such purchase from
qualified beneficiaries or does not receive from a qualified beneficiary a response to
written notice by the trustee within thirty days after the mailing of such notice to
the qualified beneficiary or legal representative at his or her last-known address; or
(II) The trust agreement contains a provision that permits purchases of life
insurance from an affiliate.
(b) For purposes of this section, an affiliated company has the same
meaning as set forth in 15 U.S.C. sec. 80a-2 (a)(2).
(3) This section applies to a trust established before, on, or after August 7,
2013, and to a life insurance policy acquired, retained, or owned by a trustee before,
on, or after August 7, 2013.
(4) Notwithstanding the provisions of this section, this section does not apply
to any trust that expressly provides that this section does not apply to such trust, or
to any trust that otherwise provides for a different standard of fiduciary care or
obligation greater than that provided in this section; except that a trust may not
permit a trustee to acquire or hold as a trust asset a life insurance policy on the life
of a person in whom the trustee does not hold an insurable interest.