S.D. Admin. R. 20:06:31:08

Current through Register Vol. 51, page 57, November 12, 2024

Section 20:06:31:08 - Trust agreements qualified under SDCL 58-14-16 - Required conditions

The following required conditions apply to trust agreements qualified under SDCL 58-14-16:

(1) The trust agreement must be entered into between the beneficiary, the grantor, and a trustee which is a qualified United States institution as defined in SDCL 58-14-23;

(2) The trust agreement must create a trust account into which assets are deposited;

(3) All assets in the trust account must be held by the trustee's office in the United States;

(4) The trust agreement shall provide that:

(a) The beneficiary has the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee;

(b) No other statement or document is required to be presented in order to withdraw assets, except that the beneficiary may be required to acknowledge receipt of withdrawn assets;

(c) It is not subject to any conditions or qualifications outside of the trust agreement; and

(d) It does not contain references to any other agreements or documents except as provided for under §§ 20:06:31:09 or 20:06:31:09.01 of this chapter;

(5) The trust agreement must be established for the sole benefit of the beneficiary;

(6) The trust agreement must require the trustee to:

(a) Receive assets and hold all assets in a safe place;

(b) Determine that all assets are in such a form that the beneficiary, or the trustee upon direction of the beneficiary, may whenever necessary negotiate any assets, without consent or signature from the grantor or any other person or entity;

(c) Furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at least at the end of each calendar quarter;

(d) Notify the grantor and the beneficiary within ten days of any deposits to or withdrawals from the trust account;

(e) Upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the beneficiary; and

(f) Allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary. However, the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw the asset on condition that the proceeds are paid in the trust account;

(7) The trust agreement must provide that at least 30 days but not more than 45 days before termination of the trust account, written notice of termination must be delivered by the trustee to the beneficiary;

(8) The trust agreement must be made subject to and governed by the laws of the state in which the trust is established;

(9) The trust agreement must prohibit invasion of the trust corpus for the purpose of paying compensation to or reimbursing the expenses of the trustee;

(10) The trust agreement must provide that the trustee is liable for its own negligence, willful misconduct, or lack of good faith.

S.D. Admin. R. 20:06:31:08

22 SDR 52, effective 10/25/1995; 44 SDR 71, effective 10/23/2017

General Authority: SDCL 58-14-17.

Law Implemented: SDCL 58-14-11 to 58-14-13, 58-14-17, 58-14-23.