Current through February 27, 2024
1. A trust
agreement established for the purposes of
NRS
681A.240 must provide for the creation of a
trust account for the deposit of assets.
2. A trust agreement must be entered into
between the beneficiary, the grantor and a trustee that is a qualified
financial institution in the United States. The failure of a trust agreement to
identify specifically the beneficiary does not affect any rights or actions
which the Commissioner has or is authorized to take.
3. Except as otherwise provided in this
subsection, all assets in the trust account must be held by the trustee at an
office of the trustee in the United States. A bank may apply to the
Commissioner for permission to use a foreign branch office of the bank as
trustee. If the Commissioner approves the use of a foreign branch office as
trustee:
(a) The written consent of the
beneficiary must be obtained; and
(b) The trust agreement must provide that the
beneficiary may deliver the written notice described in paragraph (a) of
subsection 4 to the trustee at the principal office of the trustee in the
United States.
4. A
trust agreement must:
(a) Authorize the
beneficiary to withdraw assets from the trust account at any time without
notice to the grantor, subject only to written notice by the beneficiary to the
trustee;
(b) Provide that no other
statement or document is required to be presented to withdraw assets, except
that the beneficiary may be required to acknowledge receipt of withdrawn
assets;
(c) Not be subject to any
conditions or qualifications outside of the trust agreement, except in
conjunction with a reinsurance agreement as set forth in NAC
681A.310;
(d) Be established for
the sole benefit of the beneficiary;
(e) Require that notice of termination be
delivered by the trustee to the beneficiary at least 30 days, but not more than
45 days, before termination of the trust account;
(f) Be made subject to and governed by the
laws of the state in which the trust is established;
(g) Prohibit invasion of the trust corpus for
the purpose of paying compensation to or reimbursing the expenses of the
trustee; and
(h) Make the trustee
liable for its own negligence, willful misconduct or lack of good
faith.
5. A trust
agreement must require the trustee to:
(a)
Receive and hold all assets in a safe place;
(b) Determine that all assets are in such
form that the beneficiary, or the trustee upon direction of the beneficiary,
may negotiate any assets whenever necessary without the consent or signature of
the grantor or any other person or entity;
(c) Furnish to the grantor and beneficiary a
statement of all assets in the trust account upon its creation and at intervals
of not less than the end of each calendar quarter;
(d) Notify the grantor and the beneficiary of
any deposits to or withdrawals from the trust account within 10 days after the
deposit or withdrawal is made;
(e)
Upon written demand of the beneficiary, immediately take all steps necessary to
transfer absolutely and unequivocally to the beneficiary all right, title and
interest in the assets held in the trust account and deliver physical custody
of the assets to the beneficiary; and
(f) Except as otherwise provided in
subsection 6, allow no substitutions or withdrawals of assets from the trust
account without written instructions from the beneficiary.
6. The trustee may, upon call or maturity of
any trust asset, withdraw the asset without the consent of the beneficiary if
the proceeds are paid into the trust account and the beneficiary is
notified.
7. Notwithstanding any
provision in the trust instrument to the contrary, if the grantor of the trust
has been declared insolvent or placed into receivership, rehabilitation,
liquidation or similar proceedings under the laws of its state or country of
domicile, the trustee shall comply with an order of the Commissioner with
regulatory oversight over the trust or a court of competent jurisdiction
directing the trustee to transfer to the Commissioner with regulatory oversight
or other designated receiver all the assets of the trust fund. If the grantor
of the trust has been declared insolvent or placed into receivership,
rehabilitation, liquidation or similar proceedings under the laws of its state
or country of domicile:
(a) The assets must be
applied in accordance with the priority statutes and other laws of the state in
which the trust is domiciled applicable to the assets of insurance companies in
liquidation; and
(b) If the
Commissioner with regulatory oversight over the trust or a similar authority
determines that the assets of the trust, or any part thereof, are not necessary
to satisfy claims of the beneficiaries of the trust in the United States, the
assets or any part thereof must be returned to the trustee for distribution in
accordance with the trust agreement.
Added to NAC by Comm'r
of Insurance, eff. 6-28-96; A by R027-02,
5-31-2002
NRS
679B.130,
681A.130