(a) As used in this section, “proceeds” means the proceeds paid upon the death of any insured, employee, participant, or beneficiary under: Any thrift plan, savings plan, pension plan, profit-sharing plan, death benefit plan, stock bonus plan including any employee stock ownership plan; any qualified cash or deferred arrangement which is part of a profit-sharing or stock bonus plan; any retirement plan including a self-employed retirement plan; any individual retirement account, annuity and bond or simplified employee pension plan; and the proceeds of any individual, group or industrial life insurance policy, or accident and health insurance policy and any annuity contract, endowment insurance contract or supplemental insurance contract.

(b) (1) Proceeds may be made payable to a trustee under a trust agreement or declaration of trust in existence on the date of such designation, and identified in such designation. Such proceeds shall be paid to such trustee and held and disposed of in accordance with the terms of such trust agreement or declaration of trust, including any written amendments thereto in existence on the date of death of the insured, employee or participant. It shall not be necessary to the validity of any such trust agreement or declaration of trust that it have a trust corpus other than the right of the trustee as beneficiary to receive such proceeds.

(2) Proceeds may be made payable to a trustee of a trust to be established by will. Upon issuance of a decree qualifying a trustee so named, such proceeds shall be payable to the trustee to be held and disposed of in accordance with the terms of such will as a testamentary trust. A designation which in substance names as such beneficiary the trustee under the will of the insured, employee or participant, shall be taken to refer to the will of such person actually admitted to probate, whether executed before or after the making of such designation.

(c) Such proceeds may be payable in more than one installment. If no qualified trustee claims such proceeds from the insurer or other payor within eighteen months after the death of the insured, employee or participant, or if satisfactory evidence is furnished to the insurer or other payor within such period showing that there is or will be no trustee to receive such proceeds, such proceeds shall be paid by the insurer or other payor to the personal representative or assigns of the insured, employee or participant, unless otherwise provided by agreement with the insurer or other payor during the lifetime of the insured, employee or participant.

(d) Except to the extent otherwise provided by the trust agreement, declaration of trust or will, proceeds received by the trustee shall not be subject to the debts of the insured, employee or participant, to any greater extent than if such proceeds were payable to the beneficiaries named in the trust; and for all purposes, including the succession and transfer tax, they shall not be deemed payable to or for the benefit of the estate of the insured, employee or participant.

(e) Proceeds so held in trust may be commingled with any other assets which may properly become part of such trust.

(f) Nothing in this section shall affect the validity of any designation made prior to October 1, 1978, of the trustee of any trust established under a trust agreement or declaration of trust or by will.

(g) The provisions of this section shall be applicable to decedents dying on or after October 1, 1987.

(P.A. 89-202, S. 6.)