Purpose of the Bill

The bill aims to adopt the Uniform Special Deposits Act in Minnesota, intending to regulate financial institutions under this framework. Its primary purpose is to outline the handling, obligations, and legal implications of special deposits within banks in Minnesota, promoting uniformity in the application of related laws.

Main Provisions

1. Definition and Framework: The bill introduces a new law consisting of a series of sections (47.90 to 47.985) governing special deposits. It defines important terms such as account agreement, special deposit, permissible purpose, and roles of parties like banks, depositors, and beneficiaries.

2. Special Deposit Requirements: A deposit qualifies as a special deposit if it is established under an account agreement for the benefit of multiple beneficiaries with a stated permissible purpose, and is subject to a certain contingency.

3. Beneficiary Payments: Outlines the bank's obligations to pay beneficiaries and specifies that the duty to pay arises only when the bank has knowledge of the occurrence of the specified contingency.

4. Creditor Processes and Injunctions: Generally protects special deposits from creditor processes unless specific conditions are met. Allows courts to enjoin banks from making payments if it involves fraud.

5. Recoupment and Set-off: Establishes limits on when banks can perform recoupment or set-off against a special deposit, primarily when specified in the account agreement.

6. Bank Duties and Liabilities: Banks do not have fiduciary duties concerning special deposits but must comply with the account agreement and relevant sections of the bill. Banks are liable for damages resulting from noncompliance but are not liable for consequential or punitive damages unless specified by other laws.

7. Termination of Special Deposits: Defines the conditions under which a special deposit is terminated, generally five years after funding, and procedures for managing remaining balances on termination.

8. Uniformity and Transitional Provisions: Promotes uniformity of the act across jurisdictions and outlines transitional provisions for existing agreements amended to become special deposits after enactment.

Significant Changes to Existing Law

• Establishment of Special Deposits: Introduces a clear legal framework for special deposits, which may be previously undefined under current laws.
• Bank and Creditor Interactions: Alters how banks interact with creditors concerning special deposits by limiting enforceability and protective rights.

Relevant Terms

uniform special deposits, special deposit, bank, account agreement, beneficiary, permissible purpose, contingency, creditor process, injunction, recoupment, liability, termination, fiduciary duty, debtor-creditor relationship, equity principles.