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A FIDUCIARY’S DUTY TO INSURE ANDTHE INSURANCE AGENT’S DUTY TO ADVISEPresented by:RUSSELL W. HALL, BellaireRussell W. Hall & Associates, P.C.JOHN T. RIDOUT, BellaireRidout & AssociatesRICHARD J. WHITE, HoustonBuckley, White, Castaneda & Howell, L.L.P.Previous Material and Updates by:RUSSELL W. HALLSociety of Financial Service Professionals, Houston ChapterCredit: 1 hourMCLE No: 174009761CFP No: 247984TDI No: 111651March 6, 2018

RUSSELL W. HALLRussell W. Hall & Associates, P.C.6750 West Loop So. Ste. 920 · Bellaire, Texas 77401713-662-3853 · rwhall@rwhpc.comFax 713-662-3854 · www.rwhpc.comEDUCATIONB.A., Rice UniversityJ.D., University of Houston Law CenterLL.M. (Tax), University of Houston Law CenterPROFESSIONAL ACTIVITIESBoard Certified in Estate Planning and Probate Law, Texas Board of Legal SpecializationState Bar of Texas. Sections on: International Law; Litigation; Oil, Gas & Energy Resources Law;Real Estate Probate and Trust Law; Taxation Law.Houston Bar Association. Sections on: International Law; Litigation; Oil, Gas and Mineral; Probate,Trusts & Estate; Real Estate; Taxation.American Bar Association. General Practice, Solo and Small Firm Division; Section of InternationalLaw; Law Practice Management Section; Section of Real Property, Probate and Trust Law;Section of Taxation.Houston Business and Estate Planning Council; Houston Estate and Financial Forum; HoustonChapter—Society of Financial Service Professionals, president 2016–2017State Bar CollegeFellow, Texas Bar FoundationPROFESSIONAL HISTORYFormer staff attorney, Gulf Coast Legal Foundation, Housing & Consumer UnitLicensed to practice in Texas and before the U.S. District Court for the Southern District of Texas,Tax Court, the U.S. Court of Appeals for the Fifth Circuit, and the United States Supreme CourtLAW RELATED PUBLICATIONS, ACADEMIC APPOINTMENTS AND HONORSAuthor/Speaker for the State Bar of Texas 2006 Building Blocks of Wills, Estates and ProbateCourseI.R.C. § 103 and Exclusion of Interest on Texas Lottery Prize Installments, presented September 26,2006 to the Wednesday Tax Forum, Houston, TexasPlanning Committee for the State Bar of Texas 2007 Building Blocks of Wills, Estates and ProbateCourseAuthor/Speaker for the State Bar of Texas 2007 Building Blocks of Wills, Estates and ProbateCourseAuthor/Speaker for the State Bar of Texas 2007 Advanced Estate Planning and Probate CourseAuthor/Speaker for the TSCPA CPE Foundation 2007 CPE Family ConferenceAuthor for the American Bar Association 2008 Midyear Meeting, Taxation SectionAuthor/Speaker for the 2010 Galveston Co. Bar Foundation Electronic Filing, Evidence &Technology seminarAuthor/Speaker for the 2010 Houston Bar Association Family Law InstituteAuthor/Speaker for Society of Financial Service Professionals April 21, 2010 estate planning brownbagEditorial board member of The Advocate, the journal of the State Bar of Texas Litigation Section,2007–2012Associate editor, Texas Probate System (4th Edition 2014)Author/Speaker for the Houston Bar Association, Probate, Trusts & Estate Section, 2017Editor and project director, Texas Probate System (4th Edition 2015—present)LANGUAGESSpanishREPORTED CASESHardy v. 11702 Memorial, Ltd., 176 S.W.3d 266 (Tex. App.—Houston [1st Dist.] Jul. 15, 2004, nopet .)S:\My Documents\FILES\0250\0008 Professional\Current CV (SBOT 1-page format).docxPrinted 12/1/2017 7:05 PM

JOHN T. RIDOUTRIDOUT & ASSOCIATES6800 West Loop South, Suite 415Bellaire, TX 77401(713) 334-2800www.jtrlegal.comPROFESSIONAL State Bar of Texas (Taxation Section; Real Estate, Probate & Trust Section) Admitted 1981 Board Certified, Estate Planning and Probate Law, Texas Board of Legal Specialization American Bar Association (Taxation Section, Real Property, Probate & Trust Section) Houston Bar Association (Probate, Trust & Estate Section) Houston Estate and Financial Forum Houston Business & Estate Planning Council College of State Bar of TexasEDUCATION University of Texas (B.B.A., Summa Cum Laude, 1978) Beta Gamma Sigma; Beta Alpha Psi; Phi Kappa Phi; Phi Eta Sigma University of Texas (J.D., 1981)SPEECHES & PUBLICATIONS Estate Liquidity--Internal Revenue Code Sections 6161, 6166, and 303, University ofHouston Law Center, April 1996 (Guest Lecturer) Asset Titling in Texas and Related Problems, Texas Society of CPAs (Houston Chapter),Houston, November 1995 (Author/Speaker) Taxation of Estate and Trust Terminating Distributions, University of Houston LawCenter, April 1995 (Guest Lecturer) Income Taxation of Distributions from Estates and Trusts, University of Houston LawCenter, March 1995 (Guest Lecturer) Short Course on Drafting Wills and Trusts in Texas, University of Houston Law Center,October 1994 (Guest Lecturer) Drafting Wills and Trusts: A How-to for Texas Lawyers, Center for CLE, Inc., January1995 (Dallas), December 1994 (Houston), March 1994 (Dallas and Houston), January 1994(Dallas), November 1993 (San Antonio), October 1993 (Houston), August 1993 (Houston),and July 1993 (Dallas), (Co-Author/Speaker) Basic Drafting of Wills and Trusts in Texas, National Business Institute, Inc., Houston,February 1993 (Co-Author/Speaker) Planning Opportunities with Living Trusts in Texas, National Business Institute, Inc.,Houston, November 1992 (Co-Author/Speaker) Basic Drafting of Wills and Trusts in Texas, National Business Institute, Inc., Houston,December 1990 (Co-Author/Speaker) Paid Workers at Nonprofit Organizations: Employees or Independent Contractors?, Vol.2, No. 4, Art Law and Accounting Reporter, January 1984 (Co-Author).

EXPERIENCEBUCKLEY, WHITE, CASTANADA, AND HOWELL(HOUSTON)1995Founding partner; specializing in insurance, maritime, andprofessional liability legal services for businesses and individuals.RICHARD J. WHITE1984-1995ATTORNEYPrivate practice experience with cases originating in London,Norwegian, and domestic insurance marketsIn-house experience as interim general counsel at publiclyowned offshore oil services companyEDUCATIONUNIVERSITY OF HOUSTON, J.D.UNIVERSITY OF TEXAS, PLAN II (HONORS)QUALIFICATIONS/ORGANIZATIONSState Bar of TexasCollege of the State Bar of TexasVITALSBoard Certified, Business and Consumer Law, Texas Board ofLegal Specialization, since 19962401 Fountainview, Suite 901Houston, TX 77057“A-V” rated, Martindale-Hubbell, since 1998T 713-789-7700Houston Bar AssociationE rjwhite@bwchlaw.comMaritime Law Association of the United StatesConstruction Law sections, Houston, and Texas Bar associationsInsurance Law section, State Bar of TexasPRACTICE GOALSHelp clients avoid legal problems, if possible. If problems arise,solve them quickly.

A Fiduciary’s Duty to Insure and the Insurance Agent’s Duty to AdviseTABLE OF CONTENTSI.PREFACE . 1II.INTRODUCTION. 1III. WHO NEEDS INSURANCE. 1A. Those with Property or Income . 1B. Those under Contract . 11. Landlord and Tenant . 12. Borrower . 1a. Security Agreement Covering Goods . 1b. Deed of Trust and Real Property. 13. Buyer and Seller . 14. Construction . 15. Buy-Sell, Business Continuation, and Other Shareholder Agreements . 2C. Those with Duties of Support . 21. Statutory . 2a. Parents. 2b. Spouses . 2c. Adult Children—Filial Support . 22. Judicial . 2a. Temporary Orders . 2b. Final Decree of Divorce and Agreement Incident to Divorce . 2D. Fiduciaries . 21. Generally . 2a. Insuring the Estate . 2b. Insuring the Fiduciary . 2i. The Professional. 3ii. Family . 3c. Powers, Duties, and Preliminary Diligence . 32. Agent . 3a. Controlling Law . 3i. Common Law Powers of Attorney . 3(A) Form . 3(B) Unwritten Powers of Attorney—Implied Agency Agreement . 4(C) Duties . 4(D) Termination . 4ii. Durable Power of Attorney Act . 4(A) Duties . 4(B) Authority . 4iii. Statutory Durable Power of Attorney . 4(A) Both Chapters 751 and 752 Apply . 4(B) The Statutory Form is a Special Power of Attorney . 4(C) Agent’s Duties. 5(D) The REPTL Financial Power of Attorney Bill . 5iv. Prior Statutes . 5(A) 1971 and earlier . 5(B) January 1, 1972 to August 27, 1989 . 5(C) August 28, 1989 to August 31, 1993. 5v. Foreign and Military Powers of Attorney . 5b. Powers and Duties . 6i. Special vs. General Powers of Attorney . 6ii. Immediate vs. Springing . 6iii. When Does Liability Attach . 6c. Avoiding Personal Liability . 6i

A Fiduciary’s Duty to Insure and the Insurance Agent’s Duty to Advise3.4.5.i. Disclosure of Principal . 6ii. Implied Warranty of Authority . 6d. Termination of Agent’s Authority . 6i. Principal’s revocation . 6ii. Agent’s Renunciation or Resignation . 6iii. Marriage . 7iv. Divorce or Annulment . 7v. Incapacity of Principal . 7vi. Appointment of Guardian of Estate . 7(A) Permanent. 7(B) Temporary . 7vii. Lapse . 7viii. Death of Principal . 7ix. Extension Pending Actual Knowledge of Termination . 7x. Irrevocable Powers of Attorney—“Coupled with an interest” . 7Trustee . 7a. The Trust Instrument. 7i. Limitations of Trust Code, Section 111.0035. 7ii. Limitations of Trust Code, Section 114.007 . 8b. Trust Code. 8i. Uniform Prudent Investor Act . 8ii. Prudent Investor Rule . 8iii. Duty of Care. 8iv. Diversification. 8v. Amendment, Elimination, or Waiver . 8vi. Duties at Inception of Trusteeship . 8vii. Interpreting Trust Documents . 8c. Life Insurance . 8i. As an investment . 8ii. ILIT . 9d. Delegation to Non-Trustees . 9Guardian . 9a. Authority . 9i. Generally . 9ii. Exercise of Authority under Court Order . 9iii. Exercise of Authority without Court Order. 9b. Duty of Care . 9i. Property generally . 9ii. Investments . 9iii. Investment plans . 9Executor or Administrator . 9a. Authority . 9i. Generally . 9(A) Presumption of Broad Powers . 9(B) But Power of Sale is an Exception . 10ii. Dependent Administration . 10(A) Exercise of Authority under Court Order . 10(B) Exercise of Authority without Court Order . 10(1) Permanent representative . 10(2) Temporary dependent administrator . 10(C) Perishable or burdensome personal property . 10iii. Independent Administration . 10b. Duties . 10i. Estates Code . 10(A) Duty of care . 10(B) Businesses in a dependent administration . 10ii

A Fiduciary’s Duty to Insure and the Insurance Agent’s Duty to Advise6.7.ii. Common Law. 10Other Formal Fiduciaries . 10Informal Fiduciaries . 11IV. INSURABLE INTEREST. 11A. Executors and Administrators. 11B. The Homestead . 111. Homesteader . 112. Life Tenant . 113. Remainderman . 114. Co-Tenant . 12V.TYPES OF INSURANCE . 12A. Liability & Property . 121. Liability only . 12a. Personal liability insurance . 12b. Commercial liability insurance . 12i. Commercial general liability. 12(A) Covered risks. 12(1) Premises operations . 12(2) Products-completed operations . 12(B) Types of coverage . 12(1) Property damage . 12(2) Bodily injury . 12(3) Personal injury. 13(4) Advertising injury . 13(5) Medical payments . 13ii. Directors & officers . 13iii. Errors & omissions . 132. Property only . 13a. Personal-use property insurance . 13b. Commercial insurance . 13c. Liability & property combined . 13d. Homeowners’ insurance . 13i. Liability . 13ii. Property . 13(A) Coverage may be all-risk or named-peril . 13(B) Flood insurance . 13e. Automobile insurance . 13i. Liability . 13ii. Property . 14(A) Collision . 14(B) Comprehensive. 14B. Title . 14C. Fidelity. 14D. Workers’ Compensation . 14VI. INSURANCE AGENTS AND BROKERS . 14A. Texas . 141. Agent License; Designated Product Certificate . 142. General Agent Licensing and Continuing Education Requirements Are Insufficient . 143. Agent for the Insurer. 154. The Agent’s Duties . 15B. Failure to Provide Agreed Coverage . 151. Standard of Care . 152. When Duty Arises . 15iii

A Fiduciary’s Duty to Insure and the Insurance Agent’s Duty to Advise3. Examples . 15Failure to Advise Promptly of Rejection or Lack of Coverage . 151. Standard of Care . 152. Ele

A FIDUCIARY'S DUTY TO INSURE AND THE INSURANCE AGENT'S DUTY TO ADVISE Presented by: RUSSELL W. HALL, . (Taxation Section; Real Estate, Probate & Trust Section) Admitted 1981 Board Certified, Estate Planning and Probate Law, Texas Board of Legal Specialization . professional liability legal services for businesses and individuals. 1984-1995