Full Opinion

#31100, #31144-aff in pt & rev in pt-PJD 2026 S.D. 42 IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA VIVA CAPITAL TRUST, Plaintiff and Appellee, v. JERRY GARRETT, in his individual capacity and in his capacity as Special Administrator for the ESTATE OF FRANK GARRETT, JR., and the FRANK GARRETT, JR. 2006 IRREVOCABLE TRUST, dated April 7, 2006, Defendants and Appellants. ---------------------------------------------------------------- JERRY GARRETT, an individual, as Special Administrator for the ESTATE OF FRANK GARRETT, JR., Counterclaim-plaintiff and appellant, v. VIVA CAPITAL TRUST, and WILMINGTON TRUST, N.A., as securities intermediary, Counterclaim-defendants and appellees. APPEAL FROM THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT MINNEHAHA COUNTY, SOUTH DAKOTA THE HONORABLE DOUGLAS E. HOFFMAN Retired Judge ARGUED MARCH 19, 2026 OPINION FILED 07/01/26 NICOLAS NOVY CHASE HOWARD BENJAMIN KAMPF GREGORY STAR of COZEN O’CONNOR Philadelphia, Pennsylvania SHANNON FALON COREY T. DENEVAN of Denevan Falon Prof. LLC Sioux Falls, South Dakota Attorneys for appellants. KHAI LEQUANG RICHARD W. KREBS JORDAN JEKEL of Orrick, Herrington & Sutcliffe, LLP Irvine, California ALEX HAGEN STEPHEN C. LANDON of Cadwell, Sanford, Deibert & Garry Sioux Falls, South Dakota Attorneys for appellees. #31100, #31144 DEVANEY, Justice [¶1.] In May 2022, Viva Capital Trust (Viva) commenced this declaratory judgment action against the Estate of Frank Garrett, Jr. (Estate), seeking a declaration that Viva was the rightful owner of a life insurance policy procured on Frank’s life in 2006. The Policy, initially owned by Frank’s trust, was later sold in the secondary market to other entities, including Viva, which collected the $10 million death benefits payable under the Policy after Frank died in 2019. The Estate, in its counterclaims, sought to disgorge the insurance proceeds from Viva under SDCL 58-10-5, which allows recovery of insurance benefits if a policy is made in violation of SDCL 58-10-3. This statute prohibits someone from procuring a life insurance contract on the life of another unless, at the time the Policy was procured, the beneficiary has an insurable interest in the individual insured. The Estate claimed the Policy was part of a stranger-originated life insurance (STOLI) scheme that violated South Dakota’s insurable interest statute and was essentially an illegal wagering contract on Frank’s life. After engaging in considerable discovery, the parties filed cross-motions for summary judgment. The circuit court entered summary judgment in favor of Viva and against the Estate, determining that the Policy was validly issued and that Viva was entitled to retain the Policy benefits because the Policy was procured in conformity with the governing statutes. The Estate appeals the circuit court’s order, as well as its order awarding taxable costs to Viva. -1- #31100, #31144 Factual and Procedural Background [¶2.] While some of the underlying facts in this case are disputed, most are not. With this caveat, we relate the following factual background, which is based primarily on written documentation and unrebutted deposition testimony. In late 2005, Frank Garrett, Jr., a 78-year-old California retiree, met Stewart Weissman, a California independent insurance agent, at a financial education and planning event where Weissman had an event booth. Weissman invited Frank to attend one of his seminars where he presented estate planning information to potential clients, including the use of life insurance as part of their plans. Frank was a real estate investor who, along with his wife Jean, owned and managed multi-unit rental properties in the San Francisco Bay area. [¶3.] Frank was concerned about protecting his estate and providing for Jean. Weissman explained a program whereby a high-value life insurance policy could be acquired on his life and the premiums paid via a loan obtained from a premium finance lender. In a letter to Frank and Jean, Weissman explained that the premium finance program made “a great deal of economic sense” as it enabled him “to buy as much life insurance as possible, without using [his] own funds to pay the premiums due.” He explained that, through life insurance, Frank could protect his family by utilizing life insurance proceeds, which would provide liquidity to pay any estate taxes, without the family having to sell assets to do so. It would also provide Jean funds for unexpected emergencies or business expenses. He suggested that the life insurance be held in an irrevocable trust with Jean as the beneficiary so the proceeds would go to the trust for her benefit and support. When deposed in -2- #31100, #31144 the proceedings below, Weissman testified that he explained to Frank that premium financing programs permit an insured to obtain a nonrecourse loan to cover the cost of the policy premiums, without using the insured’s own funds, for the first two years. The loan is collateralized solely by the policy. Thereafter, the borrower would have to post collateral to extend the financing and keep the policy in place. Weissman testified that premium financing was a very viable tool for clients, like Frank, who owned real estate assets that could be used as collateral to secure a loan, while using the income from such properties to pay the interest. He stated that most of the premium financing loans were set up for an 8 to 12 year period. [¶4.] Frank agreed to proceed and Weissman took steps to “shop” premium finance lenders in order to obtain a favorable rate for Frank, one of which was United National Funding, LLC (United). Frank submitted a loan application to United, and United approved Frank’s application and sent a loan commitment letter outlining the terms. Among other things, United required the creation of a South Dakota irrevocable trust and the nomination of a South Dakota commercial bank, approved by United, as trustee.1 The trustee would be the borrower on the loan and the sole owner of the life insurance policy held by the trust. Frank created 1. Richard Kearns, a portfolio manager for New Stream Capital, LLC (New Stream), which served as a lender to United for its premium financing program, testified in his deposition that it was common for people to hold life insurance policies in an irrevocable life insurance trust for estate planning and other purposes. He also explained that the reason New Stream required a South Dakota trust is because of the absence of usury laws in South Dakota, which would allow a higher interest rate of 15 to 17 percent on the loan to account for the “riskiness of the collateral.” Another reason, according to Kearns, was that South Dakota had less onerous requirements for obtaining a license to be a premium finance lender. -3- #31100, #31144 an irrevocable trust (Trust) and signed a trust agreement dated April 7, 2006 (Trust Agreement), which United provided. It identified Frank as the grantor, The First National Bank in Sioux Falls (FNB) as the Trustee, and Jean as the beneficiary of the Trust. The Trust Agreement was signed by Shawn Bolender, assistant vice president and trust officer at FNB, on April 14, 2006, and contains Frank’s signature as grantor.2 The Trust Agreement states that the Trust was created for the benefit of Jean as beneficiary. It “directs the Trustee to borrow funds from [United] pursuant to the Loan Documents” defined in the agreement, and “to use the proceeds therefrom to procure certain life insurance policies” and hold the policies in trust. [¶5.] Also on April 14, 2006, Frank and the Trustee of his Trust applied for a $10 million life insurance policy (Policy) with MassMutual Life Insurance Company (MassMutual).3 The application identified Frank’s Trust as the proposed policy owner and beneficiary. It further stated Frank’s annual earned income was “$100,000 +” and his financial net worth was “aprx 25 mil.” This was generally consistent with the information MassMutual had received as part of its 2. Copies of three different documents, each entitled Irrevocable Trust Agreement, were produced in discovery in this case and presented to the circuit court. The first is an undated document that is not fully executed, as only Frank’s signature appears; the latter two documents contain signatures of all parties. On appeal, as it did below, the Estate disputes the validity and existence of the Trust based primarily on its claim that Frank did not execute these latter two documents, which contain provisions not included in the earlier version. 3. In early 2006, Weissman assisted Frank in obtaining another $10 million life insurance policy issued by PHL Variable Life Insurance Company, which was funded through a different premium financing lender. This policy is not the subject of this appeal. -4- #31100, #31144 underwriting. The inspection report contained a health profile as well as Frank’s financial profile indicating he had a net worth of $20,750,000, including significant real estate and cash assets, with no major liabilities. It also noted Frank’s annual unearned income of $230,000 from rental properties and a pension. The report indicates that the investigator confirmed these figures with Frank’s CPA. 4 [¶6.] The application indicated the primary purpose for the insurance was “Income for Dependents” and “Estate Taxes.” In response to an inquiry in the application asking, “Are there any plans to sell the policy to another company after it is issued . . . ?,” the “No” box was checked. Weissman testified during his deposition that Frank’s intent when acquiring the policy was to protect his estate for estate planning purposes. He further testified the policy was never intended to be sold and that, prior to its issuance, Frank had not entered into any agreements to sell the policy. [¶7.] Preceding the signature lines on the application was an affirmation that “all statements made in this Part 1 are complete and true and were correctly recorded.” The signature line was dated April 14, 2006, and the application was signed by Frank, Bolender on behalf of the Trustee, and Weissman as soliciting producer of the insurance policy. The application contains a final page with the heading “Producer Statement,” which included the question, “Will loan proceeds, a loan of credit, or other financed funds be used to pay the premiums for this life 4. There is some dispute about Frank’s exact net worth. Although Frank’s son Jerry, the special administrator of Frank’s Estate, testified in his deposition that the figures reported in the inspection report regarding the value of Frank’s assets and his net worth “sound[ed] true,” Frank’s other son Stephen believed Frank’s assets were worth significantly less than $20 million. -5- #31100, #31144 insurance?” The “Yes” or “No” boxes were left blank. However, under the subheading “Producer Compensation,” Weissman and Georgia Merkel, a representative working for United, are listed as producers, with a 50/50 commission split.5 On the same date, Bolender, on behalf of the Trustee, signed a MassMutual Certification of Trust Agreement, certifying that the trust was “validly executed, and is in full force and effect[.]” [¶8.] United provided various documents to facilitate the loan for the insurance premiums. This included a loan and security agreement also signed by Bolender on April 14, pledging the Policy as security for a $940,000 loan from United to finance the first two years of premiums (in the amount of $718,000) as well as other fees and costs related to the transaction. The term of the loan was seven years with a scheduled maturity date of May 25, 2013. The loan and security agreement included a requirement that the Trustee execute a collateral assignment and also granted United a limited power of attorney for the purpose of taking actions “as may be necessary to protect” United’s “security interest and lien in the [c]ollateral” and to enforce United’s rights and remedies in the event of a default. In May 2006, after approval of the loan, United paid the premiums and fees contemplated in the loan documents.6 5. Merkel testified in her deposition that she did not receive any commissions personally; she signed them over to United. She agreed, when asked, that the reason United received part of the commissions was because the insurance policies were originated through United’s premium finance program. 6. New Stream provided United’s funding for the premium finance loan. According to Kearns, United “would originate loans that were backed by (continued . . .) -6- #31100, #31144 [¶9.] Thereafter, in the fall of 2006, First Bank & Trust (FB&T) in Sioux Falls was named successor Trustee of the Trust.7 On September 22, 2006, FB&T executed a collateral assignment, on a MassMutual form document, that assigned certain rights and interests of the Trust in the Policy to United as collateral security for the loan. These included the right to collect the net proceeds of the Policy, to surrender the Policy and receive the surrender value, and the sole right to the value of funds held by the insurer for the purposes of paying future premiums. Certain rights were excluded from the assignment, including the right to designate and change the beneficiary of the Policy. United, as the assignee, agreed that any balance of sums received from the insurance company remaining after payment of the existing liabilities “shall be paid by the Company to the persons entitled thereto under the terms of the Policy had this assignment not been executed.” This document was received by MassMutual in October 2006. ________________________ (. . . continued) policies of agents or others with whom [United] had a relationship.” United compiled the documentation and submitted the loans for approval by New Stream’s investment committee. New Stream also conducted a document review to ensure they met New Stream’s criteria. Kearns described how this procedure involved a checklist which included whether there was an insurable interest, “in other words, is the insured taking this out on his own?” He further explained that they considered “whether there was a prearranged plan to sell it or whether [the insured] just had an option . . . to do whatever he wanted with it.” Kearns testified that these loans “weren’t meant to be loan to own.” He acknowledged the “loan to own” concept existed in the realm of premium finance lenders, but he testified that New Stream’s objective was simply to get paid back on the loan, including the interest “and whatever happened to the policy elsewhere really was none of our business.” 7. The circumstances relating to the removal of FNB as Trustee and the appointment of FB&T as successor Trustee are unclear. We hereafter use the term “Trustee” to refer to either FB&T or FNB, as Trustee of Frank’s Trust, depending on the context. -7- #31100, #31144 [¶10.] In early 2008, Frank and Jean had discussions with William Noack, an insurance agent they had previously met in the summer of 2006 at one of Noack’s estate planning seminars. According to Noack, they had expressed interest in obtaining another life insurance policy, and although Noack presented an offer to them, they were unable to proceed with a transaction because Frank lacked insurability given that he had already obtained two other $10 million life insurance policies. Frank told Noack he had taken out these policies to pay for future estate taxes. In January 2008, Noack corresponded with Frank to explore Frank’s options with respect to the two policies for which the two years of premium financing would be expiring. Noack believed Frank’s best alternative was to try to retain the Policy but also explained to Frank his other options, which included a sale of the Policy in the secondary market. Frank decided to authorize Noack to attempt to sell the Policy. Noack took steps to do so but was unsuccessful in obtaining a sale price offer that exceeded the loan balance. [¶11.] Frank then reached out to Weissman indicating he was attempting to contact MassMutual to relinquish the Policy, but Weissman asked Frank to work with him to keep the Policy in force. Weissman explained, in his deposition, that he wanted Frank to “keep the policy and the planning” as they had originally discussed, as he believed it was in Frank’s best interest. He further testified there were several options, including attempting to refinance the loan with Frank’s own collateral, paying down the premiums with the cash value or other assets, or restructuring the Policy. Weissman’s office corresponded via email with -8- #31100, #31144 MassMutual to confirm that the Policy had not lapsed and to find out how much time they had to try to refinance it or shop it in the life settlement market. [¶12.] From June 2008 and over the course of the next year, New Stream, to whom United assigned its interest and rights in the Policy and loan obligations in November 2008, advanced an additional $784,865, which was used to pay the premiums for another 15 months. Ultimately, Frank decided, in 2009, to surrender the Policy to New Stream as satisfaction in full for all obligations due and owing on the loan. A July 2, 2009 letter from New Stream to the Trustee of the Trust memorializes Frank and the Trustee’s offer to surrender the Policy, and New Stream’s acceptance thereof, along with the terms of the surrender agreement, which was signed by Frank and the Trustee. The letter states that the Trustee understood that it had the options to satisfy the loan obligations by “(1) paying off the loan with personal or privately raised capital, (2) selling the Policy to an investor; and (3) arranging for refinancing through a third party[,]” but the Trustee instead elected to surrender the Policy. The surrender agreement contains language stating that “[t]he Policy was not purchased with the intent to sell, assign, or otherwise transfer the Policy or any other interests in or rights to the Policy or to any of its proceeds to any other person or entity[,]” and that, to the best of Frank’s knowledge, the application for the Policy did not contain any untrue statements. Over the course of the three years and three months in which the Policy was held by the Trust, neither Frank nor the Trustee paid anything with regard to the Policy, nor is there any evidence that they received any compensation when obtaining or surrendering it. -9- #31100, #31144 [¶13.] Thereafter, the Policy was sold and transferred to other entities, who continued to pay the premiums, until Viva purchased it in December 2014 and became the beneficial owner. Over the next several years, Viva paid MassMutual $4,402,662 for the additional premiums to keep the Policy in force. After Frank died on January 18, 2019, MassMutual paid the $10 million death benefit under the Policy, plus interest, to Viva’s securities intermediary, Wilmington Trust, N.A. (Wilmington), which credited the payment to Viva’s account. [¶14.] In January 2022, Frank’s son, Jerry, as special administrator of the Estate, filed actions in federal courts claiming the Policy was void because it was procured by or payable to someone without an insurable interest in Frank’s life and seeking recovery of the policy’s $10 million death benefit. Viva then filed this state court action against the Estate in May 2022, seeking a declaratory judgment that it is the rightful owner of the Policy’s death benefits and that the Policy was validly issued and is enforceable. The Estate answered and counterclaimed against Viva and Wilmington (hereafter collectively referred to as Viva), alleging the Policy, and United’s premium financing, were part of a STOLI scheme that violated SDCL 58- 10-3, South Dakota’s insurable interest statute which precludes a person from procuring an insurance policy on the life of another, or causing such a policy to be procured, unless the benefits of the policy are payable, at the time the insurance contract was made, to a person who has “an insurable interest in the individual insured.” The Estate sought to recover the Policy proceeds from Viva pursuant to -10- #31100, #31144 SDCL 58-10-5, which entitles an insured’s estate to maintain an action to recover policy proceeds if SDCL 58-10-3 was violated.8 [¶15.] Viva filed a motion to dismiss the counterclaim under SDCL 15-6- 12(b)(5) on the grounds that Frank, through the Trust, procured the Policy on his own life and made the Trust the beneficiary; thus, the Policy was valid under the insurable interest statutes. In its oral ruling at the motion hearing, the circuit court stated, “I think the linchpin here is whether the benefits under the contract were payable to somebody with an insurable interest, some person, or trust, or at the time the contract was made, and I think it’s undisputed that it was the case.” The court entered an order granting the motion, concluding that the Policy beneficiary had an insurable interest in Frank’s life at the time the Policy was issued. [¶16.] Thereafter, Viva filed a motion for judgment on the pleadings, and the Estate filed a motion seeking to file two amended counterclaims. The circuit court denied Viva’s motion and granted the Estate’s motion to amend. In Count I, the Estate sought a declaratory judgment that the “Sham Trust” was void, invalid, and unenforceable at its inception because it lacked a lawful purpose in that it “was only created as a vehicle for United to wager on [Frank’s] life.” The Estate alleged that 8. SDCL 58-10-5 states: If the beneficiary, assignee, or other payee under any contract made in violation of § 58-10-3 receives from the insurer any benefits thereunder accruing upon the death, disablement, or injury of the individual insured, the individual insured or his personal representative, as the case may be, may maintain an action to recover such benefits from the person so receiving them. -11- #31100, #31144 Frank’s consent to establish the Trust was obtained through fraud and undue influence by Weissman and that Frank had a diminished mental capacity. The Estate also alleged that the April 7, 2006 Trust Agreement relied on by Viva was not actually signed by Frank and that either Weissman or United appended Frank’s signature from an earlier version of the agreement onto the later document. [¶17.] In Count II, the Estate sought recovery of the insurance proceeds pursuant to SDCL 58-10-5 due to the Policy lacking a valid insurable interest. It alleged that the Policy was procured by United as a wager on Frank’s life and that United established the “Sham Trust” to feign compliance with the insurable interest statutes and to grant exclusive control of the Trust to United and Weissman. The Estate further alleged that the “Sham Trust” was used solely to act as the borrower of United’s premium finance loan, the terms of which were designed and created “to conceal the fact that United was the ultimate lender, borrower, owner, and beneficiary of the Policy from day one.” [¶18.] In its answer denying the Estate’s claims, Viva asserted, among other defenses, that the Estate’s amended counterclaims were barred by SDCL 55-4- 57(a)(1), a statute of repose which precludes claims contesting the validity of a trust that are commenced later than one year after the settlor’s death. Viva also asserted a defense that, to the extent the Policy is declared void, the Estate’s recovery of any death benefit should be offset by the amount of the premiums Viva paid on the Policy to the insurer. [¶19.] The parties filed cross-motions for summary judgment. The circuit court held a hearing, and after an extensive colloquy with both counsel, the court -12- #31100, #31144 granted Viva’s motion, and denied the Estate’s motion, “in all respects.” The court entered an order concluding that “the Estate’s [a]mended [c]ounterclaims are barred by the statute of repose, SDCL 55-4-57(a)(1).” The court further ruled that Frank and the Trustee “created a valid and enforceable trust . . . under South Dakota law;” that the Estate’s claims of “undue influence, fraudulent inducement, and lack of capacity [were] not supported by the evidence” and did “not present any genuine issues as to any material fact;” that the Policy “was validly issued and delivered to the Trust;” and that Viva was “entitled to retain the Policy’s death benefit because the Policy complied with South Dakota’s insurable interest requirements, as it was procured by [Frank] and/or the Trust, and, when the contract was made, the Policy’s benefits were payable to the Trust, and ultimately [to Jean], both of whom had an insurable interest in” Frank’s life. The court denied the Estate’s motion for summary judgment for the same reasons. Thereafter, the court awarded Viva litigation costs in the amount of $30,284.76. [¶20.] On appeal the Estate raises several issues, which we have restated: 1. Whether the circuit court erred when it determined that the statute of repose bars the Estate’s amended counterclaims. 2. Whether the circuit court erred when it determined that the Policy complied with the insurable interest statutes. 3. Whether the circuit court abused its discretion when it awarded Viva costs and disbursements. Standard of Review [¶21.] “We review a circuit court’s entry of summary judgment under the de novo standard of review.” Harvieux v. Progressive N. Ins. Co., 2018 S.D. 52, ¶ 9, 915 -13- #31100, #31144 N.W.2d 697, 700 (citation omitted). “Summary judgment is authorized under SDCL 15-6-56(c) ‘if . . . there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law.’” Scotlynn Transp., LLC v. Plains Towing & Recovery, LLC, 2024 S.D. 24, ¶ 17, 6 N.W.3d 671, 676 (alterations in original) (quoting SDCL 15-6-56(c)). “Where the parties have filed cross-motions for summary judgment and the material facts are undisputed, ‘this Court’s review is limited to determining whether the circuit court correctly applied the law.’” S.D. Bd. of Regents v. Madison Hous. & Redev. Comm’n, 2025 S.D. 50, ¶ 31, 25 N.W.3d 541, 549 (quoting Buchholz v. Storsve, 2007 S.D. 101, ¶ 7, 740 N.W.2d 107, 110). “Issues involving matters of statutory interpretation and application are reviewed de novo.” In re Jones, 2025 S.D. 54, ¶ 21, 26 N.W.3d 567, 573. Analysis and Decision [¶22.] Before addressing the issues raised on appeal, we provide a synopsis of how the law relating to the insurable interest requirement has evolved. It is a well- established principle that a person may obtain life insurance on his own life. However, when life insurance is procured by someone other than the insured, the person to whom the benefits are payable must have an insurable interest in the life of the insured. As the United State Supreme Court explained long ago, [i]t is not easy to define with precision what will in all cases constitute an insurable interest . . . . But in all cases there must be a reasonable ground, founded upon the relations of the parties to each other, either pecuniary or of blood or affinity, to expect some benefit or advantage from the continuance of the life of the assured. Otherwise the contract is a mere wager, by which the party taking the policy is directly interested in the early death of the assured. Such policies have a tendency to create a desire for the event. They are, therefore, independently -14- #31100, #31144 of any statute on the subject, condemned, as being against public policy. Warnock v. Davis, 104 U.S. 775, 779 (1881). [¶23.] As is the case in other states, South Dakota recognizes the insurable interest requirement, which the Legislature codified in SDCL 58-10-3: Any individual of competent legal capacity may procure or effect an insurance contract upon his own life or body for the benefit of any person. But no person shall procure or cause to be procured any insurance contract upon the life or body of another individual unless the benefits under such contract are payable to the individual insured or his personal representatives, or to a person having, at the time when such contract was made, an insurable interest in the individual insured.9 (Emphasis added.) The Legislature also defined who is considered to have an insurable interest in personal insurance contracts. SDCL 58-10-4. Relevant here, this includes “[i]nterests in individuals related closely by blood, marriage, or by law, a substantial interest engendered by love and affection.” SDCL 58-10-4(1). Additionally, “[t]he trustee of a trust established by an individual settlor has an insurable interest in the life of that individual settlor[.]” SDCL 58-10-4(6). [¶24.] Another relevant provision, SDCL 58-10-6.1, enacted in 1989, states in part: [A] person whose life is insured under a policy of life insurance may assign with his spouse’s written consent any or all incidents of ownership granted him under the policy, including but not limited to any right to designate a beneficiary or to pay 9. Under the statute defining terms used in SDCL Title 58, a person is “an individual, insurer, company, association, organization, Lloyds, society, reciprocal or inter-insurance exchange, partnership, syndicate, business trust, corporation, and any other legal entity[.]” SDCL 58-1-2(14). -15- #31100, #31144 premiums. If a policy of life insurance has been issued in conformity with this section, no transfer of the policy or any interest thereunder shall be invalid by reason of a lack of insurable interest of the transferee in the life of the insured or the payment of premiums thereafter by the transferee. This statute reinforces the additional well-established principle that once a policy is validly acquired, a policy holder may assign it to another, even if the transferee lacks an insurable interest.10 See Grigsby v. Russell, 222 U.S. 149, 156 (1911) (recognizing that an insurance policy is a form of investment and has “the ordinary characteristics of property” that is freely alienable). [¶25.] Over time, a robust secondary market has developed which allows individuals who no longer wish to keep their life insurance policy to sell it for more 10. This principle may have been later qualified with the enactment, in 2015, of SDCL 58-10-17, which states: A person who has an insurable interest in the life of an individual settlor pursuant to subdivisions 58-10-4(1) to (6), may create an entity solely for the purpose of purchasing, holding, or administering an insurance contract on the life of the individual settlor. Neither an insurance policy issued to the entity nor any ownership interest in the entity itself may be sold or voluntarily transferred to any entity other than one with an insurable interest in the life of the same individual settlor pursuant to subdivisions 58-10-4(1) to (6). For purposes of this section, entity, has the same meaning as the definition of, person, in subdivision 58-1-2(14). (Emphasis added.) The emphasized language may conflict with language in SDCL 58-10-6.1. Although the Estate argued at the summary judgment hearing that, because of SDCL 58-10-17, Viva was never entitled to the proceeds, the circuit court noted that the statute was enacted after the relevant events here, including Viva’s acquisition of the Policy in December 2014. On appeal, the Estate does not argue that the statute applies. Thus, we do not consider SDCL 58-10-17 in our analysis of how the governing law at the time of the disputed transactions applies to the facts before us. -16- #31100, #31144 than the cash surrender value; in such cases, the purchaser of the policy takes over payment of the policy premiums in exchange for receiving the death benefit when the insured dies. See Peter Nash Swisher, Wagering on the Lives of Strangers: The Insurable Interest Requirement in the Life Insurance Secondary Market, 50 Tort Trial & Ins. Prac. L.J. 703, 705 (2015); see also Susan Lorde Martin, Betting on the Lives of Strangers: Life Settlements, STOLI, and Securitization, 13 U. Pa. J. Bus. L. 173, 185−86 (2010). While such transactions, called life settlements,11 are highly regulated and generally recognized as legal, the emergence of a subset of life settlements, called stranger-originated life insurance (STOLI), has led to controversy and is the subject of much regulation and litigation. See PHL Variable Ins. Co. v. Price Dawe 2006 Ins. Trust, 28 A.3d 1059, 1069−70 (Del. 2011) (Price Dawe); see generally Martin, supra, at 187−88, 197−216. As one court explained, [i]n a traditional life settlement, “investors purchase existing life insurance policies from insureds who no longer need the insurance to protect their families in the event of their deaths.” [citation omitted]. In a STOLI arrangement, by contrast, “a life settlement broker persuades a senior citizen . . . to take out a life insurance policy”— not to protect the person’s family but for a cash payment or some other current benefit[.] 11. Another type of transaction is a viatical settlement, which arose “in the 1980s in response to the AIDS crisis.” Sun Life Assurance Co. of Canada v. Wells Fargo Bank, N.A., 208 A.3d 839, 847 (N.J. 2019) (Bergman) (citation omitted). “In general, a viatical settlement is ‘[a] transaction in which a terminally or chronically ill person sells the benefits of a life-insurance policy to a third party’ at a discounted value ‘in return for a lump-sum cash payment.’” Id. (quoting Black’s Law Dictionary, 1497 (9th ed. 2009)). “The market for viatical settlements later expanded to include policies for the elderly and people with diseases other than AIDS.” Id. (citation omitted); see Susan Lorde Martin, Betting on the Life of Strangers: Life Settlements, STOLI, and Securitization, 13 U. Pa. J. Bus. L. 173, 186 (2010). -17- #31100, #31144 Sun Life Assurance Co. of Canada v. Wells Fargo Bank., N.A., 208 A.3d 839, 848 (N.J. 2019) (Bergman) (third alteration in original) (quoting Martin, supra, at 187). “A key difference between non-STOLI and STOLI policies . . . is simply one of timing and certainty; whereas a non-STOLI policy might someday be resold to an investor, a STOLI policy is intended for resale before it is issued.” Id. (citation modified). [¶26.] In this case, the Estate alleges the Policy was procured via a STOLI arrangement and was thus an impermissible wager contract on Frank’s life that did not comply with South Dakota’s insurable interest statute, SDCL 58-10-3. Thus, the Estate contends it was entitled under SDCL 58-10-5 to recover the death benefits that MassMutual paid to Viva upon Frank’s death, and that the circuit court erred in concluding otherwise. It also contends the court erred when it held that the Estate’s amended counterclaims are barred by the statute of repose in SDCL 55-4-57(a)(1). Because this latter issue is dispositive on several of the arguments the Estate asserts in this appeal, we begin with an analysis of the statute of repose. 1. Whether the circuit court erred when it determined that the statute of repose bars the Estate’s amended counterclaims. [¶27.] On appeal, the Estate acknowledges that an insurable interest under SDCL 58-10-4(6) includes the interest a “trustee of a trust established by an individual settlor” has in the life of the individual settlor. The Estate argues, however, that no such insurable interest existed in this case. According to the Estate, the Trust was not properly established because Frank signed only the first -18- #31100, #31144 trust agreement and never saw or signed the later trust agreement documents. The Estate further contends that the Trust did not have a lawful purpose as required by South Dakota’s trust laws, but instead it was simply a “cover for a wager” and an artifice to “feign technical compliance” with the insurable interest laws. [¶28.] As it did below, Viva argues that the Estate’s amended counterclaims involving the Trust were barred by the statute of repose in SDCL 55-4-57. Under SDCL 55-4-57(a)(1), “[a] judicial proceeding to contest whether . . . an irrevocable trust was validly created may not be commenced later than . . . [o]ne year after the settlor’s death[.]” (Emphasis added.) Frank died on January 18, 2019. The Estate filed its answer and counterclaim on June 10, 2022 and filed its amended counterclaims on February 23, 2023, well past the one-year deadline. The Estate contends that SDCL 55-4-57(a)