MA H1281

Creates new Chapter 167K establishing a legal framework for "special deposits" - bank deposits held for the benefit of two or more beneficiaries, subject to contingencies, for purposes like escrow, security deposits, settlement funds, or collateral

Protects special deposits from creditor garnishment or attachment until the bank becomes obligated to pay a specific beneficiary, at which point creditor process becomes enforceable only against that payment amount

Prohibits banks from exercising recoupment or set-off rights against special deposits except for overdraft fees, direct costs, and amounts owed to beneficiaries

Banks have no fiduciary duty for special deposits and are liable only for proximate damages from noncompliance, not consequential or punitive damages

Effective date of January 1, 2026, with default 5-year termination period for special deposits unless otherwise specified in the account agreement