1-1 By: Thompson of Harris (Senate Sponsor - Luna) H.B. No. 1285 1-2 (In the Senate - Received from the House April 13, 1993; 1-3 April 14, 1993, read first time and referred to Committee on 1-4 Jurisprudence; May 18, 1993, reported favorably, as amended, by the 1-5 following vote: Yeas 4, Nays 0; May 18, 1993, sent to printer.) 1-6 COMMITTEE VOTE 1-7 Yea Nay PNV Absent 1-8 Henderson x 1-9 Harris of Tarrant x 1-10 Brown x 1-11 Harris of Dallas x 1-12 Luna x 1-13 Parker x 1-14 West x 1-15 COMMITTEE AMENDMENT NO. 1 By: Luna 1-16 In HB 1285, in SECTION 2, page 2, line 31, in Section 439A (b) 1-17 delete after the word "use" and before the word "to", the words 1-18 "the following form," and insert in their stead the following: ", 1-19 but shall not be required to use the following universal account 1-20 forms with options". 1-21 COMMITTEE AMENDMENT NO. 2 By: Luna 1-22 relating to a uniform single-party or multi-party account form and 1-23 to convenience accounts. 1-24 Amend Section 2 by deleting the existing subsection (c) and 1-25 inserting therefor the following paragraph at the end of Section 1-26 439A: 1-27 (c) A financial institution shall be deemed to have 1-28 adequately disclosed the information provided in this section if 1-29 the financial institution uses the form set forth in subsection (b) 1-30 of this section. If a financial institution varies the format of 1-31 the form set forth in subsection (b) of this section, then such 1-32 financial institution may make disclosures in the account agreement 1-33 or in any other form which adequately discloses the information 1-34 provided in this section. 1-35 A BILL TO BE ENTITLED 1-36 AN ACT 1-37 relating to a uniform single-party or multiple-party account form 1-38 and to convenience accounts. 1-39 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-40 SECTION 1. Part 1, Chapter XI, Texas Probate Code, is 1-41 amended by adding Section 438A to read as follows: 1-42 Sec. 438A. CONVENIENCE ACCOUNT. (a) If an account is 1-43 established at a financial institution by a party in the names of 1-44 the party and a cosigner and the terms of the account provide that 1-45 the sums on deposit are paid or delivered to the party or to the 1-46 cosigner "for the convenience" of the party, the account is a 1-47 convenience account. 1-48 (b) The making of a deposit in a convenience account does 1-49 not affect the title to the deposit. 1-50 (c) The party to a convenience account is not considered to 1-51 have made a gift of one-half of the deposit or of any additions or 1-52 accruals to the deposit to the cosigner. 1-53 (d) On the death of the party, the cosigner shall have no 1-54 right of survivorship in the account and ownership of the account 1-55 remains in the party. 1-56 (e) If an addition is made to the account by anyone other 1-57 than the party, the addition and accruals to the addition are 1-58 considered to have been made by the party. 1-59 (f) All deposits to a convenience account and additions and 1-60 accruals to the deposits may be paid to the party or to the 1-61 cosigner. The financial institution is completely released from 1-62 liability for a payment made from the account before the financial 1-63 institution receives notice in writing signed by the party not to 1-64 make the payment in accordance with the terms of the account. 1-65 After receipt of the notice from the party, the financial 1-66 institution may require the party to approve any further payments 1-67 from the account. 1-68 (g) If the financial institution makes a payment of the sums 2-1 on deposit in a convenience account to the cosigner after the death 2-2 of the party and before the financial institution has received 2-3 written notice of the party's death, the financial institution is 2-4 completely released from liability for the payment. If a financial 2-5 institution makes payment to the personal representative of the 2-6 deceased party's estate after the death of the party and before 2-7 service on the financial institution of a court order prohibiting 2-8 payment, the financial institution is released to the extent of the 2-9 payment from liability to any person claiming a right to the funds. 2-10 The receipt by the representative to whom payment is made is a 2-11 complete release and discharge of the financial institution. 2-12 SECTION 2. Part 1, Chapter XI, Texas Probate Code, is 2-13 amended by adding Section 439A to read as follows: 2-14 Sec. 439A. UNIFORM SINGLE-PARTY OR MULTIPLE-PARTY ACCOUNT 2-15 FORM. (a) A contract of deposit that contains provisions 2-16 substantially the same as in the form provided by Subsection (b) of 2-17 this section establishes the type of account selected by a party. 2-18 The provisions of this part of Chapter XI of this code govern an 2-19 account selected under the form, other than a single-party account 2-20 without a P.O.D. designation. A contract of deposit that does not 2-21 contain provisions substantially the same as in the form provided 2-22 by Subsection (b) of this section is governed by the provisions of 2-23 this chapter applicable to the account that most nearly conforms to 2-24 the depositor's intent. 2-25 (b) A financial institution may use the following form to 2-26 establish the type of account selected by a party: 2-27 UNIFORM SINGLE-PARTY OR MULTIPLE-PARTY ACCOUNT SELECTION FORM 2-28 NOTICE: The type of account you select may determine how property 2-29 passes on your death. Your will may not control the disposition of 2-30 funds held in some of the following accounts. 2-31 Select one of the following accounts by placing your initials next 2-32 to the account selected: 2-33 ______ (1) SINGLE-PARTY ACCOUNT WITHOUT "P.O.D." 2-34 (PAYABLE ON DEATH) DESIGNATION. The party to the account owns the 2-35 account. On the death of the party, ownership of the account 2-36 passes as a part of the party's estate under the party's will or by 2-37 intestacy. 2-38 Enter the name of the party: 2-39 _________________________________ 2-40 ______ (2) SINGLE-PARTY ACCOUNT WITH "P.O.D." 2-41 (PAYABLE ON DEATH) DESIGNATION. The party to the account owns the 2-42 account. On the death of the party, ownership of the account 2-43 passes to the P.O.D. beneficiaries of the account. The account is 2-44 not a part of the party's estate. 2-45 Enter the name of the party: 2-46 _________________________________ 2-47 Enter the name or names of the P.O.D. 2-48 beneficiaries: 2-49 _________________________________ 2-50 _________________________________ 2-51 ______ (3) MULTIPLE-PARTY ACCOUNT WITHOUT RIGHT 2-52 OF SURVIVORSHIP. The parties to the account own the account in 2-53 proportion to the parties' net contributions to the account. The 2-54 financial institution may pay any sum in the account to a party at 2-55 any time. On the death of a party, the party's ownership of the 2-56 account passes as a part of the party's estate under the party's 2-57 will or by intestacy. 2-58 Enter the names of the parties: 2-59 _________________________________ 2-60 _________________________________ 2-61 _________________________________ 2-62 ______ (4) MULTIPLE-PARTY ACCOUNT WITH RIGHT OF 2-63 SURVIVORSHIP. The parties to the account own the account in 2-64 proportion to the parties' net contributions to the account. The 2-65 financial institution may pay any sum in the account to a party at 2-66 any time. On the death of a party, the party's ownership of the 2-67 account passes to the surviving parties. 2-68 Enter the names of the parties: 2-69 _________________________________ 2-70 _________________________________ 3-1 ______ (5) MULTIPLE-PARTY ACCOUNT WITH RIGHT OF 3-2 SURVIVORSHIP AND P.O.D. (PAYABLE ON DEATH) DESIGNATION. The 3-3 parties to the account own the account in proportion to the 3-4 parties' net contributions to the account. The financial 3-5 institution may pay any sum in the account to a party at any time. 3-6 On the death of the last surviving party, the ownership of the 3-7 account passes to the P.O.D. beneficiaries. 3-8 Enter the names of the parties: 3-9 _________________________________ 3-10 _________________________________ 3-11 Enter the name or names of the P.O.D. 3-12 beneficiaries: 3-13 _________________________________ 3-14 _________________________________ 3-15 ______ (6) CONVENIENCE ACCOUNT. The party to the 3-16 account owns the account. The cosigner to the account may make 3-17 account transactions for the party. The cosigner does not own the 3-18 account. On the death of the party, ownership of the account 3-19 passes as a part of the party's estate under the party's will or by 3-20 intestacy. The financial institution may pay funds in the account 3-21 to the cosigner before the financial institution receives notice of 3-22 the death of the party. The payment to the cosigner does not 3-23 affect the party's ownership of the account. 3-24 Enter the name of the party: 3-25 _________________________________ 3-26 Enter the name of the cosigner: 3-27 _________________________________ 3-28 ______ (7) TRUST ACCOUNT. The parties named as 3-29 trustees to the account own the account in proportion to the 3-30 parties' net contributions to the account. A trustee may withdraw 3-31 funds from the account. A beneficiary may not withdraw funds from 3-32 the account before all trustees are deceased. On the death of the 3-33 last surviving trustee, the ownership of the account passes to the 3-34 beneficiary. The trust account is not a part of a trustee's estate 3-35 and does not pass under the trustee's will or by intestacy, unless 3-36 the trustee survives all of the beneficiaries and all other 3-37 trustees. 3-38 Enter the name or names of the trustees: 3-39 _________________________________ 3-40 _________________________________ 3-41 Enter the name or names of the beneficiaries: 3-42 _________________________________ 3-43 _________________________________ 3-44 (c) A financial institution may combine any of the 3-45 provisions and vary the format of the selections form and notices 3-46 described in Subsection (b) of this section, provided that the 3-47 customer receives adequate disclosure of the ownership rights and 3-48 there is appropriate indication of the names of the parties. This 3-49 may be accomplished in a universal account form with options listed 3-50 for selection and additional disclosures provided in the account 3-51 agreement, or in any other manner which adequately discloses the 3-52 information provided in this section. 3-53 SECTION 3. The importance of this legislation and the 3-54 crowded condition of the calendars in both houses create an 3-55 emergency and an imperative public necessity that the 3-56 constitutional rule requiring bills to be read on three several 3-57 days in each house be suspended, and this rule is hereby suspended, 3-58 and that this Act take effect and be in force from and after its 3-59 passage, and it is so enacted. 3-60 * * * * * 3-61 Austin, 3-62 Texas 3-63 May 18, 1993 3-64 Hon. Bob Bullock 3-65 President of the Senate 3-66 Sir: 3-67 We, your Committee on Jurisprudence to which was referred H.B. No. 3-68 1285, have had the same under consideration, and I am instructed to 3-69 report it back to the Senate with the recommendation that it do 3-70 pass, as amended, and be printed. 4-1 Henderson, 4-2 Chairman 4-3 * * * * * 4-4 WITNESSES 4-5 FOR AGAINST ON 4-6 ___________________________________________________________________ 4-7 Name: Alvin J. Golden x 4-8 Representing: State Bar 4-9 City: Austin 4-10 ------------------------------------------------------------------- 4-11 Name: Gayle Vickers x 4-12 Representing: Tx Bankers Assn 4-13 City: Austin 4-14 ------------------------------------------------------------------- 4-15 Name: Karen M. Neeley x 4-16 Representing: Indep. Bankers Assn of Tx 4-17 City: Austin 4-18 -------------------------------------------------------------------