BILL ANALYSIS
H.B. 422
By: Thompson
3-29-95
Committee Report (Unamended)
BACKGROUND
The Uniform Transfer on Death Security Registration Act was
drafted by the National Conference of Commissioners on Uniform
State Laws in 1989. Currently twenty states give the owners of
investment securities to transfer title to these securities on
adequate evidence of the owners death to a beneficiary outside of
the decedent probate estate. This procedure allows such a transfer
to a specified party without the problems of joint ownership.
PURPOSE
The purpose of this bill is to provide a mechanism to transfer
securities on the death of the owner or owners by registration of
beneficiary.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not
expressly grant any additional rulemaking authority to a state
officer, department, agency or institution.
SECTION BY SECTION ANALYSIS
SECTION 1 amends Chapter XI, Texas Probate Code, by adding
Part 4 as follows:
PART 4. UNIFORM TRANSFER ON DEATH
SECURITY REGISTRATION ACT
Sec. 469. Definitions: Beneficiary Form, Person,
Register, Registering Entity, Security, Security Account,
and State for the purposes of this chapter.
Sec. 470. Registration in Beneficiary Form; Sole
or Joint Tenancy Ownership. Provides that registration
in beneficiary form may only be obtained for securities
whose registration shows sole ownership by one individual
or multiple ownership by two or more with right of
survivorship, rather than as tenants in common. Further
provides that multiple owners of a security registered in
beneficiary form hold as joint tenants with right of
survivorship, as joint tenants by the entities, or as
owners of community property held in survivorship form,
and not as tenants in common.
Sec. 471. Registration in Beneficiary Form;
Applicable Law. Provides that a security may be
registered in beneficiary form if allowed by this part of
the Probate Code or a similar law in an appropriate
jurisdiction. Further provides that a registration
governed by the law of a jurisdiction in which this
uniform act or similar legislation is not or was not in
effect is presumed to be valid and authorized as a matter
of contract law.
Sec. 472. Origination of Registration in
Beneficiary Form. Provides that a security is registered
in beneficiary form if the registration includes a
designation of a beneficiary to take ownership at the
death of the owner or all owners.
Sec. 473. Form of Registration in Beneficiary
Form, Provides that Registration in beneficiary may be
shown by either the words "transfer on death" or "pay on
death" or the abbreviations "TOD" or "POD" after the
owner's name and before the beneficiary's name.
Sec. 474. Effect of Registration in Beneficiary
Form. Provides that the designation of a transfer on
death beneficiary does not affect the ownership until the
owner's death. Further provides that registration of a
security in beneficiary form may be changed or cancelled
at any time without the beneficiary's consent.
Sec. 475. Ownership on Death of Owner. Provides
that on the death of the sole owner or the last multiple
owner that ownership of a security registered in
beneficiary form passes to the beneficiary or
beneficiaries on proof of the death of all owners and may
be reregistered in the name of the beneficiaries.
Further provides that until the division of the security
multiple beneficiaries hold their interest as tenants in
common. Also provides that if no beneficiaries survive
the death of all owners that the security belongs to the
estate of the deceased sole owner or the estate of the
last to die of the multiple owners.
Sec. 476. Protection of Registering Entity.
Subsec. (a) provides that a registering entity
is not required to offer or accept a request for
registration in beneficiary form. Further
provides that an owner requesting an offered
registration in beneficiary form assents to the
protections given to the registering entity by
this Part of the Probate Code.
Subsec. (b) provides that by accepting a
request for registration of a security in
beneficiary form, the registering entity agrees to
implement the registration on the death of the
owner.
Subsec. (c) provides that a registering entity
is discharged from all claims to a security by the
estate, heirs, or devisees of the deceased owner
if it registers a transfer of the security in good
faith reliance on the registration, this part, and
on sworn information provided by the
representative of the deceased owner, the
surviving beneficiary or the beneficiary's
representative or on other information available
to the entity. Further provides that the
protections under this part do not extend to
reregistration or payment made after the
registering entity has received written notice
from a claimant to an interest security objecting
to implementation of the registration. Also
provides that no other notice or other information
available to the registering entity affects its
right to protection under this part.
Subsec. (d) provides that the protections
provided by this part to the registering entity
does not affect the rights of beneficiaries in
disputes between themselves or other claimants to
ownership of the security transferred or its value
or proceeds.
Sec. 477. Nontestamentary Transfer on Death.
Subsec. (a) provides that a transfer on death
resulting from a registration in beneficiary form
is effective because of the contract between the
owner and the registering entity and is not
testamentary.
Subsec. (b) provides that this part does not
limit the rights of creditors of the owner against
beneficiaries and other transferees under other
laws of this state.
Sec. 478. Terms, Conditions, and Forms for Registration.
Subsec. (a) provides that a registering entity
offering to accept registrations in beneficiary
form may establish a variety of terms and
conditions relating to registrations in compliance
with this subsection.
Subsec. (b) provides examples of forms to be
used for registrations under this part.
Sec. 479. Short Title: Rules of Construction.
Subsec. (a) provides that this part may be
cited as the Uniform Transfer on Death Security
Registration Act.
Subsec. (b) provides that this part shall be
liberally construed and applied to promote its
underlying purposes and policy and to make uniform
the laws with respect to the subject of this part
among states enacting it.
Subsec. (c) provides that unless displaced by
the particular provisions of this part, that the
principles of law and equity supplement its
provisions.
Sec. 480. Application of Act.
SECTION 2. Effective date.
SECTION 3. Emergency clause.
SUMMARY OF COMMITTEE ACTION
Pursuant to a public notice posted March 8, 1995, in
accordance with House rules, the Committee on Judicial Affairs met
in a public hearing on March 14, 1995, to consider House Bill 422.
The Chair, Rep. Hartnett, laid out H.B. 422 and recognized the
author, Rep. Thompson, to explain the bill. The following
witnesses testified for H.B. 422:
Debra Perelman, representing the National Conference of
Commissioners on Uniform State Laws, and
Millard H. Ruud, representing the Texas Commission on Uniform
State Laws.
Alvin Golden, representing the Texas Academy of Probate Lawyers,
testified against H.B. 422. There being no other witnesses, the
Chair moved to leave H.B. 422 pending before the Committee; there
was no objection.
Pursuant to a public notice posted March 23, 1995, and to an
announcement made on the House Floor while the House was still in
session on March 29, 1995, the Committee on Judicial Affairs met in
a formal meeting on March 29, 1995. H.B. 422 was pending before
the committee. Rep. Goodman moved that H.B. 422 be reported
favorably back to the full House, without amendment, with the
recommendation that it do pass, be printed and sent to the
Committee on Calendars. The motion prevailed by the following
record vote: 7 ayes, 0 nays, 1 PNV, and 1 absent.