BILL ANALYSIS
H.B. 422
By: Thompson (Montford)
Jurisprudence
5-26-95
Senate 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, 20 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 procedures allows such a transfer to
a specified party without the problems of joint ownership.
PURPOSE
As proposed, H.B. 422 provides a mechanism to transfer securities
on the death of the owner or owners by registration of a
beneficiary.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Chapter XI, Probate Code, by adding Part 4, as
follows:
PART 4. UNIFORM TRANSFER ON DEATH SECURITY REGISTRATION ACT
Sec. 469. DEFINITIONS. Defines "beneficiary form," "person,"
"register," "registering entity," "security," "security
account," and "state."
Sec. 470. REGISTRATION IN BENEFICIARY FORM; SOLE OR JOINT
TENANCY OWNERSHIP. Authorizes only an individual whose
registration of a security shows sole ownership by one
individual or multiple ownership by two or more with right of
survivorship, rather than tenants in common, to obtain
registration in beneficiary form (registration). Provides
that multiple owners of a security registered in beneficiary
form (registered security) hold as joint tenants with right of
survivorship, as tenants by the entireties, or as owners of
community property held in survivorship form, and not as
tenants in common.
Sec. 471. REGISTRATION IN BENEFICIARY FORM; APPLICABLE LAW.
Authorizes a security to be registered if the form is
authorized by certain relevant statutes. Provides that a
registration governed by the law of a jurisdiction in which
this uniform act or similar legislation is not in force or was
not in force when a registration was made is nevertheless
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 if the registration
includes a designation of a beneficiary to take the ownership
at the death of the owners.
Sec. 473. FORM OF REGISTRATION IN BENEFICIARY FORM.
Authorizes registration to be shown by certain words or
abbreviations after the name of the registered owner and
before the name of a beneficiary.
Sec. 474. EFFECT OF REGISTRATION IN BENEFICIARY FORM.
Provides that the designation of a transfer on death
beneficiary on a registration in beneficiary form does not
affect ownership until the owner's death. Authorizes a
registration to be canceled or changed at any time by the
owners without the consent of the beneficiary.
Sec. 475. OWNERSHIP ON DEATH OF OWNER. Provides that on
death of a sole owner or the last to die of multiple owners,
ownership of a registered security passes to the beneficiaries
who survive all owners. Authorizes a registered security to
be reregistered in the name of the beneficiaries on proof of
death of all owners and compliance with requirements of the
registering entity. Provides that until division of the
security after the death of all owners, multiple beneficiaries
surviving the death of all owners hold their interests as
tenants in common. Provides that the security belongs to the
estate of the decedent or the last to die of multiple owners
if no beneficiary survives the death of all owners.
Sec. 476. PROTECTION OF REGISTERING ENTITY. (a) Provides
that a registering entity is not required to offer or to
accept a request for registration. Provides that the owner
requesting registration assents to the protections given to
the registering entity if a registration is offered by a
registering entity.
(b) Provides that the registering entity agrees that the
registration will be implemented on the death of the owner
by accepting a request for registration.
(c) Provides that a registering entity is discharged from
all claims to a security if it registers a transfer of a
security and does so in good faith reliance on the
registration, on this part, and on information available to
the registering entity. Provides that the protections of
this part do not extend to a reregistration or payment made
after a registering entity has received notice from a
claimant to an interest in the security objecting to
implementation of a registration. Provides that no other
notice or information available to the registering entity
affects its right to protection.
(d) Provides that the protection provided to the registering
entity of a security does not affect the rights of
beneficiaries in disputes between themselves and other
claimants to ownership of the security transferred or its
value or proceeds.
Sec. 477. NONTESTAMENTARY TRANSFER ON DEATH. (a) Provides
that a transfer on death resulting from a registration is
effective by reason of the contract regarding the registration
between the owner and the registering entity and this part and
is not testamentary.
(b) Provides that this part does not limit the rights of
creditors of security owners against beneficiaries and other
transferees under other state laws.
Sec. 478. TERMS, CONDITIONS, AND FORMS FOR REGISTRATION. (a)
Authorizes a registering entity offering to accept
registrations to establish the terms under which it will
receive requests for registrations and for implementation of
registrations. Sets forth measures for which the terms may
provide. Authorizes substitution to be indicated by appending
to the name of the primary beneficiary the letters "LDPS,"
standing for "lineal descendants per stirpes." Provides that
this designation substitutes a deceased beneficiary's
descendants who survive the owner for a beneficiary who fails
to survive the owner, the descendants to be identified and to
share in accordance with the law governing inheritance by
descendants of an intestate. Authorizes other forms of
identifying beneficiaries who are to take on contingencies and
rules for providing proofs and assurances needed to satisfy
concerns by registering entities to be contained in a
registering entity's terms.
(b) Sets forth illustrations of registrations that a
registering entity may authorize.
Sec. 479. SHORT TITLE: RULES OF CONSTRUCTION. (a) Short
title: Uniform Transfer on Death Security Registration Act.
(b) Requires this part to 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.
(c) Provides that the principles of law and equity
supplement its provisions unless displaced by the particular
provisions of this part.
Sec. 480. APPLICATION OF ACT. Makes application of this Act
prospective.
SECTION 2. Effective date: September 1, 1995.
SECTION 3. Emergency clause.