By Thompson H.B. No. 422
74R2521 CLG-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the adoption of the Uniform Transfer On Death Security
1-3 Registration Act.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter XI, Texas Probate Code, is amended by
1-6 adding Part 4 to read as follows:
1-7 PART 4. UNIFORM TRANSFER ON DEATH SECURITY
1-8 REGISTRATION ACT
1-9 Sec. 469. DEFINITIONS. In this part:
1-10 (1) "Beneficiary form" means a registration of a
1-11 security that indicates the present owner of the security and the
1-12 intention of the owner regarding the person who will become the
1-13 owner of the security on the death of the owner.
1-14 (2) "Person" includes a corporation, organization,
1-15 government or governmental subdivision or agency, business trust,
1-16 estate, trust, partnership, association, and any other legal
1-17 entity.
1-18 (3) "Register," including its derivatives, means to
1-19 issue a certificate showing the ownership of a certificated
1-20 security or, in the case of an uncertificated security, to initiate
1-21 or transfer an account showing ownership of securities.
1-22 (4) "Registering entity" means a person who originates
1-23 or transfers a security title by registration, and includes a
1-24 broker maintaining security accounts for customers and a transfer
2-1 agent or other person acting for or as an issuer of securities.
2-2 (5) "Security" means a share, participation, or other
2-3 interest in property, in a business, or in an obligation of an
2-4 enterprise or other issuer, and includes a certificated security,
2-5 an uncertificated security, and a security account.
2-6 (6) "Security account" means:
2-7 (A) a reinvestment account associated with a
2-8 security, a securities account with a broker, a cash balance in a
2-9 brokerage account, cash, interest, earnings, or dividends earned or
2-10 declared on a security in an account, a reinvestment account, or a
2-11 brokerage account, whether or not credited to the account before
2-12 the owner's death; or
2-13 (B) a cash balance or other property held for or
2-14 due to the owner of a security as a replacement for or product of
2-15 an account security, whether or not credited to the account before
2-16 the owner's death.
2-17 (7) "State," when referring to a part of the United
2-18 States, includes any state, district, commonwealth, territory, and
2-19 insular possession of the United States and any area subject to the
2-20 legislative authority of the United States of America.
2-21 Sec. 470. REGISTRATION IN BENEFICIARY FORM; SOLE OR JOINT
2-22 TENANCY OWNERSHIP. Only an individual whose registration of a
2-23 security shows sole ownership by one individual or multiple
2-24 ownership by two or more with right of survivorship, rather than as
2-25 tenants in common, may obtain registration in beneficiary form.
2-26 Multiple owners of a security registered in beneficiary form hold
2-27 as joint tenants with right of survivorship, as tenants by the
3-1 entireties, or as owners of community property held in survivorship
3-2 form, and not as tenants in common.
3-3 Sec. 471. REGISTRATION IN BENEFICIARY FORM; APPLICABLE LAW.
3-4 A security may be registered in beneficiary form if the form is
3-5 authorized by this part or a similar statute of the state of
3-6 organization of the issuer or registering entity, the location of
3-7 the registering entity's principal office, the office of its
3-8 transfer agent, or its office making the registration, or by this
3-9 uniform act or a similar statute of the law of the state listed as
3-10 the owner's address at the time of registration. A registration
3-11 governed by the law of a jurisdiction in which this uniform act or
3-12 similar legislation is not in force or was not in force when a
3-13 registration in beneficiary form was made is nevertheless presumed
3-14 to be valid and authorized as a matter of contract law.
3-15 Sec. 472. ORIGINATION OF REGISTRATION IN BENEFICIARY FORM.
3-16 A security, whether evidenced by certificate or account, is
3-17 registered in beneficiary form if the registration includes a
3-18 designation of a beneficiary to take the ownership at the death of
3-19 the owner or the deaths of all multiple owners.
3-20 Sec. 473. FORM OF REGISTRATION IN BENEFICIARY FORM.
3-21 Registration in beneficiary form may be shown by the words
3-22 "transfer on death" or the abbreviation "TOD" or by the words "pay
3-23 on death" or the abbreviation "POD," after the name of the
3-24 registered owner and before the name of a beneficiary.
3-25 Sec. 474. EFFECT OF REGISTRATION IN BENEFICIARY FORM. The
3-26 designation of a TOD beneficiary on a registration in beneficiary
3-27 form does not affect ownership until the owner's death. A
4-1 registration of a security in beneficiary form may be canceled or
4-2 changed at any time by the sole owner or all then surviving owners,
4-3 without the consent of the beneficiary.
4-4 Sec. 475. OWNERSHIP ON DEATH OF OWNER. On death of a sole
4-5 owner or the last to die of multiple owners, ownership of a
4-6 security registered in beneficiary form passes to the beneficiary
4-7 or beneficiaries who survive all owners. On proof of death of all
4-8 owners and compliance with any applicable requirements of the
4-9 registering entity, a security registered in beneficiary form may
4-10 be reregistered in the name of the beneficiary or beneficiaries who
4-11 survive the death of all owners. Until division of the security
4-12 after the death of all owners, multiple beneficiaries surviving the
4-13 death of all owners hold their interests as tenants in common. If
4-14 no beneficiary survives the death of all owners, the security
4-15 belongs to the estate of the deceased sole owner or the estate of
4-16 the last to die of multiple owners.
4-17 Sec. 476. PROTECTION OF REGISTERING ENTITY. (a) A
4-18 registering entity is not required to offer or to accept a request
4-19 for security registration in beneficiary form. If a registration
4-20 in beneficiary form is offered by a registering entity, the owner
4-21 requesting registration in beneficiary form assents to the
4-22 protections given to the registering entity by this part.
4-23 (b) By accepting a request for registration of a security in
4-24 beneficiary form, the registering entity agrees that the
4-25 registration will be implemented on the death of the deceased owner
4-26 as provided by this part.
4-27 (c) A registering entity is discharged from all claims to a
5-1 security by the estate, creditors, heirs, or devisees of the
5-2 deceased owner if it registers a transfer of a security in
5-3 accordance with Section 475 of this code and does so in good faith
5-4 reliance on the registration, on this part, and on information
5-5 provided to it by affidavit of the personal representative of the
5-6 deceased owner, or by the surviving beneficiary or by the surviving
5-7 beneficiary's representatives, or other information available to
5-8 the registering entity. The protections of this part do not extend
5-9 to a reregistration or payment made after a registering entity has
5-10 received written notice from a claimant to an interest in the
5-11 security objecting to implementation of a registration in
5-12 beneficiary form. No other notice or other information available
5-13 to the registering entity affects its right to protection under
5-14 this part.
5-15 (d) The protection provided by this part to the registering
5-16 entity of a security does not affect the rights of beneficiaries in
5-17 disputes between themselves and other claimants to ownership of the
5-18 security transferred or its value or proceeds.
5-19 Sec. 477. NONTESTAMENTARY TRANSFER ON DEATH. (a) A
5-20 transfer on death resulting from a registration in beneficiary form
5-21 is effective by reason of the contract regarding the registration
5-22 between the owner and the registering entity and this part and is
5-23 not testamentary.
5-24 (b) This part does not limit the rights of creditors of
5-25 security owners against beneficiaries and other transferees under
5-26 other laws of this state.
5-27 Sec. 478. TERMS, CONDITIONS, AND FORMS FOR REGISTRATION.
6-1 (a) A registering entity offering to accept registrations in
6-2 beneficiary form may establish the terms and conditions under which
6-3 it will receive requests for registration in beneficiary form and
6-4 for implementation of registrations in beneficiary form, including
6-5 requests for cancellation of previously registered TOD beneficiary
6-6 designations and requests for reregistration to effect a change of
6-7 beneficiary. The terms and conditions may provide for proving
6-8 death, avoiding or resolving a problem concerning fractional
6-9 shares, designating primary and contingent beneficiaries, and
6-10 substituting a named beneficiary's descendants to take in the place
6-11 of the named beneficiary in the event of the beneficiary's death.
6-12 Substitution may be indicated by appending to the name of the
6-13 primary beneficiary the letters "LDPS," standing for "lineal
6-14 descendants per stirpes." This designation substitutes a deceased
6-15 beneficiary's descendants who survive the owner for a beneficiary
6-16 who fails to survive the owner, the descendants to be identified
6-17 and to share in accordance with the law of the beneficiary's
6-18 domicile at the owner's death governing inheritance by descendants
6-19 of an intestate. Other forms of identifying beneficiaries who are
6-20 to take on one or more contingencies and rules for providing proofs
6-21 and assurances needed to satisfy reasonable concerns by registering
6-22 entities regarding conditions and identities relevant to accurate
6-23 implementation of registrations in beneficiary form may be
6-24 contained in a registering entity's terms and conditions.
6-25 (b) The following are illustrations of registrations in
6-26 beneficiary form that a registering entity may authorize:
6-27 (1) Sole owner--sole beneficiary: John S Brown TOD
7-1 (or POD) John S Brown Jr.
7-2 (2) Multiple owners--sole beneficiary: John S Brown
7-3 Mary B Brown JT TEN TOD John S Brown Jr.
7-4 (3) Multiple owners--primary and secondary
7-5 (substituted) beneficiaries: John S Brown Mary B Brown, JT TEN TOD
7-6 John S Brown Jr SUB BENE Peter Q Brown or John S Brown Mary B Brown
7-7 JT TEN TOD John S Brown Jr LDPS.
7-8 Sec. 479. SHORT TITLE: RULES OF CONSTRUCTION. (a) This
7-9 part may be cited as the Uniform Transfer on Death Security
7-10 Registration Act.
7-11 (b) This part shall be liberally construed and applied to
7-12 promote its underlying purposes and policy and to make uniform the
7-13 laws with respect to the subject of this part among states enacting
7-14 it.
7-15 (c) Unless displaced by the particular provisions of this
7-16 part, the principles of law and equity supplement its provisions.
7-17 Sec. 480. APPLICATION OF ACT. This part applies to
7-18 registrations of securities in beneficiary form made before, on, or
7-19 after September 1, 1995, by decedents dying on or after September
7-20 1, 1995.
7-21 SECTION 2. This Act takes effect September 1, 1995.
7-22 SECTION 3. The importance of this legislation and the
7-23 crowded condition of the calendars in both houses create an
7-24 emergency and an imperative public necessity that the
7-25 constitutional rule requiring bills to be read on three several
7-26 days in each house be suspended, and this rule is hereby suspended.