1-1 By: Thompson (Senate Sponsor - Montford) H.B. No. 422
1-2 (In the Senate - Received from the House May 15, 1995;
1-3 May 16, 1995, read first time and referred to Committee on
1-4 Jurisprudence; May 25, 1995, reported favorably by the following
1-5 vote: Yeas 4, Nays 0; May 25, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the adoption of the Uniform Transfer On Death Security
1-9 Registration Act.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Chapter XI, Texas Probate Code, is amended by
1-12 adding Part 4 to read as follows:
1-13 PART 4. UNIFORM TRANSFER ON DEATH SECURITY
1-14 REGISTRATION ACT
1-15 Sec. 469. DEFINITIONS. In this part:
1-16 (1) "Beneficiary form" means a registration of a
1-17 security that indicates the present owner of the security and the
1-18 intention of the owner regarding the person who will become the
1-19 owner of the security on the death of the owner.
1-20 (2) "Person" includes a corporation, organization,
1-21 government or governmental subdivision or agency, business trust,
1-22 estate, trust, partnership, association, and any other legal
1-23 entity.
1-24 (3) "Register," including its derivatives, means to
1-25 issue a certificate showing the ownership of a certificated
1-26 security or, in the case of an uncertificated security, to initiate
1-27 or transfer an account showing ownership of securities.
1-28 (4) "Registering entity" means a person who originates
1-29 or transfers a security title by registration, and includes a
1-30 broker maintaining security accounts for customers and a transfer
1-31 agent or other person acting for or as an issuer of securities.
1-32 (5) "Security" means a share, participation, or other
1-33 interest in property, in a business, or in an obligation of an
1-34 enterprise or other issuer, and includes a certificated security,
1-35 an uncertificated security, and a security account.
1-36 (6) "Security account" means:
1-37 (A) a reinvestment account associated with a
1-38 security, a securities account with a broker, a cash balance in a
1-39 brokerage account, cash, interest, earnings, or dividends earned or
1-40 declared on a security in an account, a reinvestment account, or a
1-41 brokerage account, whether or not credited to the account before
1-42 the owner's death; or
1-43 (B) a cash balance or other property held for or
1-44 due to the owner of a security as a replacement for or product of
1-45 an account security, whether or not credited to the account before
1-46 the owner's death.
1-47 (7) "State," when referring to a part of the United
1-48 States, includes any state, district, commonwealth, territory, and
1-49 insular possession of the United States and any area subject to the
1-50 legislative authority of the United States of America.
1-51 Sec. 470. REGISTRATION IN BENEFICIARY FORM; SOLE OR JOINT
1-52 TENANCY OWNERSHIP. Only an individual whose registration of a
1-53 security shows sole ownership by one individual or multiple
1-54 ownership by two or more with right of survivorship, rather than as
1-55 tenants in common, may obtain registration in beneficiary form.
1-56 Multiple owners of a security registered in beneficiary form hold
1-57 as joint tenants with right of survivorship, as tenants by the
1-58 entireties, or as owners of community property held in survivorship
1-59 form, and not as tenants in common.
1-60 Sec. 471. REGISTRATION IN BENEFICIARY FORM; APPLICABLE LAW.
1-61 A security may be registered in beneficiary form if the form is
1-62 authorized by this part or a similar statute of the state of
1-63 organization of the issuer or registering entity, the location of
1-64 the registering entity's principal office, the office of its
1-65 transfer agent, or its office making the registration, or by this
1-66 uniform act or a similar statute of the law of the state listed as
1-67 the owner's address at the time of registration. A registration
1-68 governed by the law of a jurisdiction in which this uniform act or
2-1 similar legislation is not in force or was not in force when a
2-2 registration in beneficiary form was made is nevertheless presumed
2-3 to be valid and authorized as a matter of contract law.
2-4 Sec. 472. ORIGINATION OF REGISTRATION IN BENEFICIARY FORM.
2-5 A security, whether evidenced by certificate or account, is
2-6 registered in beneficiary form if the registration includes a
2-7 designation of a beneficiary to take the ownership at the death of
2-8 the owner or the deaths of all multiple owners.
2-9 Sec. 473. FORM OF REGISTRATION IN BENEFICIARY FORM.
2-10 Registration in beneficiary form may be shown by the words
2-11 "transfer on death" or the abbreviation "TOD" or by the words "pay
2-12 on death" or the abbreviation "POD," after the name of the
2-13 registered owner and before the name of a beneficiary.
2-14 Sec. 474. EFFECT OF REGISTRATION IN BENEFICIARY FORM. The
2-15 designation of a TOD beneficiary on a registration in beneficiary
2-16 form does not affect ownership until the owner's death. A
2-17 registration of a security in beneficiary form may be canceled or
2-18 changed at any time by the sole owner or all then surviving owners,
2-19 without the consent of the beneficiary.
2-20 Sec. 475. OWNERSHIP ON DEATH OF OWNER. On death of a sole
2-21 owner or the last to die of multiple owners, ownership of a
2-22 security registered in beneficiary form passes to the beneficiary
2-23 or beneficiaries who survive all owners. On proof of death of all
2-24 owners and compliance with any applicable requirements of the
2-25 registering entity, a security registered in beneficiary form may
2-26 be reregistered in the name of the beneficiary or beneficiaries who
2-27 survive the death of all owners. Until division of the security
2-28 after the death of all owners, multiple beneficiaries surviving the
2-29 death of all owners hold their interests as tenants in common. If
2-30 no beneficiary survives the death of all owners, the security
2-31 belongs to the estate of the deceased sole owner or the estate of
2-32 the last to die of multiple owners.
2-33 Sec. 476. PROTECTION OF REGISTERING ENTITY. (a) A
2-34 registering entity is not required to offer or to accept a request
2-35 for security registration in beneficiary form. If a registration
2-36 in beneficiary form is offered by a registering entity, the owner
2-37 requesting registration in beneficiary form assents to the
2-38 protections given to the registering entity by this part.
2-39 (b) By accepting a request for registration of a security in
2-40 beneficiary form, the registering entity agrees that the
2-41 registration will be implemented on the death of the deceased owner
2-42 as provided by this part.
2-43 (c) A registering entity is discharged from all claims to a
2-44 security by the estate, creditors, heirs, or devisees of the
2-45 deceased owner if it registers a transfer of a security in
2-46 accordance with Section 475 of this code and does so in good faith
2-47 reliance on the registration, on this part, and on information
2-48 provided to it by affidavit of the personal representative of the
2-49 deceased owner, or by the surviving beneficiary or by the surviving
2-50 beneficiary's representatives, or other information available to
2-51 the registering entity. The protections of this part do not extend
2-52 to a reregistration or payment made after a registering entity has
2-53 received written notice from a claimant to an interest in the
2-54 security objecting to implementation of a registration in
2-55 beneficiary form. No other notice or other information available
2-56 to the registering entity affects its right to protection under
2-57 this part.
2-58 (d) The protection provided by this part to the registering
2-59 entity of a security does not affect the rights of beneficiaries in
2-60 disputes between themselves and other claimants to ownership of the
2-61 security transferred or its value or proceeds.
2-62 Sec. 477. NONTESTAMENTARY TRANSFER ON DEATH. (a) A
2-63 transfer on death resulting from a registration in beneficiary form
2-64 is effective by reason of the contract regarding the registration
2-65 between the owner and the registering entity and this part and is
2-66 not testamentary.
2-67 (b) This part does not limit the rights of creditors of
2-68 security owners against beneficiaries and other transferees under
2-69 other laws of this state.
2-70 Sec. 478. TERMS, CONDITIONS, AND FORMS FOR REGISTRATION.
3-1 (a) A registering entity offering to accept registrations in
3-2 beneficiary form may establish the terms and conditions under which
3-3 it will receive requests for registration in beneficiary form and
3-4 for implementation of registrations in beneficiary form, including
3-5 requests for cancellation of previously registered TOD beneficiary
3-6 designations and requests for reregistration to effect a change of
3-7 beneficiary. The terms and conditions may provide for proving
3-8 death, avoiding or resolving a problem concerning fractional
3-9 shares, designating primary and contingent beneficiaries, and
3-10 substituting a named beneficiary's descendants to take in the place
3-11 of the named beneficiary in the event of the beneficiary's death.
3-12 Substitution may be indicated by appending to the name of the
3-13 primary beneficiary the letters "LDPS," standing for "lineal
3-14 descendants per stirpes." This designation substitutes a deceased
3-15 beneficiary's descendants who survive the owner for a beneficiary
3-16 who fails to survive the owner, the descendants to be identified
3-17 and to share in accordance with the law of the beneficiary's
3-18 domicile at the owner's death governing inheritance by descendants
3-19 of an intestate. Other forms of identifying beneficiaries who are
3-20 to take on one or more contingencies and rules for providing proofs
3-21 and assurances needed to satisfy reasonable concerns by registering
3-22 entities regarding conditions and identities relevant to accurate
3-23 implementation of registrations in beneficiary form may be
3-24 contained in a registering entity's terms and conditions.
3-25 (b) The following are illustrations of registrations in
3-26 beneficiary form that a registering entity may authorize:
3-27 (1) Sole owner--sole beneficiary: John S Brown TOD
3-28 (or POD) John S Brown Jr.
3-29 (2) Multiple owners--sole beneficiary: John S Brown
3-30 Mary B Brown JT TEN TOD John S Brown Jr.
3-31 (3) Multiple owners--primary and secondary
3-32 (substituted) beneficiaries: John S Brown Mary B Brown, JT TEN TOD
3-33 John S Brown Jr SUB BENE Peter Q Brown or John S Brown Mary B Brown
3-34 JT TEN TOD John S Brown Jr LDPS.
3-35 Sec. 479. SHORT TITLE: RULES OF CONSTRUCTION. (a) This
3-36 part may be cited as the Uniform Transfer on Death Security
3-37 Registration Act.
3-38 (b) This part shall be liberally construed and applied to
3-39 promote its underlying purposes and policy and to make uniform the
3-40 laws with respect to the subject of this part among states enacting
3-41 it.
3-42 (c) Unless displaced by the particular provisions of this
3-43 part, the principles of law and equity supplement its provisions.
3-44 Sec. 480. APPLICATION OF ACT. This part applies to
3-45 registrations of securities in beneficiary form made before, on, or
3-46 after September 1, 1995, by decedents dying on or after September
3-47 1, 1995.
3-48 SECTION 2. This Act takes effect September 1, 1995.
3-49 SECTION 3. The importance of this legislation and the
3-50 crowded condition of the calendars in both houses create an
3-51 emergency and an imperative public necessity that the
3-52 constitutional rule requiring bills to be read on three several
3-53 days in each house be suspended, and this rule is hereby suspended.
3-54 * * * * *