PMWJ S.B. 504 75(R) BILL ANALYSIS
JUDICIAL AFFAIRS
S.B. 504
By: Harris (Thompson)
3-26-97
Committee Report (Amended)
BACKGROUND
The Uniform Transfer on Death Security Registration Act was drafted by
the National Conference of Commissioners on Uniform State Laws in 1989.
More than twenty states give the holders of investment securities power to
transfer title to a beneficiary of these securities on adequate evidence
of the owner's death. This procedure allows such a transfer to a
specified party without the problems of joint ownership or the expense of
probate administration, supervision or hearings.
PURPOSE
The purpose of this bill is to provide a mechanism to transfer securities
on the death of the owner or owners by registration in beneficiary form.
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. SECTION 1 amends Chapter XI, Texas Probate Code, by adding
Part 4 as follows:
PART 4. UNIFORM TRANSFER ON DEATH SECURITY REGISTRATION ACT
Sec. 466. Definitions for the purposes of this chapter: Beneficiary
Form, Person, Register, Registering Entity, Security, Security Account,
and State.
Sec. 467. Registration in Beneficiary Form; Sole or Joint Tenancy
Ownership. This section 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. It establishes a
presumption that multiple owners of a security registered in beneficiary
form 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. 468. Registration in Beneficiary Form; Applicable Law. This
section 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. It 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. 469. Origination of Registration in Beneficiary Form. This
section 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. 470. Form of Registration in Beneficiary Form. Sec. 470 provides
that registration in beneficiary form 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. 471. Effect of Registration in Beneficiary Form. Sec. 471 provides
that the designation of a transfer on death beneficiary does not affect
the ownership until the owner's death. Registration of a security in
beneficiary form may be changed or cancelled at any time without the
beneficiary's consent.
Sec. 472. Ownership on Death of Owner. This section provides that, on
the death of the sole owner or the last multiple owner, 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 beneficiary or beneficiaries who survive all owners.
It further provides that, until the division of the security, multiple
beneficiaries hold their interest as tenants in common. If no
beneficiaries survive the death of all owners, the security belongs to the
estate of the deceased sole owner or the estate of the last to die of the
multiple owners.
Sec. 473. 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. It 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. It 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 in the security
objecting to implementation of the registration. No other notice or other
information available to the registering entity affects its right to
protection under this part.
(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. 474. 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. 475. Rights of Creditor on Registration.
Subsec. (a) provides that a security registered in beneficiary form does
not preclude the decedent's estate from recovering sums necessary to cover
amounts owed by the estate.
Subsec. (b) provides that a party, POD or TOD payee, or beneficiary is
liable to the decedent's estate for sums necessary to cover amounts owed
by the estate and remaining unpaid after application of the estate's
assets, not to exceed the amount the party, payee, or beneficiary
received.
Subsec. (c) provides that a proceeding to assert the liability provided
by Subsec. (b) cannot be commenced unless the personal representative has
received a written demand from a spouse, creditor or guardian of a child
of the decedent. Proceedings to assert the liability provided by Subsec.
(b) cannot be commenced more than two years after the death of the
decedent. Sums recovered are administered as part of the estate.
Subsec. (d) provides that this section does not prevent payment or
transfer of a security registered in beneficiary form unless the personal
representative notifies the appropriate party in writing.
Sec. 476. 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. 477. Notice of Effect of Registration. This section provides that
a registering entity shall provide the owner requesting a registration
notice of the legal effect of the registration and sets forth an example
of presumptively sufficient notice.
Sec. 478. Effect of Certain Security Account on Community Property.
This section provides that a security account does not affect community
property rights.
Sec. 479. Short Title: Rules of Construction.
Subsec. (a). Short title: 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.
EXPLANATION OF AMENDMENTS
Committee Amendment No. 1 replaces new Sec. 477 of the Probate Code in
Section 1 of the bill to require the notice of rights to be printed in
capital letters in 12 point, boldface type. The amendment also added a
heading to the notice and requires the registering owner to sign the
notice.