AN ACT
1-1 relating to the adoption of the Uniform Transfer on Death Security
1-2 Registration Act.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Chapter XI, Texas Probate Code, is amended by
1-5 adding Part 4 to read as follows:
1-6 PART 4. UNIFORM TRANSFER ON DEATH SECURITY
1-7 REGISTRATION ACT
1-8 Sec. 466. DEFINITIONS. In this part:
1-9 (1) "Beneficiary form" means a registration of a
1-10 security that indicates the present owner of the security and the
1-11 intention of the owner regarding the person who will become the
1-12 owner of the security on the death of the owner.
1-13 (2) "Person" includes a corporation, organization,
1-14 government or governmental subdivision or agency, business trust,
1-15 estate, trust, partnership, association, and any other legal
1-16 entity.
1-17 (3) "Register," including its derivatives, means to
1-18 issue a certificate showing the ownership of a certificated
1-19 security or, in the case of an uncertificated security, to initiate
1-20 or transfer an account showing ownership of securities.
1-21 (4) "Registering entity" means a person who originates
1-22 or transfers a security title by registration and includes a broker
1-23 maintaining security accounts for customers and a transfer agent or
2-1 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, an
2-5 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. 467. 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.
3-1 Multiple owners of a security registered in beneficiary form hold
3-2 as joint tenants with right of survivorship, as tenants by the
3-3 entireties, or as owners of community property held in survivorship
3-4 form, and not as tenants in common.
3-5 Sec. 468. REGISTRATION IN BENEFICIARY FORM; APPLICABLE LAW.
3-6 A security may be registered in beneficiary form if the form is
3-7 authorized by this part or a similar statute of the state of
3-8 organization of the issuer or registering entity, the location of
3-9 the registering entity's principal office, the office of its
3-10 transfer agent, or its office making the registration, or by this
3-11 uniform act or a similar statute of the law of the state listed as
3-12 the owner's address at the time of registration. A registration
3-13 governed by the law of a jurisdiction in which this uniform act or
3-14 similar legislation is not in force or was not in force when a
3-15 registration in beneficiary form was made is nevertheless presumed
3-16 to be valid and authorized as a matter of contract law.
3-17 Sec. 469. ORIGINATION OF REGISTRATION IN BENEFICIARY FORM.
3-18 A security, whether evidenced by certificate or account, is
3-19 registered in beneficiary form if the registration includes a
3-20 designation of a beneficiary to take the ownership at the death of
3-21 the owner or the deaths of all multiple owners.
3-22 Sec. 470. FORM OF REGISTRATION IN BENEFICIARY FORM.
3-23 Registration in beneficiary form may be shown by the words
3-24 "transfer on death" or the abbreviation "TOD" or by the words "pay
3-25 on death" or the abbreviation "POD," after the name of the
4-1 registered owner and before the name of a beneficiary.
4-2 Sec. 471. EFFECT OF REGISTRATION IN BENEFICIARY FORM. The
4-3 designation of a TOD beneficiary on a registration in beneficiary
4-4 form does not affect ownership until the owner's death. A
4-5 registration of a security in beneficiary form may be canceled or
4-6 changed at any time by the sole owner or all then surviving owners,
4-7 without the consent of the beneficiary.
4-8 Sec. 472. OWNERSHIP ON DEATH OF OWNER. On death of a sole
4-9 owner or the last to die of multiple owners, ownership of a
4-10 security registered in beneficiary form passes to the beneficiary
4-11 or beneficiaries who survive all owners. On proof of death of all
4-12 owners and compliance with any applicable requirements of the
4-13 registering entity, a security registered in beneficiary form may
4-14 be reregistered in the name of the beneficiary or beneficiaries who
4-15 survive the death of all owners. Until division of the security
4-16 after the death of all owners, multiple beneficiaries surviving the
4-17 death of all owners hold their interests as tenants in common. If
4-18 no beneficiary survives the death of all owners, the security
4-19 belongs to the estate of the deceased sole owner or the estate of
4-20 the last to die of multiple owners.
4-21 Sec. 473. PROTECTION OF REGISTERING ENTITY. (a) A
4-22 registering entity is not required to offer or to accept a request
4-23 for security registration in beneficiary form. If a registration
4-24 in beneficiary form is offered by a registering entity, the owner
4-25 requesting registration in beneficiary form assents to the
5-1 protections given to the registering entity by this part.
5-2 (b) By accepting a request for registration of a security in
5-3 beneficiary form, the registering entity agrees that the
5-4 registration will be implemented on the death of the deceased owner
5-5 as provided by this part.
5-6 (c) A registering entity is discharged from all claims to a
5-7 security by the estate, creditors, heirs, or devisees of the
5-8 deceased owner if it registers a transfer of a security in
5-9 accordance with Section 472 of this code and does so in good faith
5-10 reliance on the registration, on this part, and on information
5-11 provided to it by affidavit of the personal representative of the
5-12 deceased owner, or by the surviving beneficiary or by the surviving
5-13 beneficiary's representatives, or other information available to
5-14 the registering entity. The protections of this part do not extend
5-15 to a reregistration or payment made after a registering entity has
5-16 received written notice from a claimant to an interest in the
5-17 security objecting to implementation of a registration in
5-18 beneficiary form. No other notice or other information available
5-19 to the registering entity affects its right to protection under
5-20 this part.
5-21 (d) The protection provided by this part to the registering
5-22 entity of a security does not affect the rights of beneficiaries in
5-23 disputes between themselves and other claimants to ownership of the
5-24 security transferred or its value or proceeds.
5-25 Sec. 474. NONTESTAMENTARY TRANSFER ON DEATH. (a) A
6-1 transfer on death resulting from a registration in beneficiary form
6-2 is effective by reason of the contract regarding the registration
6-3 between the owner and the registering entity and this part and is
6-4 not testamentary.
6-5 (b) This part does not limit the rights of creditors of
6-6 security owners against beneficiaries and other transferees under
6-7 other laws of this state.
6-8 Sec. 475. RIGHTS OF CREDITOR ON REGISTRATION. (a) A
6-9 security registered in beneficiary form is not effective against an
6-10 estate of a deceased party to transfer to a survivor sums that are
6-11 otherwise needed to pay debts, taxes, and expenses of
6-12 administration, including statutory allowances to the surviving
6-13 spouse and minor children, if other assets of the estate are
6-14 insufficient.
6-15 (b) A party, POD or TOD payee, or beneficiary who receives a
6-16 payment from or transfer of a security registered in beneficiary
6-17 form after the death of a deceased party is liable to account to
6-18 the deceased party's personal representative for amounts the
6-19 decedent owned beneficially immediately before the decedent's death
6-20 to the extent necessary to discharge the claims and charges
6-21 described by Subsection (a) of this section remaining unpaid after
6-22 application of the decedent's estate, but is not liable in an
6-23 amount greater than the amount that the party, POD or TOD payee, or
6-24 beneficiary received from the security.
6-25 (c) A proceeding to assert the liability provided by
7-1 Subsection (b) of this section may not be commenced unless the
7-2 personal representative has received a written demand by a
7-3 surviving spouse, a creditor, or one acting for a minor child of
7-4 the decedent, and a proceeding may not be commenced later than two
7-5 years after the date of the death of the decedent. Sums recovered
7-6 by the personal representative under this section shall be
7-7 administered as part of the decedent's estate.
7-8 (d) This section does not affect the right of a financial
7-9 institution, a securities issuer, or a securities broker to make a
7-10 payment from or transfer of a security registered in beneficiary
7-11 form according to the terms of the security or impose liability on
7-12 the institution, issuer, or broker to the estate of a deceased
7-13 party unless before the payment or transfer the institution,
7-14 issuer, or broker received written notice from the personal
7-15 representative stating the sums needed to pay debts, taxes, and
7-16 expenses of administration.
7-17 Sec. 476. TERMS, CONDITIONS, AND FORMS FOR REGISTRATION.
7-18 (a) A registering entity offering to accept registrations in
7-19 beneficiary form may establish the terms and conditions under which
7-20 it will receive requests for registration in beneficiary form and
7-21 for implementation of registrations in beneficiary form, including
7-22 requests for cancellation of previously registered TOD beneficiary
7-23 designations and requests for reregistration to effect a change of
7-24 beneficiary. The terms and conditions may provide for proving
7-25 death, avoiding or resolving a problem concerning fractional
8-1 shares, designating primary and contingent beneficiaries, and
8-2 substituting a named beneficiary's descendants to take in the place
8-3 of the named beneficiary in the event of the beneficiary's death.
8-4 Substitution may be indicated by appending to the name of the
8-5 primary beneficiary the letters "LDPS," standing for "lineal
8-6 descendants per stirpes." This designation substitutes a deceased
8-7 beneficiary's descendants who survive the owner for a beneficiary
8-8 who fails to survive the owner, the descendants to be identified
8-9 and to share in accordance with the law of the beneficiary's
8-10 domicile at the owner's death governing inheritance by descendants
8-11 of an intestate. Other forms of identifying beneficiaries who are
8-12 to take on one or more contingencies and rules for providing proofs
8-13 and assurances needed to satisfy reasonable concerns by registering
8-14 entities regarding conditions and identities relevant to accurate
8-15 implementation of registrations in beneficiary form may be
8-16 contained in a registering entity's terms and conditions.
8-17 (b) The following are illustrations of registrations in
8-18 beneficiary form that a registering entity may authorize:
8-19 (1) Sole owner--sole beneficiary: John S Brown TOD
8-20 (or POD) John S Brown Jr.
8-21 (2) Multiple owners--sole beneficiary: John S Brown
8-22 Mary B Brown JT TEN TOD John S Brown Jr.
8-23 (3) Multiple owners--primary and secondary
8-24 (substituted) beneficiaries: John S Brown Mary B Brown, JT TEN TOD
8-25 John S Brown Jr SUB BENE Peter Q Brown or John S Brown Mary B Brown
9-1 JT TEN TOD John S Brown Jr LDPS.
9-2 Sec. 477. NOTICE OF EFFECT OF REGISTRATION. A registering
9-3 entity shall provide to an owner requesting registration of a
9-4 security in beneficiary form a written statement describing the
9-5 legal effects of the registration not later than the date on which
9-6 the owner registers the security. The statement shall be printed
9-7 in all capital 12-point boldfaced type and shall be signed by the
9-8 registering owner at the time of registration. The following
9-9 statement is sufficient if signed by the registering owner:
9-10 "IMPORTANT NOTICE REGARDING YOUR RIGHTS
9-11 "ON PROOF OF DEATH, YOUR SECURITY IN BENEFICIARY FORM WILL BE
9-12 TRANSFERRED TO YOUR NAMED BENEFICIARY OR BENEFICIARIES WITHOUT
9-13 BEING PART OF YOUR ESTATE UNDER YOUR WILL OR BY INTESTACY. YOU
9-14 SHOULD MAKE SURE BEFORE YOU REGISTER YOUR SECURITY IN BENEFICIARY
9-15 FORM THAT THE REGISTRATION DOES NOT CONFLICT WITH ANY OTHER
9-16 PROVISION IN A DOCUMENT THAT YOU HAVE AUTHORIZED AND SIGNED,
9-17 INCLUDING A WILL OR TRUST AGREEMENT. IF YOU HAVE ANY DOUBT ABOUT
9-18 WHETHER A CONFLICT EXISTS, YOU SHOULD SEEK THE ADVICE OF A
9-19 PROFESSIONAL IN THE FIELD OF ESTATE PLANNING. YOU SHOULD ALSO NOTE
9-20 THAT REGISTERING YOUR SECURITY IN BENEFICIARY FORM MAY NOT AFFECT A
9-21 CREDITOR'S CLAIM AGAINST YOUR ESTATE OR AFFECT THE ESTATE OR
9-22 INHERITANCE TAX LIABILITY OF YOUR ESTATE OR OF YOUR BENEFICIARY OR
9-23 BENEFICIARIES.
9-24 "I HAVE READ THE ABOVE NOTICE AND UNDERSTAND ITS CONTENTS.
9-25 _________________________________(signature of registering owner)"
10-1 Sec. 478. EFFECT OF CERTAIN SECURITY ACCOUNT ON COMMUNITY
10-2 PROPERTY INTEREST. A security account created with community
10-3 property funds is subject to Section 15, Article XVI, Texas
10-4 Constitution, and does not alter community property rights in any
10-5 form or manner, regardless of whether the security account has been
10-6 registered in beneficiary form.
10-7 Sec. 479. SHORT TITLE: RULES OF CONSTRUCTION. (a) This
10-8 part may be cited as the Uniform Transfer on Death Security
10-9 Registration Act.
10-10 (b) This part shall be liberally construed and applied to
10-11 promote its underlying purposes and policy and to make uniform the
10-12 laws with respect to the subject of this part among states enacting
10-13 it.
10-14 (c) Unless displaced by the particular provisions of this
10-15 part, the principles of law and equity supplement its provisions.
10-16 Sec. 480. APPLICATION OF ACT. This part applies to
10-17 registrations of securities in beneficiary form made before, on, or
10-18 after September 1, 1997, by decedents dying on or after September
10-19 1, 1997.
10-20 SECTION 2. This Act takes effect September 1, 1997.
10-21 SECTION 3. The importance of this legislation and the
10-22 crowded condition of the calendars in both houses create an
10-23 emergency and an imperative public necessity that the
10-24 constitutional rule requiring bills to be read on three several
10-25 days in each house be suspended, and this rule is hereby suspended.
S.B. No. 504
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 504 passed the Senate on
March 13, 1997, by the following vote: Yeas 31, Nays 0; and that
the Senate concurred in House amendment on April 8, 1997, by a
viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 504 passed the House, with
amendment, on April 3, 1997, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor