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