BILL NUMBER: AB 873 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Harman
FEBRUARY 22, 2001
An act to amend Section 2024 of the Family Code, to amend Sections
5003, 5302, and 21111 of, to add Part 4 (commencing with Section
5600) to Division 5 of, and to repeal Section 6202 of, the Probate
Code, relating to nonprobate transfers.
LEGISLATIVE COUNSEL'S DIGEST
AB 873, as introduced, Harman. Nonprobate transfers: former
spouses.
Existing law provides for the transfer of property upon death by
various means, including wills, trusts, joint tenancies, insurance
policies, and retirement death benefits, among others. Existing law
permits a trustee with a power of appointment to distribute property
to beneficiaries according to the terms of the trust. Existing law
permits the structuring of certain financial accounts so that they
will be payable to one person upon the death of another. Existing
law permits vehicles to be owned in joint tenancy and, upon death of
one of the parties, that ownership may pass to another joint tenant.
Existing law provides that dissolution of a marriage revokes a
bequest of property made in a will to a former spouse, and revokes a
beneficiary designation to a former spouse under the Public Employees'
Retirement System, as specified. Existing law provides that
dissolution of marriage prohibits a former spouse from receiving the
spouse's share under intestate succession.
This bill would provide that specified property transfers to a
transferor's spouse upon death would fail if, at the time of death,
that person is longer the transferor's surviving spouse, as defined,
except where the transfer is not subject to revocation at time of
death, or where there is clear and convincing evidence that the
transfers intended to preserve the transfer to the former spouse.
This bill would provide that a joint tenancy created between a
decedent and the decedent's former spouse is severed if it was
created before or during marriage and, at the time of death, the
former spouse is not the decedent's surviving spouse, except as
specified. This bill would also provide for the property rights of a
person who subsequently purchases or encumbrances property in good
faith, and would provide that a specified affidavit or declaration in
this regard may be recorded. By increasing the duties of local
officials processing these documents, this bill would create a
state-mandated local program. This bill would provide that holders
of certain property may transfer the property in accordance with
provisions of specified instruments despite possible inconsistencies
with the rights of a person named as a beneficiary except as
specified. This bill would permit a court to award damages and fees
when a notice of a person claiming an interest certain property is
determined to have been filed in bad faith. This bill would delete
the definition of spouse from the California Statutory Will. This
bill would also make related changes. This bill would be operative
on January 1, 2002, but would provide that specified provisions do
not apply if the decedent making the nonprobate transfer or creating
the joint tenancy dies, or if the dissolution of a marriage
terminating the status of a beneficiary occurs, before that date.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement, including the creation of a State Mandates Claims Fund
to pay the costs of mandates that do not exceed $1,000,000 statewide
and other procedures for claims whose statewide costs exceed
$1,000,000.
This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 2024 of the Family Code is amended to read:
2024. (a) A petition for dissolution of marriage, nullity of
marriage, or legal separation of the parties, or a joint petition for
summary dissolution of marriage, shall contain the following notice:
"Please review your will, insurance policies, retirement
benefit plans, credit cards, other credit accounts and credit
reports, and other matters that you may want to change
"Dissolution or annulment of your marriage may automatically affect
the rights of your former spouse regarding such things as your will,
life insurance proceeds, trust benefits, retirement death benefits,
power of attorney designation, pay on death bank accounts, transfer
on death vehicle registration, and joint tenancy survivorship. You
should review these matters, as well as any credit cards, other
credit accounts, and credit reports to determine whether they should
be changed or reaffirmed in view of the dissolution or
annulment of your marriage, or your legal separation. However, some
changes may require the agreement of your spouse or a court order
(see Part 3 (commencing with Section 231) of Division 2 of the Family
Code). Dissolution or annulment of your marriage may
automatically change a disposition made by your will to your former
spouse." Code)."
(b) A judgment for dissolution of marriage, for nullity of
marriage, or for legal separation of the parties shall contain the
following notice:
"Please review your will, insurance policies, retirement
benefit plans, credit cards, other credit accounts and credit
reports, and other matters that you may want to change
"Dissolution or annulment of your marriage may automatically affect
the rights of your former spouse regarding such things as your will,
life insurance proceeds, trust benefits, retirement death benefits,
power of attorney designation, pay on death bank accounts, transfer
on death vehicle registration, and joint tenancy survivorship. You
should review these matters, as well as any credit cards, other
credit accounts, and credit reports to determine whether they should
be changed or reaffirmed in view of the dissolution or
annulment of your marriage, or your legal separation.
Dissolution or annulment of your marriage may automatically change a
disposition made by your will to your former spouse."
separation."
SEC. 2. Section 5003 of the Probate Code is amended to read:
5003. (a) A holder of property under an instrument of a type
described in Section 5000 may transfer the property in compliance
with a provision for a nonprobate transfer on death that satisfies
the terms of the instrument, whether or not the transfer is
consistent with the beneficial ownership of the property as between
the person who executed the provision for transfer of the property
and other persons having an interest in the property or their
successors , and whether or not the transfer is consistent with
the rights of the person named as beneficiary .
(b) Except as provided in this subdivision, no notice or other
information shown to have been available to the holder of the
property affects the right of the holder to the protection provided
by subdivision (a). The protection provided by subdivision (a) does
not extend to a transfer made after either of the following events:
(1) The holder of the property has been served with a contrary
court order.
(2) The holder of the property has been served with a written
notice of a person claiming an adverse interest in the property.
However, this paragraph does not apply to a pension plan to the
extent the transfer is a periodic payment pursuant to the plan.
(c) The protection provided by this section does not affect the
rights of the person who executed the provision for transfer of the
property and other persons having an interest in the property or
their successors in disputes among themselves concerning the
beneficial ownership of the property.
(d) The protection provided by this section is not exclusive of
any protection provided the holder of the property by any other
provision of law.
(e) A person shall not serve notice under paragraph (2) of
subdivision (b) in bad faith. If the court in an action or
proceeding relating to the rights of the parties determines that a
person has served notice under paragraph (2) of subdivision (b) in
bad faith, the court shall award against the person the cost of the
action or proceeding, including a reasonable attorney's fee, and the
damages caused by the service.
SEC. 3. Section 5302 of the Probate Code is amended to read:
5302. (a) Subject to Section 5600:
(a) Sums remaining on deposit at the death of a party to a
joint account belong to the surviving party or parties as against the
estate of the decedent unless there is clear and convincing evidence
of a different intent. If there are two or more surviving parties,
their respective ownerships during lifetime are in proportion to
their previous ownership interests under Section 5301 augmented by an
equal share for each survivor of any interest the decedent may have
owned in the account immediately before the decedent's death; and the
right of survivorship continues between the surviving parties.
(b) If the account is a P.O.D. account:
(1) On death of one of two or more parties, the rights to any sums
remaining on deposit are governed by subdivision (a).
(2) On death of the sole party or of the survivor of two or more
parties, (A) any sums remaining on deposit belong to the P.O.D. payee
or payees if surviving, or to the survivor of them if one or more
die before the party, (B) if two or more P.O.D. payees survive, any
sums remaining on deposit belong to them in equal and undivided
shares unless the terms of the account or deposit agreement expressly
provide for different shares, and (C) if two or more P.O.D. payees
survive, there is no right of survivorship in the event of death of a
P.O.D. payee thereafter unless the terms of the account or deposit
agreement expressly provide for survivorship between them.
(c) If the account is a Totten trust account:
(1) On death of one of two or more trustees, the rights to any
sums remaining on deposit are governed by subdivision (a).
(2) On death of the sole trustee or the survivor of two or more
trustees, (A) any sums remaining on deposit belong to the person or
persons named as beneficiaries, if surviving, or to the survivor of
them if one or more die before the trustee, unless there is clear and
convincing evidence of a different intent, (B) if two or more
beneficiaries survive, any sums remaining on deposit belong to them
in equal and undivided shares unless the terms of the account or
deposit agreement expressly provide for different shares, and (C) if
two or more beneficiaries survive, there is no right of survivorship
in event of death of any beneficiary thereafter unless the terms of
the account or deposit agreement expressly provide for survivorship
between them.
(d) In other cases, the death of any party to a multiple-party
account has no effect on beneficial ownership of the account other
than to transfer the rights of the decedent as part of the decedent's
estate.
(e) A right of survivorship arising from the express terms of the
account or under this section, a beneficiary designation in a Totten
trust account, or a P.O.D. payee designation, cannot be changed by
will.
SEC. 4. Part 4 (commencing with Section 5600) is added to Division
5 of the Probate Code, to read:
PART 4. NONPROBATE TRANSFER TO FORMER SPOUSE
5600. (a) Except as provided in subdivision (b), a nonprobate
transfer to the transferor's former spouse, in an instrument executed
by the transferor before or during the marriage, fails if, at the
time of the transferor's death, the former spouse is not the
transferor's surviving spouse as defined in Section 78.
(b) Subdivision (a) does not cause a nonprobate transfer to fail
in either of the following cases:
(1) The nonprobate transfer is not subject to revocation by the
transferor at the time of the transferor's death.
(2) There is clear and convincing evidence that the transferor
intended to preserve the nonprobate transfer to the former spouse.
(e) Where a nonprobate transfer fails by operation of this
section, the instrument making the nonprobate transfer shall be
treated as it would if the former spouse failed to survive the
transferor.
(d) Nothing in this section affects the rights of a subsequent
purchaser or encumbrancer for value in good faith who relies on the
apparent failure of a nonprobate transfer under this section or who
lacks knowledge of the failure of a nonprobate transfer under this
section.
(e) As used in this section, "nonprobate transfer" means a
provision of either of the following types:
(1) A provision of a type described in Section 5000.
(2) A provision in an instrument that operates on death, other
than a will, conferring a power of appointment or naming a trustee.
5601. (a) Except as provided in subdivision (b), a joint tenancy
between the decedent and the decedent's former spouse, created before
or during the marriage, is severed as to the decedent's interest if,
at the time of the decedent's death, the former spouse is not the
decedent's surviving spouse as defined in Section 78.
(b) Subdivision (a) does not sever a joint tenancy in either of
the following cases:
(1) The joint tenancy is not subject to severance by the decedent
at the time of the decedent's death.
(2) There is clear and convincing evidence that the decedent
intended to preserve the joint tenancy in favor of the former spouse.
(c) Nothing in this section affects the rights of a subsequent
purchaser or encumbrancer for value in good faith who relies on an
apparent severance under this section or who lacks knowledge of a
severance under this section.
5602. (a) Nothing in this part affects the rights of a purchaser
or encumbrancer of real property for value who in good faith relies
on an affidavit or a declaration under penalty of perjury under the
laws of this state that states all of the following:
(1) The name of the decedent.
(2) The date and place of the decedent's death.
(3) A description of the real property transferred to the affiant
or declarant by an instrument making a nonprobate transfer or by
operation of joint tenancy survivorship.
(4) Either of the following, as appropriate:
(A) The affiant or declarant is the surviving spouse of the
decedent.
(B) The affiant or declarant is not the surviving spouse of the
decedent, but the rights of the affiant or declarant to the described
property are not affected by Section 5600 or 5601.
(b) A person relying on an affidavit or declaration made pursuant
to subdivision (a) has no duty to inquire into the truth of the
matters stated in the affidavit or declaration.
(c) An affidavit or declaration made pursuant to subdivision (a)
may be recorded.
5603. (a) This part is operative on January 1, 2002.
(b) Except as provided in subdivision (c), this part applies to an
instrument making a nonprobate transfer or creating a joint tenancy
whether executed before, on, or after the operative date of this
part.
(c) Sections 5600 and 5601 do not apply, and the applicable law in
effect before the operative date of this part applies, to an
instrument making a nonprobate transfer or creating a joint tenancy
in either of the following circumstances:
(1) The person making the nonprobate transfer or creating the
joint tenancy dies before the operative date of this part.
(2) The dissolution of marriage or other event that terminates the
status of the nonprobate transfer beneficiary or joint tenant as a
surviving spouse occurs before the operative date of this part.
SEC. 5. Section 6202 of the Probate Code is repealed.
6202. "Spouse" means the testator's husband or wife at the time
the testator signs a California statutory will.
SEC. 6. Section 21111 of the Probate Code is amended to read:
21111. Except as provided in Section 21110:
(a) If a transfer, other than a residuary gift or a transfer of a
future interest, fails for any reason, the property
transferred becomes a part of the residue transferred under the
instrument. is transferred as follows:
(1) If the transferring instrument provides for an alternative
disposition in the event the transfer fails, the property is
transferred according to the terms of the instrument.
(2) If the transferring instrument does not provide for an
alternative disposition but does provide for the transfer of a
residue, the property becomes a part of the residue transferred under
the instrument.
(3) If the transferring instrument does not provide for an
alternative disposition and does not provide for the transfer of a
residue, the property is transferred to the decedent's estate.
(b) If a residuary gift or a future interest is transferred to two
or more persons and the share of a transferee fails for any reason,
the share passes to the other transferees in proportion to their
other interest in the residuary gift or the future interest.
SEC. 7. Notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
costs mandated by the state, reimbursement to local agencies and
school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code. If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.