BILL NUMBER: AB 873 CHAPTERED
BILL TEXT
CHAPTER 417
FILED WITH SECRETARY OF STATE OCTOBER 2, 2001
APPROVED BY GOVERNOR OCTOBER 1, 2001
PASSED THE ASSEMBLY SEPTEMBER 4, 2001
PASSED THE SENATE AUGUST 30, 2001
AMENDED IN SENATE AUGUST 28, 2001
AMENDED IN SENATE JULY 9, 2001
AMENDED IN ASSEMBLY MAY 10, 2001
AMENDED IN ASSEMBLY APRIL 17, 2001
AMENDED IN ASSEMBLY MARCH 28, 2001
INTRODUCED BY Assembly Member Harman
FEBRUARY 22, 2001
An act to amend Sections 2024 and 2040 of the Family Code, to
amend Sections 1300, 1301, 1303, 5003, 5302, and 21111 of, to add
Section 856.5 to, 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, 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 no longer the transferor's surviving spouse, due to
annulment or dissolution of marriage, except where the transfer is
not subject to revocation at time of death, or where there is clear
and convincing evidence that the transferor intended to preserve the
transfer to the former spouse. This bill would except provisions in
life insurance policies from the definition of specified property
transfers subject to the provisions described above. The 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, due to annulment or dissolution of
marriage, except as specified.
The 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.
The bill would additionally 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. The
bill would permit a court to award damages and fees when a notice of
a person claiming an interest in certain property is determined to
have been filed in bad faith. The bill would delete the definition
of spouse from the California Statutory Will. The bill would also
make related and conforming changes. The 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.
Chapter 49 of the Statutes of 2001, operative January 1, 2002,
revised, recast, and consolidated provisions regarding the
determination of claims brought to determine ownership of real or
personal property claimed by an estate, a ward or conservatee, or a
trustee, as specified.
This bill would require a court, acting under those provisions, to
deny a petition, if the court determines that the matter should be
determined by a civil action. This bill would also make related
technical changes.
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.
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:
"Dissolution or annulment of your marriage may automatically
cancel your spouse's rights under your will, trust, retirement
benefit plan, power of attorney, pay on death bank account, transfer
on death vehicle registration, survivorship rights to any property
owned in joint tenancy, and any other similar thing. It does not
automatically cancel your spouse's rights as beneficiary of your life
insurance policy. If these are not the results that you want, you
must change your will, trust, account agreement, or other similar
document to reflect your actual wishes.
Dissolution or annulment of your marriage may also automatically
cancel your rights under your spouse's will, trust, retirement
benefit plan, power of attorney, pay on death bank account, transfer
on death vehicle registration, and survivorship rights to any
property owned in joint tenancy, and any other similar thing. It
does not automatically cancel your rights as beneficiary of your
spouse's life insurance policy.
You should review these matters, as well as any credit cards,
other credit accounts, insurance policies, retirement benefit plans,
and credit reports to determine whether they should be changed or
whether you should take any other actions 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)."
(b) A judgment for dissolution of marriage, for nullity of
marriage, or for legal separation of the parties shall contain the
following notice:
"Dissolution or annulment of your marriage may automatically
cancel your spouse's rights under your will, trust, retirement
benefit plan, power of attorney, pay on death bank account, transfer
on death vehicle registration, survivorship rights to any property
owned in joint tenancy, and any other similar thing. It does not
automatically cancel your spouse's rights as beneficiary of your life
insurance policy. If these are not the results that you want, you
must change your will, trust, account agreement, or other similar
document to reflect your actual wishes.
Dissolution or annulment of your marriage may also automatically
cancel your rights under your spouse's will, trust, retirement
benefit plan, power of attorney, pay on death bank account, transfer
on death vehicle registration, survivorship rights to any property
owned in joint tenancy, and any other similar thing. It does not
automatically cancel your rights as beneficiary of your spouse's life
insurance policy.
You should review these matters, as well as any credit cards,
other credit accounts, insurance policies, retirement benefit plans,
and credit reports to determine whether they should be changed or
whether you should take any other actions in view of the dissolution
or annulment of your marriage, or your legal separation."
SEC. 2. Section 2040 of the Family Code is amended to read:
2040. (a) In addition to the contents required by Section 412.20
of the Code of Civil Procedure, the summons shall contain a temporary
restraining order:
(1) Restraining both parties from removing the minor child or
children of the parties, if any, from the state without the prior
written consent of the other party or an order of the court.
(2) Restraining both parties from transferring, encumbering,
hypothecating, concealing, or in any way disposing of any property,
real or personal, whether community, quasi-community, or separate,
without the written consent of the other party or an order of the
court, except in the usual course of business or for the necessities
of life, and requiring each party to notify the other party of any
proposed extraordinary expenditures at least five business days
before incurring those expenditures and to account to the court for
all extraordinary expenditures made after service of the summons on
that party.
Notwithstanding the foregoing, nothing in the restraining order
shall preclude a party from using community property, quasi-community
property, or the party's own separate property to pay reasonable
attorney's fees and costs in order to retain legal counsel in the
proceeding. A party who uses community property or quasi-community
property to pay his or her attorney's retainer for fees and costs
under this provision shall account to the community for the use of
the property. A party who uses other property that is subsequently
determined to be the separate property of the other party to pay his
or her attorney's retainer for fees and costs under this provision
shall account to the other party for the use of the property.
(3) Restraining both parties from cashing, borrowing against,
canceling, transferring, disposing of, or changing the beneficiaries
of any insurance or other coverage, including life, health,
automobile, and disability, held for the benefit of the parties and
their child or children for whom support may be ordered.
(4) Restraining both parties from creating a nonprobate transfer
or modifying a nonprobate transfer in a manner that affects the
disposition of property subject to the transfer, without the written
consent of the other party or an order of the court.
(b) Nothing in this section restrains any of the following:
(1) Creation, modification, or revocation of a will.
(2) Revocation of a nonprobate transfer, including a revocable
trust, pursuant to the instrument, provided that notice of the change
is filed and served on the other party before the change takes
effect.
(3) Elimination of a right of survivorship to property, provided
that notice of the change is filed and served on the other party
before the change takes effect.
(4) Creation of an unfunded revocable or irrevocable trust.
(5) Execution and filing of a disclaimer pursuant to Part 8
(commencing with Section 260) of Division 2 of the Probate Code.
(c) In all actions filed on and after January 1, 1995, the summons
shall contain the following notice:
"WARNING: California law provides that, for purposes of division
of property upon dissolution of marriage or legal separation,
property acquired by the parties during marriage in joint form is
presumed to be community property. If either party to this action
should die before the jointly held community property is divided, the
language of how title is held in the deed (i.e., joint tenancy,
tenants in common, or community property) will be controlling and not
the community property presumption. You should consult your
attorney if you want the community property presumption to be written
into the recorded title to the property."
(d) For the purposes of this section:
(1) "Nonprobate transfer" means an instrument, other than a will,
that makes a transfer of property on death, including a revocable
trust, pay on death account in a financial institution, Totten trust,
transfer on death registration of personal property, or other
instrument of a type described in Section 5000 of the Probate Code.
(2) "Nonprobate transfer" does not include a provision for the
transfer of property on death in an insurance policy or other
coverage held for the benefit of the parties and their child or
children for whom support may be ordered, to the extent that the
provision is subject to paragraph (3) of subdivision (a).
(e) The restraining order included in the summons shall include
descriptions of the notices required by paragraphs (2) and (3) of
subdivision (b).
SEC. 3. Section 856.5 is added to the Probate Code, to read:
856.5. The court may not grant a petition under this chapter if
the court determines that the matter should be determined by a civil
action.
SEC. 4. Section 1300 of the Probate Code is amended to read:
1300. In all proceedings governed by this code, an appeal may be
taken from the making of, or the refusal to make, any of the
following orders:
(a) Directing, authorizing, approving, or confirming the sale,
lease, encumbrance, grant of an option, purchase, conveyance, or
exchange of property.
(b) Settling an account of a fiduciary.
(c) Authorizing, instructing, or directing a fiduciary, or
approving or confirming the acts of a fiduciary.
(d) Directing or allowing payment of a debt, claim, or cost.
(e) Fixing, authorizing, allowing, or directing payment of
compensation or expenses of an attorney.
(f) Fixing, directing, authorizing, or allowing payment of the
compensation or expenses of a fiduciary.
(g) Surcharging, removing, or discharging a fiduciary.
(h) Transferring the property of the estate to a fiduciary in
another jurisdiction.
(i) Allowing or denying a petition of the fiduciary to resign.
(j) Discharging a surety on the bond of a fiduciary.
(k) Adjudicating the merits of a claim made under Part 19
(commencing with Section 850) of Division 2.
SEC. 5. Section 1301 of the Probate Code is amended to read:
1301. With respect to guardianships, conservatorships, and other
protective proceedings, the grant or refusal to grant the following
orders is appealable:
(a) Granting or revoking of letters of guardianship or
conservatorship, except letters of temporary guardianship or
temporary conservatorship.
(b) Granting permission to the guardian or conservator to fix the
residence of the ward or conservatee at a place not within this
state.
(c) Directing, authorizing, approving, or modifying payments,
whether for support, maintenance, or education of the ward or
conservatee or for a person legally entitled to support, maintenance,
or education from the ward or conservatee.
(d) Granting or denying a petition under Section 2423 or under
Article 10 (commencing with Section 2580) of Chapter 6 of Part 4 of
Division 4.
(e) Affecting the legal capacity of the conservatee pursuant to
Chapter 4 (commencing with Section 1870) of Part 3 of Division 4.
(f) Adjudicating the merits of a claim under Article 5 (commencing
with Section 2500) of Chapter 6 of Part 4 of Division 4.
(g) Granting or denying a petition under Chapter 3 (commencing
with Section 3100) of Part 6 of Division 4.
SEC. 6. Section 1303 of the Probate Code is amended to read:
1303. With respect to a decedent's estate, the grant or refusal
to grant the following orders is appealable:
(a) Granting or revoking letters to a personal representative,
except letters of special administration or letters of special
administration with general powers.
(b) Admitting a will to probate or revoking the probate of a will.
(c) Setting aside a small estate under Section 6609.
(d) Setting apart a probate homestead or property claimed to be
exempt from enforcement of a money judgment.
(e) Granting, modifying, or terminating a family allowance.
(f) Determining heirship, succession, entitlement, or the persons
to whom distribution should be made.
(g) Directing distribution of property.
(h) Determining that property passes to, or confirming that
property belongs to, the surviving spouse under Section 13656.
(i) Authorizing a personal representative to invest or reinvest
surplus money under Section 9732.
(j) Determining whether an action constitutes a contest under
Chapter 2 (commencing with Section 21320) of Part 3 of Division 11.
(k) Determining the priority of debts under Chapter 3 (commencing
with Section 11440) of Part 9 of Division 7.
SEC. 7. 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. 8. Section 5302 of the Probate Code is amended to read:
5302. 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. 9. 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, as a result
of the dissolution or annulment of the marriage. A judgment of legal
separation that does not terminate the status of husband and wife is
not a dissolution for purposes of this section.
(b) Subdivision (a) does not cause a nonprobate transfer to fail
in any 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.
(3) A court order that the nonprobate transfer be maintained on
behalf of the former spouse is in effect at the time of the
transferor's death.
(c) 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, other than a provision of a life insurance policy, 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, as a result of
the dissolution or annulment of the marriage. A judgment of legal
separation that does not terminate the status of husband and wife is
not a dissolution for purposes of this section.
(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.
(d) For purposes of this section, property held in "joint tenancy"
includes property held as community property with right of
survivorship, as described in Section 682.1 of the Civil Code.
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. Nothing in this part is intended to limit the court's
authority to order a party to a dissolution or annulment of marriage
to maintain the former spouse as a beneficiary on any nonprobate
transfer described in this part, or to preserve a joint tenancy in
favor of the former spouse.
5604. (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. 10. Section 6202 of the Probate Code is repealed.
SEC. 11. 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 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. 12. 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.