BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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          |SENATE RULES COMMITTEE            |                  AB 1784|
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                                    CONSENT


          Bill No:  AB 1784
          Author:   Harman (R)
          Amended:  4/30/02 in Assembly
          Vote:     21

           
           SENATE JUDICIARY COMMITTEE  :  6-0, 6/18/02
          AYES:  Escutia, Ackerman, Haynes, Kuehl, O'Connell, Sher

          ASSEMBLY FLOOR  : 72-0, 5/16/02 (Passed on Consent) - See  
            last page for vote


           SUBJECT  :    Wills, trusts and estate planning instruments:   
          rules of 
                      construction

           SOURCE  :     California Law Revision Commission


           DIGEST  :    This bill adjusts the rules of construction  
          applicable to wills, trusts and other estate planning  
          instruments as recommended by the California Law Revision  
          Commission.

           ANALYSIS  :    Existing law provides specific rules of  
          construction to be used by the courts as aids to  
          interpretation where the instrument being construed is  
          silent or ambiguous.  These rules apply to wills, trusts,  
          deeds, and any other instrument.  [Probate Code Sections  
          21101 et seq. All references hereafter are to the Probate  
          Code, unless indicated otherwise.]

          This bill would modify the existing rules of construction  
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          as follows:

          1. Clarify that extrinsic evidence may be used to determine  
             the intention of a transferor. [Sec. 21102.]

          2. Substitute the term "at-death transfer " for  
             "testamentary gift" in the rules of construction, and  
             define "at-death transfer" as a transfer that is  
             revocable during the lifetime of the transferor, and  
             would specifically exclude joint tenancy as a form of  
             at-death transfer entitled to special treatment  under  
             the rules.

          3. Delete all references to "beneficiary" in the rules,  
             substituting instead the term "transfer," which has been  
             used interchangeably with "beneficiary" to refer to the  
             donee of a donative transfer.

          4. Repeal several provisions that are duplicative of those  
             found in other codes and that are therefore unnecessary  
             (e.g., delete Section 21106, which is a less complete  
             statement than its equivalent in Civil Code Section 686,  
             and delete Civil Code Section 1073, which is duplicative  
             of Section 21108), and repeal provisions that are  
             inconsistent, based on flawed presumptions, or no longer  
             serve a useful purpose.  Other provisions would be  
             eliminated because they are redundant or they would be  
             consolidated into other relevant provisions.

          5. Limit the application of a clause that requires the  
             beneficiary to survive a donor to gifts that remain  
             revocable during the life of the donor. [Sec. 21109(a).]

          6. Directly state that a provision in an instrument  
             requiring the transferee to survive the transferor  
             constitutes an intention of the transferor that the  
             antilapse statute not apply. [Sec. 21110(b).]

          7. Clarify that absent operation of an antilapse statute, a  
             failed gift passes in the transferor's estate, and that  
             in case of an intestacy, the applicable intestate  
             distribution is determined according to the general  
             class gift rules.  Accordingly, the bill also would  
             clarify that a gift of "my estate" is to be treated as a  







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             residuary gift. [Sec. 21114.]

          8. Recast the provisions governing determination of  
             beneficiaries entitled to take under a class gift in  
             conformance with the Uniform Probate Code. [Sec. 21114.]

          9. Conform the rules relating to intestacy that interpret  
             class gifts to "heirs" and to "issues" so that the  
             determination is made under the intestate succession  
             laws in effect at the time the transfer is to take  
             effect in enjoyment. [Secs. 21114 and 21115.]

          10.Establish an applicable standard for determining the  
             value of property selected to satisfy a pecuniary gift,  
             drawn from regulations of the U.S. Treasury. [Sec.  
             21118.]

          11.Conform California law to provisions of the Uniform  
             Probate Code governing gifts of securities that have  
             changed in form (by merger, sale, reinvestment, etc.),  
             and limit their application to at-death transfers  
             generally. [Sec. 21132.]

          12.Conform existing rules for construing the donor's intent  
             where the donor has made a specific gift of property but  
             the property is no longer part of the donor's estate to  
             the revised Uniform Probate Code provisions and address  
             a gap concerning ademption by satisfaction, where an  
             inter vivos gift of property to the beneficiary named in  
             the instrument is a satisfaction of that specific gift.  
             [Secs. 21133-21135.]

          13.Make other technical changes and conforming revisions.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  6/20/02)

          California Law Revision Commission (source)
          Judicial Council
          California Judges Association

           ARGUMENTS IN SUPPORT  :    According to the CLRC, all of the  







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          existing rules of construction are based on previously  
          existing Probate Code provisions applicable to wills.  "The  
          basic idea of the 1994 extension to trusts and other  
          instruments was to achieve uniformity among the common  
          estate planning instruments."

          More problematic than the simple extension of the rules to  
          trusts and other instruments, is the extension of the same  
          rules to other forms of donative transfers, such as inter  
          vivos gifts, deeds, joint tenancy, and insurance policies,  
          the sponsor states.  Because the Uniform Probate Code has  
          been updated since the last revisions to the California  
          rules of construction, the CLRC recommends that relevant  
          provisions be paralleled in California. 

           ASSEMBLY FLOOR  :
          AYES:  Aanestad, Alquist, Aroner, Ashburn, Bogh, Briggs,  
            Calderon, Bill Campbell, Canciamilla, Cardoza, Chan,  
            Chavez, Chu, Cogdill, Cohn, Corbett, Correa, Cox,  
            Daucher, Diaz, Dickerson, Dutra, Firebaugh, Florez,  
            Frommer, Goldberg, Hertzberg, Hollingsworth, Horton,  
            Jackson, Keeley, Kehoe, Kelley, Koretz, La Suer, Leach,  
            Leonard, Leslie, Liu, Longville, Maddox, Maldonado,  
            Matthews, Migden, Mountjoy, Nakano, Nation, Negrete  
            McLeod, Oropeza, Robert Pacheco, Rod Pacheco, Papan,  
            Pavley, Pescetti, Reyes, Richman, Runner, Salinas,  
            Shelley, Simitian, Steinberg, Strickland, Strom-Martin,  
            Thomson, Vargas, Wayne, Wiggins, Wright, Wyland, Wyman,  
            Zettel, Wesson


          RJG:jk  6/20/02   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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