BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1784| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED AB 1784 Page 2 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 AB 1784 Page 3 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 AB 1784 Page 4 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 **** END ****