BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1575|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 1575
Author: Sher (D)
Amended: 6/28/02
Vote: 21
SENATE JUDICIARY COMMITTEE : 4-2, 4/2/02
AYES: Escutia, Kuehl, Peace, Sher
NOES: Ackerman, Haynes
SENATE FLOOR : 23-10, 4/15/02
AYES: Alarcon, Alpert, Bowen, Burton, Chesbro, Costa,
Dunn, Escutia, Figueroa, Karnette, Kuehl, Machado,
McPherson, O'Connell, Ortiz, Perata, Polanco, Romero,
Scott, Sher, Soto, Speier, Torlakson
NOES: Ackerman, Battin, Haynes, Johnson, Knight, Margett,
McClintock, Morrow, Oller, Poochigian
ASSEMBLY FLOOR : 41-31, 8/19/02 - See last page for vote
SUBJECT : Wills and trusts: prohibited transferees:
exceptions
SOURCE : Estate Planning, Trust and Probate Section of
the State Bar
DIGEST : This bill makes some clarifying changes to the
rule that voids transfers made through an instrument or
will to specified persons who are disqualified due to a
fiduciary relationship with the transferor. The bill adds
a cohabitant of the transferor to those exempt from the
rule, as well as exempt transfers of up to $3,000 and
CONTINUED
SB 1575
Page
2
transfers made by a nonresident through an instrument
signed outside the State, as specified.
Assembly Amendments recast a provision dealing with an
attorney conducting an independent review to define the
term "cohabitant."
ANALYSIS : Existing law voids any provision or provisions
in any instrument that makes a donative transfer to the
following persons:
1. The person who drafted the instrument, or his or her
relative by blood or marriage, cohabitant, or employee.
2. Any partner or shareholder of a law firm or
corporation in which the person who drafted the
instrument holds an interest, or an employee of that
law firm or law corporation.
3. Any person who is in a fiduciary relationship with the
transferor, such as conservator or trustee, who
transcribes the instrument or causes the instrument to
be transcribed, or that person's relative or
cohabitant.
4. A care custodian of a dependent adult, as defined.
Existing law exempts from the prohibited transferee rule,
transfers made under the following circumstances:
1. If the transferor is related by blood or marriage (as
defined) to the person who drafted the instrument.
2. If the instrument was reviewed by an independent
attorney who counsels the transferor about the nature
of the intended transfer and who signs and delivers to
the transferor and to the drafter a certificate of
independent review stating his or her conclusion that
the transfer was not the product of fraud, duress,
menace, or undue influence.
3. If the court approves the instrument and orders the
transfer after full disclosure of the relationships of
the persons involved.
SB 1575
Page
3
4. As to specified instruments, if the court determines,
upon clear and convincing evidence, excluding the
testimony of the prohibited transferee, that the
transfer was not the product of fraud, menace, duress
or undue influence. (If it was, disqualified person is
required to pay all costs of the proceeding, including
attorney's fees.)
5. If the transferee is a federal, state, or local
entity, a tax-exempt 501(c)(3) or 501(c)(19) entity or
a trust holding an interest in the tax-exempt entity or
its trustee.
This bill:
1. Adds to the list of persons exempted from the
prohibited transferee rule, a cohabitant with the
transferee.
2. Exempts transfers of up to $3,000 from the rule, as
well as transfers made by a nonresident through an
instrument signed outside the State. The bill
specifies this does not apply if the total value of the
property in the estate of the transferor does not
exceed the amount prescribed in Section 13100 of the
Probate Code, which puts forth guidelines that exclude
property that does not exceed $200,000, and if 40 days
have elapsed since the death of the decendant.
3. Requires the attorney conducting the independent
review to determine whether fraud, duress, menace or
undue influence was involved in the transfer provides
an original certificate to each of the transferors and
the drafter of the instrument.
Existing law provides that the above shall apply only
to: a) any instrument other than one making a transfer
to a person related by blood or marriage, or b) any
instrument executed on or before July 1, 1993, by a
person who was a resident of the State at the time the
instrument was executed.
The transferor is related by blood or marriage to, is a
SB 1575
Page
4
cohabitant with, or is the registered domestic partner,
pursuant to Division 2.5 (commencing with Section 297)
of the Family Code, of the transferee or the person who
drafted the instrument. For purposes of this section,
"cohabitant" has the meaning set forth in Section 13700
of the Penal Code. This subdivision shall
retroactively apply to an instrument that becomes
irrevocable on or after July 1, 1993.
4. Clarifies that the attorney conducting the independent
review shall not be considered to otherwise represent
the client.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/20/02)
Estate Planning, Trust and Probate Section of the State Bar
OPPOSITION : (Verified 8/20/02)
Campaign for California Families
ARGUMENTS IN SUPPORT : The bill is needed, the sponsor
says, to update the prohibited transferee rule, clarify its
provisions, and make it more effective in its operation.
ARGUMENTS IN OPPOSITION : Campaign for California
Families opposes SB 1575. They state, "This bill
undermines the vote of the people awarding more rights of
marriage to homosexual 'domestic partners'. When
Californians overwhelmingly passed Proposition 22, the
Protection of Marriage Initiative, they wanted to protect
all the rights and benefits of marriage for only a man and
a woman. This bill cheapens marriage and undermines the
will of the people."
ASSEMBLY FLOOR :
AYES: Alquist, Aroner, Canciamilla, Cardenas, Cedillo,
Chan, Chavez, Chu, Cohn, Corbett, Diaz, Dutra, Firebaugh,
Goldberg, Hertzberg, Jackson, Keeley, Kehoe, Liu,
Longville, Lowenthal, Migden, Nakano, Nation, Negrete
McLeod, Oropeza, Papan, Pavley, Reyes, Salinas, Shelley,
SB 1575
Page
5
Simitian, Steinberg, Strom-Martin, Thomson, Vargas,
Washington, Wayne, Wiggins, Wright, Wesson
NOES: Aanestad, Ashburn, Bates, Bogh, Briggs, Bill
Campbell, John Campbell, Cogdill, Cox, Daucher,
Dickerson, Florez, Harman, Hollingsworth, Kelley, La
Suer, Leach, Leonard, Leslie, Maddox, Maldonado,
Mountjoy, Robert Pacheco, Rod Pacheco, Pescetti, Richman,
Runner, Strickland, Wyland, Wyman, Zettel
RJG:kb 8/20/02 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****