BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 495|
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                              UNFINISHED BUSINESS


          Bill No:  SB 495
          Author:   Fuller (R)
          Amended:  8/18/11
          Vote:     21

           
           SENATE JUDICIARY COMMITTEE  :  5-0, 5/3/11
          AYES:  Evans, Harman, Blakeslee, Corbett, Leno

           SENATE APPROPRIATIONS COMMITTEE  :  9-0, 5/26/11
          AYES:  Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley, 
            Price, Runner, Steinberg

           SENATE FLOOR :  39-0, 6/2/11
          AYES:  Alquist, Anderson, Berryhill, Blakeslee, Calderon, 
            Cannella, Corbett, Correa, De León, DeSaulnier, Dutton, 
            Emmerson, Evans, Fuller, Gaines, Hancock, Harman, 
            Hernandez, Huff, Kehoe, La Malfa, Leno, Lieu, Liu, 
            Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio, 
            Simitian, Steinberg, Strickland, Vargas, Walters, Wolk, 
            Wright, Wyland, Yee
          NO VOTE RECORDED:  Runner

           ASSEMBLY FLOOR  :  71-3, 8/25/11 - See last page for vote


           SUBJECT  :    Unclaimed property

           SOURCE  :     California State Controller


           DIGEST  :    This bill makes several changes to the Unclaimed 
          Property Law (UPL) to increase the period of time the State 
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          Controller (Controller) must hold property that has been 
          delivered to the state under the UPL.  Specifically, this 
          bill (1) extends the period of time that property of no 
          commercial value must be held by the Controller from 18 
          months to seven years; (2) specifies additional 
          circumstances under which certain funds in retirement 
          accounts and plans become due and payable and exempts 
          tangible or intangible property from escheating to the 
          state if the fiduciary and owner of the property have taken 
          specified actions regarding the property; and (3) makes 
          other technical and clarifying amendments, including 
          property holder reporting requirements to specify that the 
          person holding the property only need report property 
          subject to escheat.

           Assembly Amendments  delete provisions affecting Code of 
          Civil Procedure (CCP) Section 1514 relative to (1) 
          increasing the holding period of property in a safe deposit 
          box and (2) provision relative to notice time frame.

           ANALYSIS  :    Existing law, the UPL, provides that funds 
          held by a business association in an individual retirement 
          account or under a retirement plan for self-employed 
          individuals or similar account or plan established pursuant 
          to the internal revenue laws of the United States or of 
          this state escheat to the state when the owner, for more 
          than three years after the funds become payable or 
          distributable, has not done any of the following:  (1) 
          increased or decreased the principal; (2) accepted payment 
          of principal or income; or (3) corresponded electronically 
          or in writing concerning the property or otherwise 
          indicated an interest. (CCP Section 1513(a)(6).)  Existing 
          law provides that the above funds are not considered 
          payable or distributable unless, under the terms of the 
          account or plan, distribution of all or part of the funds 
          would then be mandatory. (CCP Section 1513(a)(6))

          Existing law provides that all tangible and intangible 
          personal property located in this state, as specified, and 
          the income on that property, held in a fiduciary capacity 
          for the benefit of another person escheats to the state if 
          after it becomes payable or distributable, the owner has 
          not, within a period of three years, increased or decreased 
          the principal, accepted payment of principal or income, 

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          corresponded in writing regarding the property, or 
          otherwise indicated an interest.  (CCP Section 1518.)  
          Existing law provides that funds in an individual 
          retirement account or retirement plan for self-employed 
          individuals or similar account are not considered payable 
          or distributable unless under the terms of the account or 
          plan, distribution of all or part of the funds would then 
          be mandatory.  (CCP Section 1518(b))

          This bill, instead, provides that the funds are not 
          considered payable or distributable unless:  (1) under the 
          terms of the account or plan, distribution of all or a part 
          of the funds would then be mandatory; or (2) for an account 
          or plan that is not subject to a mandatory distribution 
          requirement under the internal revenue laws of the United 
          States or laws of this state, the owner has attained the 
          age of 70 and one-half years of age.

          Existing law requires the Controller to retain delivered 
          unclaimed property that has no apparent commercial value 
          for a period no less than 18 months.  Property may 
          thereafter be destroyed or otherwise disposed of, and no 
          action against the Controller or the holder of the property 
          may be brought or maintained.  (CCP Section 1565) 

          This bill extends the Controller's holding period for 
          property that has no apparent commercial value from not 
          less than 18 months to not less than seven years. 

          This bill makes other technical, clarifying changes.

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

          According to the Senate Appropriations Committee:

                         Fiscal Impact (in thousands)

           Major Provisions       2011-12     2012-13    2013-14     Fund  

          Extended escheat period                           
          $1,200General

          Holding items of no value                         

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          $152General

          Compliance program staff     $261       $528      
          $528General

           Compliance program revenues             ($5,021)  
          ($11,7110)           General
           NET costs/(revenues)         $261       ($4,493)  
          (9,831)General
          
           SUPPORT  :   (Verified  8/25/11)

          California State Controller (source)

           ARGUMENTS IN SUPPORT  :    According to the author, "SB 495 
          is intended to further address the problems and concerns of 
          the state's unclaimed property program by ensuring that as 
          much personal property as possible never escheats to the 
          state while helping to return property that has escheated 
          to its rightful owners."


           ASSEMBLY FLOOR  :  71-3, 8/25/11
          AYES:  Achadjian, Alejo, Ammiano, Atkins, Beall, Bill 
            Berryhill, Block, Blumenfield, Bradford, Brownley, 
            Buchanan, Butler, Charles Calderon, Carter, Cedillo, 
            Chesbro, Conway, Cook, Davis, Dickinson, Donnelly, Eng, 
            Feuer, Fletcher, Fong, Fuentes, Furutani, Beth Gaines, 
            Galgiani, Garrick, Gordon, Grove, Hagman, Halderman, 
            Hall, Harkey, Hayashi, Roger Hernández, Hill, Huber, 
            Huffman, Jeffries, Jones, Knight, Lara, Logue, Bonnie 
            Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell, 
            Monning, Morrell, Nestande, Nielsen, Olsen, Pan, Perea, 
            V. Manuel Pérez, Portantino, Silva, Skinner, Smyth, 
            Solorio, Swanson, Valadao, Wagner, Wieckowski, Yamada, 
            John A. Pérez
          NOES:  Allen, Gatto, Norby
          NO VOTE RECORDED:  Bonilla, Campos, Gorell, Hueso, Torres, 
            Williams


          RJG:kc  8/26/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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