BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 495| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED SB 495 Page 2 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, CONTINUED SB 495 Page 3 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 CONTINUED SB 495 Page 4 $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 CONTINUED SB 495 Page 5 **** END **** CONTINUED