BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1779


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          Date of Hearing:  May 18, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          1779 (Gatto) - As Amended May 4, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill requires the California Law Revision Commission (CLRC)  
          to expand an existing study-regarding an evaluation of the  
          state's revocable transfer on death deed (RTDD)-to also examine  
          whether it is feasible and appropriate to expand the RTDD to  
          include:


          1)The transfer of stock cooperatives or other common interest  
            developments.


          2)Transfers to a trust or other legal entity.








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          FISCAL EFFECT:


          Minor absorbable costs for the CLRC to expand its study. (The  
          commission's annual budget is almost $900,000, and includes  
          funding for five staff positions.)


          COMMENTS:


          1)Background. Follow several unsuccessful legislative attempts  
            over the last 10 years, AB 139 (Gatto), Chapter 293, Statutes  
            of 2015, finally established a five-year pilot program  
            allowing owners of real property, until January 1, 2021, to  
            transfer their property upon death, outside the normal probate  
            procedure, through a written instrument known as a "revocable  
            transfer upon death deed." 


            Due to concerns about the potential for the RTDD to create  
            confusion, impact Medi-Cal reimbursement and, most  
            importantly, create new opportunities for fraud and elder  
            abuse, the bill was limited to transfers of only certain small  
            amounts of property and was limited in terms of the  
            beneficiaries and how they take the property, in order to keep  
            the program as uncomplicated as possible and help those who  
            are likely house-rich, but otherwise have no need for estate  
            planning. In addition, the CLRC was charged with studying the  
            impact of the RTDD and reporting its findings and  
            recommendations to the Legislature by January 1, 2020.


          2)Purpose. This bill adds two issues to the CLRC's study. First,  
            to consider whether RTDDs should be expanded to include  
            transfers of stock cooperatives or other common interest  
            development property.  Such properties may not be owned as  








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            real property, but may in fact be owned in some other fashion,  
            such as stock in the housing cooperative. Second, whether  
            RTDDs should include transfers to a trust or other legal  
            entity. Currently, an RTDD may be used to transfer property to  
            a beneficiary, defined as a person named in a RTDD as the  
            transferor of the property. However, the Probate Code more  
            generally defines person as "an individual, corporation,  
            government or governmental subdivision or agency, business  
            trust, estate, trust, partnership, limited liability company,  
            association, or other entity."  It is therefore arguable that  
            the existing pilot RTDD already permits transfer of property  
            to trusts or other legal entities. This bill ensures that  
            whether it is indeed appropriate to be so inclusive is fully  
            studied.


          Analysis Prepared by:Chuck Nicol / APPR. / (916)  
          319-2081