BILL ANALYSIS Ó
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.
AB 1779
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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
AB 1779
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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