Pennsylvania Act 1996-168 — PROBATE ESTATES AND FIDUCIARIES CODE (20 PA.C.S.) - AMEND

Act text

PROBATE ESTATES AND FIDUCIARIES CODE (20 PA.C.S.) - AMEND
                 Act of Dec. 18, 1996, P.L. 1118, No. 168             Cl. 20
                             Session of 1996
                               No. 1996-168

     HB 299

                                  AN ACT

     Amending Title 20 (Decedents, Estates and Fiduciaries) of the
        Pennsylvania Consolidated Statutes, allowing owners of
        securities to register the title to same in transfer-on-death
        form; and providing for reports for school district trustees.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

        Section 1.  Title 20 of the Pennsylvania Consolidated
     Statutes is amended by adding a chapter to read:
                                CHAPTER 64
                 TRANSFER ON DEATH SECURITY REGISTRATION
     Sec.
     6401.  Definitions.
     6402.  Registration in beneficiary form.
     6403.  Law applicable to registration.
     6404.  Origination of registration in beneficiary form.
     6405.  Form of registration in beneficiary form.
     6406.  Effect of registration in beneficiary form.
     6407.  Ownership on death of owner.
     6408.  Protection of registering entity.
     6409.  Nontestamentary transfer on death.
     6410.  Terms, conditions and forms for registration.
     6411.  Transfers of securities and security accounts.
     6412.  Construction of chapter.
     6413.  Application of chapter.
      § 6401.  Definitions.
        The following words and phrases when used in this chapter
     shall have the meanings given to them in this section unless the
     context clearly indicates otherwise:
        "Beneficiary form."  A registration of a security which
     indicates the present owner of the security and the intention of
     the owner regarding the person who will become the owner of the
     security upon the death of the owner.
        "Financial institution."  Any regulated financial institution
     insured by the Federal Deposit Insurance Corporation or its
     successor or an affiliate of the financial institution.
        "Heirs."  Those persons, including the surviving spouse, who
     are entitled under the statutes of intestate succession to the
     property of a decedent.
        "Person."  An individual, a corporation, an organization or
     other legal entity.
        "Personal representative."  The term includes an executor,
     administrator, successor personal representative, special
     administrator and persons who perform substantially the same
     function under the law governing their status.
        "Property."  The term includes both real and personal
     property or any interest therein and anything that may be the
     subject of ownership.
        "Register."  To issue a certificate showing the ownership of
     a certificated security or, in the case of an uncertificated
     security, to initiate or transfer an account showing ownership
     of securities.
        "Registering entity."  A person who originates or transfers a
     security title by registration. The term includes a broker
     maintaining security accounts for customers and a transfer agent
     or other person acting for or as an issuer of securities.
        "Security."  A share, participation or other interest in
     property, in a business or in an obligation of an enterprise or
     other issuer. The term also includes a certificated security, an
     uncertificated security and a security account.
        "Security account."
            (1)  A reinvestment account associated with a security, a
        securities account with a financial institution or a
        securities dealer or broker and any cash balance in a
        brokerage account with a financial institution or a
        securities dealer or broker or cash, interest, earnings or
        dividends earned or declared on a security in an account, a
        reinvestment account or a brokerage account, whether or not
        credited to the account before the owner's death.
            (2)  A cash balance or other property held for or due to
        the owner of a security as a replacement for or product of an
        account security, whether or not credited to the account
        before the owner's death.
        "State."  Any state of the United States, the District of
     Columbia, the Commonwealth of Puerto Rico and any territory or
     possession subject to the legislative authority of the United
     States.
      § 6402.  Registration in beneficiary form.
        Only individuals whose registration of a security shows sole
     ownership by one individual or multiple ownership by two or more
     with right of survivorship, rather than as tenants in common,
     may obtain registration in beneficiary form. Multiple owners of
     a security registered in beneficiary form hold as joint tenants
     with right of survivorship, as tenants by the entireties or as
     owners of community property held in survivorship form and not
     as tenants in common.
      § 6403.  Law applicable to registration.
        A security may be registered in beneficiary form if the form
     is authorized by this or a similar statute of the state of
     organization of the issuer or registering entity, the location
     of the registering entity's principal office, the office of its
     transfer agent or its office making the registration or by this
     or a similar statute of the law of the state listed as the
     owner's address at the time of registration. A registration
     governed by the law of a jurisdiction in which this or similar
     legislation is not in force or was not in force when a
     registration in beneficiary form was made is nevertheless
     presumed to be valid and authorized as a matter of contract law.
      § 6404.  Origination of registration in beneficiary form.
        A security, whether evidenced by certificate or account, is
     registered in beneficiary form when the registration includes a
     designation of a beneficiary, which may include a trustee of a
     trust, to take the ownership at the death of the owner or the
     deaths of all multiple owners.
      § 6405.  Form of registration in beneficiary form.
        Registration in beneficiary form may be shown by the words
     "transfer on death" or the acronym "TOD," or by the words "pay
     on death" or the acronym "POD," after the name of the registered
     owner and before the name of a beneficiary.
      § 6406.  Effect of registration in beneficiary form.
        The designation of a TOD beneficiary on a registration in
     beneficiary form has no effect on ownership until the owner's
     death. A registration of a security in beneficiary form may be
     canceled or changed at any time by the sole owner or all then
     surviving owners, without the consent of the beneficiary.
      § 6407.  Ownership on death of owner.
        On death of a sole owner or the last to die of all multiple
     owners, ownership of securities registered in beneficiary form
     passes to the beneficiary or beneficiaries who survive all
     owners. On proof of death of all owners and compliance with any
     applicable requirements of the registering entity, a security
     registered in beneficiary form may be reregistered in the name
     of the beneficiary or beneficiaries who survived the death of
     all owners. Until division of the security after the death of
     all owners, multiple beneficiaries surviving the death of all
     owners hold their interests as tenants in common. If no
     beneficiary survives the death of all owners, the security
     belongs to the estate of the deceased sole owner or the estate
     of the last to die of all multiple owners.
      § 6408.  Protection of registering entity.
        (a)  General rule.--A registering entity is not required to
     offer or to accept a request for security registration in
     beneficiary form. If a registration in beneficiary form is
     offered by a registering entity, the owner requesting
     registration in beneficiary form assents to the protections
     given to the registering entity by this chapter.
        (b)  Implementation.--By accepting a request for registration
     of a security in beneficiary form, the registering entity agrees
     that the registration will be implemented on death of the
     deceased owner as provided in this chapter.
        (c)  Discharge.--A registering entity is discharged from all
     claims to a security by the estate, creditors, heirs or devisees
     of a deceased owner if it registers a transfer of a security in
     accordance with section 6407 (relating to ownership on death of
     owner) and does so in good faith reliance on the registration,
     on this chapter and on information provided to it by affidavit
     of the personal representative of the deceased owner or by the
     surviving beneficiary or by the surviving beneficiary's
     representatives, or other information available to the
     registering entity. The protections of this chapter do not
     extend to a reregistration or payment made after the registering
     entity has received written notice from any claimant to any
     interest in the security objecting to implementation of a
     registration in beneficiary form. No other notice or other
     information available to the registering entity affects its
     right to protection under this chapter.
        (d)  Rights of beneficiaries not affected.--The protection
     provided by this chapter to the registering entity of a security
     does not affect the rights of beneficiaries in disputes between
     themselves and other claimants to ownership of the security
     transferred or its value or proceeds.
      § 6409.  Nontestamentary transfer on death.
        (a)  General rule.--A transfer on death resulting from a
     registration in beneficiary form is effective by reason of the
     contract regarding the registration between the owner and the
     registering entity and this chapter and is not testamentary.
        (b)  Creditors.--This chapter does not limit the rights of
     creditors of security owners against beneficiaries and other
     transferees under other laws of this Commonwealth.
      § 6410.  Terms, conditions and forms for registration.
        (a)  Terms and conditions.--A registering entity offering to
     accept registrations in beneficiary form may establish the terms
     and conditions under which it will receive requests for
     registrations in beneficiary form and for implementation of
     registrations in beneficiary form, including requests for
     cancellation of previously registered TOD beneficiary
     designations and requests for reregistration to effect a change
     of beneficiary. The terms and conditions so established may
     provide for proving death, avoiding or resolving any problems
     concerning fractional shares, designating primary and contingent
     beneficiaries and substituting a named beneficiary's descendants
     to take in the place of the named beneficiary in the event of
     the beneficiary's death. Substitution may be indicated by
     appending to the name of the primary beneficiary the letters
     "LDPS," standing for "lineal descendants per stirpes." This
     designation substitutes a deceased beneficiary's descendants who
     survive the owner for a beneficiary who fails to so survive, the
     descendants to be identified and to share in accordance with the
     law of the beneficiary's domicile at the owner's death governing
     inheritance by descendants of an intestate. Other forms of
     identifying beneficiaries who are to take on one or more
     contingencies, and rules for providing proofs and assurances
     needed to satisfy reasonable concerns by registering entities
     regarding conditions and identities relevant to accurate
     implementation of registrations in beneficiary form, may be
     contained in a registering entity's terms and conditions.
        (b)  Forms.--The following are illustrations of registrations
     in beneficiary form which a registering entity may authorize:
            (1)  Sole owner-sole beneficiary: John S. Brown TOD (or
        POD) John S. Brown, Jr., or John S. Brown TOD to Sally Smith,
        trustee under my trust (under will or deed) dated.
            (2)  Multiple owners-sole beneficiary: John S. Brown Mary
        B. Brown JT TEN TOD John S. Brown, Jr.
            (3)  Multiple owners-primary and secondary (substituted)
        beneficiaries: John S. Brown Mary B. Brown JT TEN TOD John S.
        Brown, Jr. SUB BENE Peter Q. Brown or John S. Brown Mary B.
        Brown JT TEN TOD John S. Brown, Jr., LDPS.
      § 6411.  Transfers of securities and security accounts.
        (a)  Payment of inheritance tax.--No corporation, financial
     institution, broker or similar entity shall transfer on its
     books or issue a new certificate for any share of its capital
     stock, its registered bonds, a security or a security account,
     belonging to or standing in the name of a resident decedent,
     belonging to or standing in the joint names of a resident
     decedent and one or more persons, held in trust by or for a
     resident decedent or in a beneficiary form indicating that a
     resident decedent was the present owner or became the owner upon
     the death of another, unless the inheritance tax upon the
     transfer has actually been paid, or the written consent of the
     Secretary of Revenue, or its designee, is first secured, or
     there is presented to it an affidavit of the personal
     representative or heir of the decedent, or his or their
     attorney, that the decedent was a nonresident at the time of his
     death, or that the person in whose name said security, security
     account, shares of registered bond stands jointly with the
     decedent by right of survivorship was the spouse of the decedent
     at the time of death and that the ownership in, or designation
     of such spouse was not created within one year before the
     decedent's death, or written notification of the transfer is
     given to the Secretary of Revenue within ten days of the
     transfer as provided in subsection (d).
        (b)  Certificate of payment.--Whenever the inheritance tax
     upon the transfer of a security, security account, share or
     registered bank referred to herein is paid, it shall be the duty
     of the secretary upon his motion or the request of any party in
     interest or of such corporation, association, financial
     institution, broker or similar entity to provide a certification
     of such payment. The assessment notice subjecting said security,
     etc., to tax issued by the Department of Revenue shall serve as
     certification of such payment if accompanied by proof of
     payment.
        (c)  Exemption.--The provisions of this section shall not
     apply to the transfer of stock, registered bonds, securities or
     a securities account assigned by a decedent before his death as
     collateral security for a loan, provided that any lender so
     holding such item shall, upon selling it, send a written report
     to the department stating the amount for which the items were
     sold and the amount which was applied in reduction or payment of
     the loan. Any entity, herein above described, may transfer such
     item upon presentation to it of an affidavit of the lender, or
     someone acting under the authority of the lender and on its
     behalf, that the item was held as security at the time of
     decedent's death.
        (d)  Notification.--Notification to the Secretary of Revenue
     shall include the name of the deceased person, the purchase date
     of the capital stock, registered bond, security or security
     account, the date of death value of the item being transferred
     and the name, address and social security number of the person
     to whom the item is being transferred.
      § 6412.  Construction of chapter.
        This chapter shall be liberally construed and applied to
     promote its underlying purposes and policy and to make uniform
     the laws with respect to the subject of this chapter among
     states enacting it. Unless displaced by the particular
     provisions of this chapter, the principles of law and equity
     supplement its provisions.
      § 6413.  Application of chapter.
        This chapter applies to registration of securities in
     beneficiary form made before or after the effective date of this
     chapter by decedents dying on or after the effective date of
     this chapter.
        Section 2.  Title 20 is amended by adding sections to read:
      § 7144.  Reports for school district trustees.
        (a)  Scope.--This section applies if a school district is a
     trustee of land in accordance with all of the following:
            (1)  The land is held for the benefit of the public.
            (2)  The land is not used directly for school purposes.
        (b)  Requirement.--
            (1)  By January 30, the school district shall prepare a
        report for the prior year concerning the trust.
            (2)  The report shall detail all of the following:
                (i)  Revenues generated.
                (ii)  Expenses incurred.
                (iii)  Balance of funds held by the school district
            as trustee.
                (iv)  A statement regarding the activities taken by
            the trustee during the prior year to advance the purposes
            of the trust.
            (3)  The report must be certified as correct by the
        district superintendent.
            (4)  The report shall be made public as follows:
                (i)  The report shall be published in 14-point type
            in a newspaper of general circulation in each county in
            which the land is located.
                (ii)  The report shall be available during business
            hours for inspection and copying at the office of the
            district superintendent. A reasonable fee may be charged
            for copying.
      § 7145.  Jurisdiction.
        Notwithstanding 42 Pa.C.S. § 931 (relating to original
     jurisdiction and venue), jurisdiction over an action involving
     land referred to in section 7144 (relating to reports for school
     district trustees) shall be vested in the court of common pleas
     in the judicial district where:
            (1)  all of the land is located; or
            (2)  more than 50% of the land is located.
        Section 3.  The report required by 20 Pa.C.S. § 7144(b)(1)
     shall apply to calendar years beginning with 1996.
        Section 4.  This act shall take effect as follows:
            (1)  The addition of 20 Pa.C.S. Ch. 64 shall take effect
        in 60 days.
            (2)  The remainder of this act shall take effect
        immediately.

     APPROVED--The 18th day of December, A. D. 1996.

     THOMAS J. RIDGE