SENATE BILL NO. 1031

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S1031...................................................by JUDICIARY AND RULES
NONPROBATE TRANSFERS - Repeals and adds to existing law to provide the
liability of nonprobate transferees for creditor claims and statutory
allowances; to define nonprobate transfer; to provide the limits of liability
of the nonprobate transferee; to provide the order of liability of such
transferees; to allow apportionment of liability in various instruments; to
provide time limits within which an action must be brought and conditions
precedent for such an action; to provide for release of liability for certain
third party holders of interests; and to provide for proportionate liability
for transferees in certain situations.
                                                                        
01/27    Senate intro - 1st rdg - to printing
01/28    Rpt prt - to Jud
02/06    Rpt out - rec d/p - to 2nd rdg
02/07    2nd rdg - to 3rd rdg
02/10    3rd rdg - PASSED - 34-0-1
      AYES -- Bailey, Brandt, Bunderson, Burkett, Burtenshaw, Calabretta,
      Cameron, Compton, Darrington, Davis, Gannon, Geddes, Goedde, Hill,
      Ingram, Kennedy, Keough, Little, Lodge, Malepeai, Marley, McKenzie,
      McWilliams, Noble, Noh, Pearce, Richardson, Schroeder, Sorensen,
      Stegner, Stennett, Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- Andreason
    Floor Sponsor - Sweet
    Title apvd - to House
02/11    House intro - 1st rdg - to Jud
02/28    Rpt out - rec d/p - to 2nd rdg
03/03    2nd rdg - to 3rd rdg
03/05    3rd rdg - PASSED - 67-2-1
      AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Bell, Bieter,
      Black, Block, Boe, Bolz, Bradford, Campbell, Cannon, Collins, Crow,
      Cuddy, Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge,
      Field(18), Field(23), Gagner, Garrett, Harwood, Henbest, Jaquet, Jones,
      Kellogg, Kulczyk, Lake, Langford, Langhorst, Martinez, McGeachin,
      McKague, Meyer, Miller, Mitchell, Naccarato, Nielsen, Raybould,
      Ridinger, Ringo, Roberts, Robison, Rydalch, Sali, Sayler, Schaefer,
      Shepherd, Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass,
      Stevenson, Tilman, Trail, Wills, Wood, Mr. Speaker
      NAYS -- Clark, Moyle
      Absent and excused -- Ring
    Floor Sponsor - Nielsen
    Title apvd - to Senate
03/06    To enrol
03/07    Rpt enrol - Pres signed
03/10    Sp signed
03/11    To Governor
03/13    Governor signed
         Session Law Chapter 61
         Effective: 07/01/03

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                                    SENATE BILL NO. 1031
                                                                        
                              BY JUDICIARY AND RULES COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO DECEDENT'S ESTATES; REPEALING SECTION 15-6-107, IDAHO CODE, RELAT-
  3        ING TO RIGHTS OF CREDITORS IN DECEDENT'S ESTATE PROCEEDINGS; AMENDING PART
  4        1, CHAPTER 6, TITLE 15, IDAHO CODE, BY  THE  ADDITION  OF  A  NEW  SECTION
  5        15-6-107,  IDAHO  CODE, TO PROVIDE THE LIABILITY OF NONPROBATE TRANSFEREES
  6        FOR CREDITOR CLAIMS AND STATUTORY ALLOWANCES, TO DEFINE "NONPROBATE TRANS-
  7        FER," TO PROVIDE THE LIMITS OF LIABILITY OF THE NONPROBATE TRANSFEREE,  TO
  8        PROVIDE THE ORDER OF LIABILITY OF SUCH TRANSFEREES, TO ALLOW APPORTIONMENT
  9        OF  LIABILITY  IN VARIOUS INSTRUMENTS, TO PROVIDE TIME LIMITS WITHIN WHICH
 10        AN ACTION MUST BE BROUGHT AND CONDITIONS PRECEDENT FOR SUCH AN ACTION,  TO
 11        PROVIDE FOR RELEASE OF LIABILITY FOR CERTAIN THIRD PARTY HOLDERS OF INTER-
 12        ESTS  AND TO PROVIDE FOR PROPORTIONATE LIABILITY OF TRANSFEREES IN CERTAIN
 13        SITUATIONS.
                                                                        
 14    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 15        SECTION 1.  That Section 15-6-107, Idaho Code, be, and the same is  hereby
 16    repealed.
                                                                        
 17        SECTION 2.  That Part 1, Chapter 6, Title 15, Idaho Code, be, and the same
 18    is  hereby  amended  by the addition thereto of a NEW SECTION, to be known and
 19    designated as Section 15-6-107, Idaho Code, and to read as follows:
                                                                        
 20        15-6-107.  LIABILITY OF NONPROBATE TRANSFEREES  FOR  CREDITOR  CLAIMS  AND
 21    STATUTORY ALLOWANCES. (1) In this section, "nonprobate transfer" means a valid
 22    transfer  effective at death, other than of a survivorship interest in a joint
 23    tenancy of real estate, by a transferor whose last domicile was in this  state
 24    to  the  extent that the transferor immediately before death had power, acting
 25    alone, to prevent the transfer by revocation or withdrawal and instead to  use
 26    the property for the benefit of the transferor to apply it to discharge claims
 27    against the transferor's probate estate.
 28        (2)  Except as otherwise provided by statute, a transferee of a nonprobate
 29    transfer  is subject to liability to the decedent's probate estate for allowed
 30    claims against the decedent's probate estate and statutory allowances  to  the
 31    decedent's  surviving  spouse,  minor  children  and dependent children to the
 32    extent the decedent's probate estate is insufficient to satisfy  those  claims
 33    and  allowances.  The  liability of a nonprobate transferee may not exceed the
 34    value of nonprobate transfers received or controlled by that transferee.
 35        (3)  Nonprobate transferees are liable for the insufficiency described  in
 36    subsection (2) of this section in the following order:
 37        (a)  As provided in the decedent's will or any other governing instrument;
 38        (b)  To  the  extent  of  the value of the nonprobate transfer received or
 39        controlled by the trustee of a trust serving as the  principal  nonprobate
 40        instrument  in  the  decedent's estate plan as shown by its designation as
 41        devisee of the decedent's residuary estate or by other  facts  or  circum-
 42        stances;
                                                                        
                                           2
                                                                        
  1        (c)  Other nonprobate transferees, in proportion to the values received.
  2        (4)  Unless otherwise provided by the trust instrument, interests of bene-
  3    ficiaries  in  all trusts incurring liabilities under this section shall abate
  4    as necessary to satisfy the liability as if all of the trust instruments  were
  5    a single will and the interests were devises under it.
  6        (5)  A  provision  made in one (1) instrument may direct the apportionment
  7    of the liability among the nonprobate transferees taking  under  that  or  any
  8    other  governing  instrument.  If  a provision in one (1) instrument conflicts
  9    with a provision in another, the later one  prevails.
 10        (6)  Upon due notice to a nonprobate transferee, the liability imposed  by
 11    this  section is enforceable in proceedings in this state, wherever the trans-
 12    feree is located.
 13        (7)  A proceeding under this section may not be commenced unless the  per-
 14    sonal  representative of the decedent's estate has received from the surviving
 15    spouse or one acting for a minor or dependent child, to the extent that statu-
 16    tory allowances are affected, or a creditor, a written demand for the proceed-
 17    ing. If the personal representative declines or fails to commence a proceeding
 18    after demand, a person making demand may commence the proceeding in  the  name
 19    of  the  decedent's estate, at the expense of the person making the demand and
 20    not of the estate. A personal representative who declines  in  good  faith  to
 21    commence a requested proceeding incurs no personal liability for declining.
 22        (8)  A  proceeding  under  this  section  must be commenced within two (2)
 23    years after the decedent's death, but a proceeding on  behalf  of  a  creditor
 24    whose  claim  was  allowed  after  proceedings challenging disallowance of the
 25    claim may be commenced within sixty (60) days after  final  allowance  of  the
 26    claim.
 27        (9)  Unless a written notice asserting that a decedent's probate estate is
 28    insufficient  to pay allowed claims and statutory allowances has been received
 29    from the decedent's personal representative the following rules apply:
 30        (a)  Payment or delivery of assets by a financial  institution,  registrar
 31        or  other  obligor to a nonprobate transferee in accordance with the terms
 32        of the governing instrument controlling the transfer releases the  obligor
 33        from all claims for amounts paid or assets delivered.
 34        (b)  A  trustee receiving or controlling a nonprobate transfer is released
 35        from liability under this section on any assets distributed to the trust's
 36        beneficiaries. Each beneficiary to the extent of the distribution received
 37        becomes liable for the amount of the trustee's liability  attributable  to
 38        that asset imposed by subsections (2) and (3) of this section.

Statement of Purpose / Fiscal Impact


                       STATEMENT OF PURPOSE
                                 
                             RS 12630
                                 
                                 
                                 
Nonprobate transfers are becoming increasingly used in Idaho to transfer
assets at death, with examples being revocable and irrevocable trusts,
life insurance, and multiple-party accounts (stock accounts,
certificates of deposit, checking accounts, and so forth) . This process
can greatly impact the provisions of the Idaho Probate Code giving
protections to surviving spouses, minor and dependent children, and
creditors. The original 15-6-107 has been outdated by new and often
sophisticated nonprobate methods of transfer. The language in the bill
is that of the Uniform Laws Commissioners amendments to the Uniform
Probate Act adopted by the National Conference of Commissioners on
Uniform State Laws at its meeting July 24-31, 1998, with minor revisions
to reflect existing Idaho probate law (for example, allowing two years
instead of one year after death to seek collection of the transfer).   The
bill still retains the protection of third party holders of accounts,
such as banks or trustees, acting in good faith. This bill is part of an
ongoing review and revision of this complex area to reflect modern
estate planning methods while preserving basic protections for family of
the deceased.

                           FISCAL NOTE
                                 
This bill will have no fiscal impact.








                    CONTACT:  Robert L. Aldridge
                              1209 North Eighth Street
                              Boise, Idaho 83702-4297
                                                    Telephone:     office: (208) 336-9880 home: (208) 888-4668
                                                     Fax:     (208) 336-9882
                                    e-mail: rlaldridge@hotmail . corn
                    
                    
                    
                    
                    
                    
          STATEMENT OF PURPOSE/FISCAL NOTE                           S 1031