HB406 By Representatives Harbison, Henry, Shedd, Hanes and Whorton (I) RFD Judiciary Rd 1 15-MAR-16

SYNOPSIS: This bill would adopt the Uniform Real Property Transfer on Death Act. This bill would establish a mechanism which would enable the owner of real property to pass the real property to a beneficiary at the owner's death without probate by executing and recording a transfer on death deed. This bill would also permit the owner of the real property to retain all ownership rights in the property while living, including the right to sell the property, revoke the deed, or name a different beneficiary. This bill would specify the content of the transfer on death deed and the procedure for executing and filing the deed.

A BILL TO BE ENTITLED AN ACT

To adopt the Uniform Real Property Transfer on Death Act; to establish a mechanism which would enable the owner of real property to pass the real property to a beneficiary at the owner's death without probate by executing and recording a transfer on death deed; to permit the owner of the real property to retain all ownership rights in the property while living, including the right to sell the property, revoke the deed, or name a different beneficiary; to specify the content of the transfer on death deed and the procedure for executing and filing the deed.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. SHORT TITLE. This act may be cited as the Uniform Real Property Transfer on Death Act.

Section 2. DEFINITIONS. In this act, the following terms have the following meanings:

(1) BENEFICIARY. A person that receives property under a transfer on death deed.

(2) DESIGNATED BENEFICIARY. A person designated to receive property in a transfer on death deed.

(3) JOINT OWNER. An individual who owns property concurrently with one or more other individuals with a right of survivorship. The term includes a joint tenant, owner of community property with a right of survivorship, and tenant by the entirety. The term does not include a tenant in common or owner of community property without a right of survivorship.

(4) PERSON. An individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.

(5) PROPERTY. An interest in real property located in this state which is transferable on the death of the owner.

(6) TRANSFER ON DEATH DEED. A deed authorized under this act.

Section 3. APPLICABILITY. This act applies to a transfer on death deed made before, on, or after January 1, 2017, by a transferor dying on or after January 1, 2017.

Section 4. NONEXCLUSIVITY. This act does not affect any method of transferring property otherwise permitted under the law of this state.

Section 5. TRANSFER ON DEATH DEED AUTHORIZED. An individual may transfer property to one or more beneficiaries effective at the transferor's death by a transfer on death deed.

Section 6. TRANSFER ON DEATH DEED REVOCABLE. A transfer on death deed is revocable even if the deed or another instrument contains a contrary provision.

Section 7. TRANSFER ON DEATH DEED NONTESTAMENTARY. A transfer on death deed is nontestamentary.

Section 8. CAPACITY OF TRANSFEROR. The capacity required to make or revoke a transfer on death deed is the same as the capacity required to make a will.

Section 9. REQUIREMENTS. A transfer on death deed must meet all of the following requirements:

(1) Except as otherwise provided in subdivision (2), contain the essential elements and formalities of a properly recordable inter vivos deed.

(2) State that the transfer to the designated beneficiary is to occur at the transferor's death.

(3) Be recorded before the transferor's death in the public records in the office of the judge of probate in the county where the property is located.

Section 10. NOTICE, DELIVERY, ACCEPTANCE, CONSIDERATION NOT REQUIRED. A transfer on death deed is effective without either of the following:

(1) Notice or delivery to or acceptance by the designated beneficiary during the transferor's life.

(2) Consideration.

Section 11. REVOCATION BY INSTRUMENT AUTHORIZED; REVOCATION BY ACT NOT PERMITTED.

(a) Subject to subsection (b), an instrument is effective to revoke a recorded transfer on death deed, or any part of it, only if the instrument meets both of the following requirements:

(1) Is one of the following:

(A) A transfer on death deed that revokes the deed or part of the deed expressly or by inconsistency.

(B) An instrument of revocation that expressly revokes the deed or part of the deed.

(C) An inter vivos deed that expressly revokes the transfer on death deed or part of the deed.

(2) Is acknowledged by the transferor after the acknowledgment of the deed being revoked and recorded before the transferor's death in the public records in the office of the judge of probate in the county where the deed is recorded.

(b) If a transfer on death deed is made by more than one transferor, both of the following conditions apply:

(1) Revocation by a transferor does not affect the deed as to the interest of another transferor.

(2) A deed of joint owners is revoked only if it is revoked by all of the living joint owners.

(c) After a transfer on death deed is recorded, it may not be revoked by a revocatory act on the deed.

(d) This section does not limit the effect of an inter vivos transfer of the property.

Section 12. EFFECT OF TRANSFER ON DEATH DEED DURING TRANSFEROR'S LIFE. During a transferor's life, a transfer on death deed does not do any of the following:

(1) Affect an interest or right of the transferor or any other owner, including the right to transfer or encumber the property.

(2) Affect an interest or right of a transferee, even if the transferee has actual or constructive notice of the deed.

(3) Affect an interest or right of a secured or unsecured creditor or future creditor of the transferor, even if the creditor has actual or constructive notice of the deed.

(4) Affect the transferor's or designated beneficiary's eligibility for any form of public assistance.

(5) Create a legal or equitable interest in favor of the designated beneficiary.

(6) Subject the property to claims or process of a creditor of the designated beneficiary.

Section 13. EFFECT OF TRANSFER ON DEATH DEED AT TRANSFEROR'S DEATH.

(a) Except as otherwise provided in the transfer on death deed or in Chapter 7 of Title 43 of the Code of Alabama 1975, the Uniform Simultaneous Death Act, Section 43-8-137 of the Code of Alabama 1975, relating to revocation of interest in property by divorce or annulment, or Section 43-8-224 of the Code of Alabama 1975, establishing an anti lapse provision, on the death of the transferor, all of the following rules apply to property that is the subject of a transfer on death deed and owned by the transferor at death:

(1) Subject to subdivision (2), the interest in the property is transferred to the designated beneficiary in accordance with the deed.

(2) The interest of a designated beneficiary is contingent on the designated beneficiary surviving the transferor. The interest of a designated beneficiary who fails to survive the transferor lapses.

(3) Subject to subdivision (4), concurrent interests are transferred to the beneficiaries in equal and undivided shares with no right of survivorship.

(4) If the transferor has identified two or more designated beneficiaries to receive concurrent interests in the property, the share of one which lapses or fails for any reason is transferred to the other, or to the others in proportion to the interest of each in the remaining part of the property held concurrently.

(b) Subject to Chapter 4 of Title 35 of the Code of Alabama 1975, a beneficiary takes the property subject to all conveyances, encumbrances, assignments, contracts, mortgages, liens, and other interests to which the property is subject at the transferor's death. For purposes of this subsection and Chapter 4 of Title 35 of the Code of Alabama 1975, the recording of the transfer on death deed is deemed to have occurred at the transferor's death.

(c) If a transferor is a joint owner who is:

(1) Survived by one or more other joint owners, the property that is the subject of a transfer on death deed belongs to the surviving joint owner or owners with right of survivorship.

(2) The last surviving joint owner, the transfer on death deed is effective.

(d) A transfer on death deed transfers property without covenant or warranty of title even if the deed contains a contrary provision.

Section 14. DISCLAIMER. A beneficiary may disclaim all or part of the beneficiary's interest as provided by Article 11 of Chapter 8 of Title 43 of the Code of Alabama 1975.

Section 15. LIABILITY FOR CREDITOR CLAIMS AND STATUTORY ALLOWANCES.

(a) To the extent the transferor's probate estate is insufficient to satisfy an allowed claim against the estate or a statutory allowance to a surviving spouse or child, the estate may enforce the liability against property transferred at the transferor's death by a transfer on death deed.

(b) If more than one property is transferred by one or more transfer on death deeds, the liability under subsection (a) is apportioned among the properties in proportion to their net values at the transferor's death.

(c) A proceeding to enforce the liability under this section must be commenced not later than 18 months after the transferor's death.

Section 16. FORM OF TRANSFER ON DEATH DEED. The following form may be used to create a transfer on death deed. The other sections of this act govern the effect of this or any other instrument used to create a transfer on death deed:

(front of form)

REVOCABLE TRANSFER ON DEATH DEED

NOTICE TO OWNER

You should carefully read all information on the other side of this form. You May Want to Consult a Lawyer Before Using This Form.

This form must be recorded before your death, or it will not be effective.

IDENTIFYING INFORMATION:

Owner or Owners Making This Deed

___________________ __________________

Printed name Mailing address

___________________ __________________

Printed name Mailing address

Legal description of the property:

___________________

PRIMARY BENEFICIARY

I designate the following beneficiary if the beneficiary survives me.

________________ __________________

Printed name Mailing address, if available

ALTERNATE BENEFICIARY – Optional

If my primary beneficiary does not survive me, I designate the following alternate beneficiary if that beneficiary survives me.

_______________ _______________

Printed name Mailing address, if available

TRANSFER ON DEATH

At my death, I transfer my interest in the described property to the beneficiaries as designated above.

Before my death, I have the right to revoke this deed.

SIGNATURE OF OWNER OR OWNERS MAKING THIS DEED

__________________ ([Seal]) ______________

Signature Date

__________________ ([Seal]) ______________

Signature Date

ACKNOWLEDGMENT

(insert acknowledgment for deed here)

Section 17. FORM OF REVOCATION. The following form may be used to create an instrument of revocation under this act. The other sections of this act govern the effect of this or any other instrument used to revoke a transfer on death deed

(front of form)

REVOCATION OF TRANSFER ON DEATH DEED

NOTICE TO OWNER

This revocation must be recorded before you die or it will not be effective. This revocation is effective only as to the interests in the property of owners who sign this revocation.

IDENTIFYING INFORMATION:

Owner or Owners of Property Making This Revocation

___________________ __________________

Printed name Mailing address

___________________ __________________

Printed name Mailing address

Legal description of the property:

___________________

REVOCATION

I revoke all my previous transfers of this property by transfer on death deed

SIGNATURE OF OWNER OR OWNERS MAKING THIS REVOCATION

__________________ ([Seal]) ______________

Signature Date

__________________ ([Seal]) ______________

Signature Date

ACKNOWLEDGMENT

(insert acknowledgment here)

Section 18. UNIFORMITY OF APPLICATION AND CONSTRUCTION. In applying and construing this uniform act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among the states that enact it.

Section 19. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT. This act modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001, et seq., but does not modify, limit, or supersede Section 101(c) of that act, 15 U.S.C. Section 7001(c), or authorize electronic delivery of any of the notices described in Section 103(b) of that act, 15 U.S.C. Section 7003(b).

Section 20. EFFECTIVE DATE. This act shall become effective January 1, 2017.

Property, Real and Personal

Wills and Trusts

Real Estate

Deeds

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