Bill Text: CA AB1622 | 2013-2014 | Regular Session | Introduced
Bill Title: Uniform Powers of Appointment Act.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-03-25 - In committee: Hearing postponed by committee. [AB1622 Detail]
Download: California-2013-AB1622-Introduced.html
BILL NUMBER: AB 1622 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Bonta
FEBRUARY 6, 2014
An act to repeal and add Part 14 (commencing with Section 600) of
Division 2 of the Probate Code, relating to the powers of
appointment.
LEGISLATIVE COUNSEL'S DIGEST
AB 1622, as introduced, Bonta. Uniform Powers of Appointment Act.
Existing law provides for the creation, exercise, and release of
powers of appointment, as specified.
This bill would repeal those provisions and establish instead the
Uniform Powers of Appointment Act.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Part 14 (commencing with Section 600) of Division 2 of
the Probate Code is repealed.
SEC. 2. Part 14 (commencing with Section 600) is added to Division
2 of the Probate Code, to read:
PART 14. UNIFORM POWERS OF APPOINTMENT ACT
CHAPTER 1. GENERAL PROVISIONS
600. This part shall be known and may be cited as the Uniform
Powers of Appointment Act.
601. For purposes of this part, the following definitions apply:
(a) "Appointee" means a person to which a powerholder makes an
appointment of appointive property.
(b) "Appointive property" means the property or property interest
subject to a power of appointment.
(c) "Blanket-exercise clause" means a clause in an instrument that
exercises a power of appointment and is not a specific-exercise
clause. The term includes a clause that does any of the following:
(1) Expressly uses the words "any power" in exercising any power
of appointment the powerholder has.
(2) Expressly uses the words "any property" in appointing any
property over which the powerholder has a power of appointment.
(3) Disposes of all property subject to disposition by the
powerholder.
(d) "Donor" means a person that creates a power of appointment.
(e) "Exclusionary power of appointment" means a power of
appointment exercisable in favor of any one or more of the
permissible appointees to the exclusion of the other permissible
appointees.
(f) "General power of appointment" means a power of appointment
exercisable in favor of the powerholder, the powerholder's estate, a
creditor of the powerholder, or a creditor of the powerholder's
estate.
(g) "Gift-in-default clause" means a clause identifying a taker in
default of appointment.
(h) "Impermissible appointee" means a person that is not a
permissible appointee.
(i) "Instrument" means a record.
(j) "Nongeneral power of appointment" means a power of appointment
that is not a general power of appointment.
(k) "Permissible appointee" means a person in whose favor a
powerholder may exercise a power of appointment.
(l) "Person" means an individual, estate, trust, business or
nonprofit entity, public corporation, government or governmental
subdivision, agency, or instrumentality, or other legal entity.
(m) "Power of appointment" means a power that enables a
powerholder acting in a nonfiduciary capacity to designate a
recipient of an ownership interest in or another power of appointment
over the appointive property. The term does not include a power of
attorney.
(n) "Powerholder" means a person in which a donor creates a power
of appointment.
(o) "Presently exercisable power of appointment" means a power of
appointment exercisable by the powerholder at the relevant time. The
term:
(1) Includes a power of appointment not exercisable until the
occurrence of a specified event, the satisfaction of an ascertainable
standard, or the passage of a specified time only after any of the
following:
(A) The occurrence of the specified event.
(B) The satisfaction of the ascertainable standard.
(C) The passage of the specified time.
(2) Does not include a power exercisable only at the powerholder's
death.
(p) "Record" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
(q) "Specific-exercise clause" means a clause in an instrument
that specifically refers to and exercises a particular power of
appointment.
(r) "Taker in default of appointment" means a person that takes
all or part of the appointive property to the extent the powerholder
does not effectively exercise the power of appointment.
(s) "Terms of the instrument" means the manifestation of the
intent of the maker of the instrument regarding the instrument's
provisions as expressed in the instrument or as may be established by
other evidence that would be admissible in a legal proceeding.
602. Unless the terms of the instrument creating a power of
appointment manifest a contrary intent, both of the following apply:
(a) The creation, revocation, or amendment of the power is
governed by the law of the donor's domicile at the relevant time.
(b) The exercise, release, or disclaimer of the power, or the
revocation or amendment of the exercise, release, or disclaimer of
the power, is governed by the law of the powerholder's domicile at
the relevant time.
603. The common law and principles of equity supplement this
part, except to the extent modified by this part or law of this state
other than this part.
CHAPTER 2. CREATION, REVOCATION, AND AMENDMENT OF POWER OF
APPOINTMENT
605. (a) A power of appointment is created only if both of the
following conditions are satisfied:
(1) The instrument creating the power:
(A) Is valid under applicable law; and
(B) Except as otherwise provided in subdivision (b), transfers the
appointive property.
(2) The terms of the instrument creating the power manifest the
donor's intent to create in a powerholder a power of appointment over
the appointive property exercisable in favor of a permissible
appointee.
(b) Subparagraph (B) of paragraph (1) of subdivision (a) does not
apply to the creation of a power of appointment by the exercise of a
power of appointment.
(c) A power of appointment may not be created in a deceased
individual.
(d) Subject to an applicable rule against perpetuities, a power of
appointment may be created in an unborn or unascertained
powerholder.
606. A powerholder may not transfer a power of appointment. If a
powerholder dies without exercising or releasing a power, the power
lapses.
607. Subject to Section 609, and unless the terms of the
instrument creating a power of appointment manifest a contrary
intent, the power is all of the following:
(a) Presently exercisable.
(b) Exclusionary.
(c) Except as otherwise provided in Section 608, general.
608. Unless the terms of the instrument creating a power of
appointment manifest a contrary intent, the power is nongeneral if
both of the following conditions are satisfied:
(a) The power is exercisable only at the powerholder's death.
(b) The permissible appointees of the power are a defined and
limited class that does not include the powerholder's estate, the
powerholder's creditors, or the creditors of the powerholder's
estate.
609. (a) For purposes of this section, "adverse party" means a
person with a substantial beneficial interest in property which would
be affected adversely by a powerholder's exercise or nonexercise of
a power of appointment in favor of the powerholder, the powerholder's
estate, a creditor of the powerholder, or a creditor of the
powerholder's estate.
(b) If a powerholder may exercise a power of appointment only with
the consent or joinder of an adverse party, the power is nongeneral.
(c) If the permissible appointees of a power of appointment are
not defined and limited, the power is exclusionary.
610. A donor may revoke or amend a power of appointment only to
the extent either of the following conditions is satisfied:
(a) The instrument creating the power is revocable by the donor.
(b) The donor reserves a power of revocation or amendment in the
instrument creating the power of appointment.
CHAPTER 3. EXERCISE OF POWER OF APPOINTMENT
615. (a) A power of appointment is exercised only if both of the
following conditions are satisfied:
(1) The instrument exercising the power is valid under applicable
law.
(2) The terms of the instrument exercising the power do both of
the following:
(A) Manifest the powerholder's intent to exercise the power.
(B) Subject to Section 618, satisfy the requirements of exercise,
if any, imposed by the donor.
(b) A power of appointment is exercised only to the extent the
appointment is a permissible exercise of the power.
616. (a) For purposes of this section, both of the following
shall apply:
(1) "Residuary clause" does not include a residuary clause
containing a blanket- exercise clause or a specific-exercise clause.
(2) "Will" includes a codicil and a testamentary instrument that
revises another will.
(b) A residuary clause in a powerholder's will, or a comparable
clause in the powerholder's revocable trust, manifests the
powerholder's intent to exercise a power of appointment only if all
of the following conditions are satisfied:
(1) The terms of the instrument containing the residuary clause do
not manifest a contrary intent.
(2) The power is a general power exercisable in favor of the
powerholder's estate.
(3) There is no gift-in-default clause or the gift-in-default
clause is ineffective.
(4) The powerholder did not release the power.
617. Unless the terms of the instrument exercising a power of
appointment manifest a contrary intent, one of the following applies:
(a) Except as otherwise provided in subdivision (b), a
blanket-exercise clause extends to a power acquired by the
powerholder after executing the instrument containing the clause.
(b) If the powerholder is also the donor of the power, the clause
does not extend to the power unless there is no gift-in-default
clause or the gift-in-default clause is ineffective.
618. A powerholder's substantial compliance with a formal
requirement of appointment imposed by the donor, including a
requirement that the instrument exercising the power of appointment
make reference or specific reference to the power, is sufficient if
both of the following conditions are satisfied:
(a) The powerholder knows of and intends to exercise the power.
(b) The powerholder's manner of attempted exercise of the power
does not impair a material purpose of the donor in imposing the
requirement.
619. (a) A powerholder of a general power of appointment that
permits appointment to the powerholder or the powerholder's estate
may make any appointment, including an appointment in trust or
creating a new power of appointment, that the powerholder could make
in disposing of the powerholder's own property.
(b) A powerholder of a general power of appointment that permits
appointment only to the creditors of the powerholder or of the
powerholder's estate may appoint only to those creditors.
(c) Unless the terms of the instrument creating a power of
appointment manifest a contrary intent, the powerholder of a
nongeneral power may do one of the following:
(1) Make an appointment in any form, including an appointment in
trust, in favor of a permissible appointee.
(2) Create a general power in a permissible appointee.
(3) Create a nongeneral power in any person to appoint to one or
more of the permissible appointees of the original nongeneral power.
620. (a) Subject to Sections 620.3 and 620.7, an appointment to a
deceased appointee is ineffective.
(b) Unless the terms of the instrument creating a power of
appointment manifest a contrary intent, a powerholder of a nongeneral
power may exercise the power in favor of, or create a new power of
appointment in, a descendant of a deceased permissible appointee
whether or not the descendant is described by the donor as a
permissible appointee.
620.3. (a) Except as provided in subdivision (b), if an
appointment by will or by instrument effective only at the death of
the powerholder is ineffective because of the death of an appointee
before the appointment becomes effective and the appointee leaves
issue surviving the powerholder, the surviving issue of the appointee
take the appointed property in the same manner as the appointee
would have taken had the appointee survived the powerholder, except
that the property passes only to persons who are permissible
appointees, including appointees permitted under Section 620.7. If
the surviving issue are all of the same degree of kinship to the
deceased appointee, they take equally, but if of unequal degree, then
those of more remote degree take in the manner provided in Section
240.
(b) This section does not apply if either the donor or powerholder
manifests an intent that some other disposition of the appointive
property shall be made.
620.7. (a) Unless the creating instrument expressly provides
otherwise, if a permissible appointee dies before the exercise of a
nongeneral power of appointment, the powerholder has the power to
appoint to the issue of the deceased permissible appointee, whether
or not the issue was included within the description of the
permissible appointees, if the deceased permissible appointee was
alive at the time of the execution of the creating instrument or was
born thereafter.
(b) This section applies whether the nongeneral power of
appointment is exercisable by inter vivos instrument, by will, or
otherwise.
(c) This section applies to a case where the power of appointment
is exercised on or after July 1, 1982, but does not affect the
validity of any exercise of a power of appointment made before July
1, 1982.
621. (a) Except as otherwise provided in Section 620, an exercise
of a power of appointment in favor of an impermissible appointee is
ineffective.
(b) An exercise of a power of appointment in favor of a
permissible appointee is ineffective to the extent the appointment is
a fraud on the power.
622. If a powerholder exercises a power of appointment in a
disposition that also disposes of property the powerholder owns, the
owned property and the appointive property shall be allocated in the
permissible manner that best carries out the powerholder's intent.
623. To the extent a powerholder of a general power of
appointment, other than a power to withdraw property from, revoke, or
amend a trust, makes an ineffective appointment, either of the
following applies:
(a) The gift-in-default clause controls the disposition of the
ineffectively appointed property.
(b) If there is no gift-in-default clause or to the extent the
clause is ineffective, the ineffectively appointed property:
(1) Passes to either of the following:
(A) The powerholder if the powerholder is a permissible appointee
and living.
(B) If the powerholder is an impermissible appointee or deceased,
the powerholder's estate if the estate is a permissible appointee.
(2) If there is no taker under paragraph (1), passes under a
reversionary interest to the donor or the donor's transferee or
successor in interest.
624. To the extent a powerholder releases or fails to exercise a
general power of appointment other than a power to withdraw property
from, revoke, or amend a trust, either of the following applies:
(a) The gift-in-default clause controls the disposition of the
unappointed property.
(b) If there is no gift-in-default clause or to the extent the
clause is ineffective:
(1) Except as otherwise provided in paragraph (2), the unappointed
property passes to either of the following:
(A) The powerholder if the powerholder is a permissible appointee
and living.
(B) If the powerholder is an impermissible appointee or deceased,
the powerholder's estate if the estate is a permissible appointee.
(2) To the extent the powerholder released the power, or if there
is no taker under paragraph (1), the unappointed property passes
under a reversionary interest to the donor or the donor's transferee
or successor in interest.
625. To the extent a powerholder releases, ineffectively
exercises, or fails to exercise a nongeneral power of appointment,
either of the following applies:
(a) The gift-in-default clause controls the disposition of the
unappointed property.
(b) If there is no gift-in-default clause or to the extent the
clause is ineffective, the unappointed property either:
(1) Passes to the permissible appointees if both of the following
conditions are satisfied:
(A) The permissible appointees are defined and limited.
(B) The terms of the instrument creating the power do not manifest
a contrary intent.
(2) If there is no taker under paragraph (1), passes under a
reversionary interest to the donor or the donor's transferee or
successor in interest.
626. Unless the terms of the instrument creating or exercising a
power of appointment manifest a contrary intent, if the powerholder
makes a valid partial appointment to a taker in default of
appointment, the taker in default of appointment may share fully in
unappointed property.
627. If a powerholder makes an appointment to a taker in default
of appointment and the appointee would have taken the property under
a gift-in-default clause had the property not been appointed, the
power of appointment is deemed not to have been exercised and the
appointee takes under the clause.
628. A powerholder may revoke or amend an exercise of a power of
appointment only to the extent either of the following conditions is
satisfied:
(a) The powerholder reserves a power of revocation or amendment in
the instrument exercising the power of appointment and, if the power
is nongeneral, the terms of the instrument creating the power of
appointment do not prohibit the reservation.
(b) The terms of the instrument creating the power of appointment
provide that the exercise is revocable or amendable.
CHAPTER 4. DISCLAIMER OR RELEASE: CONTRACT TO APPOINT OR NOT
TO APPOINT
630. As provided by Chapter 1 (commencing with Section 260) of
Part 8:
(a) A powerholder may disclaim all or part of a power of
appointment.
(b) A permissible appointee, appointee, or taker in default of
appointment may disclaim all or part of an interest in appointive
property.
631. A powerholder may release a power of appointment, in whole
or in part, except to the extent the terms of the instrument creating
the power prevent the release.
632. A powerholder of a releasable power of appointment may
release the power in whole or in part by either of the following:
(a) By substantial compliance with a method provided in the terms
of the instrument creating the power.
(b) If the terms of the instrument creating the power do not
provide a method or the method provided in the terms of the
instrument is not expressly made exclusive, by a record manifesting
the powerholder's intent by clear and convincing evidence.
633. A powerholder may revoke or amend a release of a power of
appointment only to the extent that either of the following
conditions is satisfied:
(a) The instrument of release is revocable by the powerholder.
(b) The powerholder reserves a power of revocation or amendment in
the instrument of release.
634. A powerholder of a presently exercisable power of
appointment may contract to do either of the following:
(a) Not to exercise the power.
(b) To exercise the power if the contract, when made, does not
confer a benefit on an impermissible appointee.
635. A powerholder of a power of appointment that is not
presently exercisable may contract to exercise or not to exercise the
power only if both of the following conditions are satisfied:
(a) The powerholder is also the donor of the power.
(b) The powerholder has reserved the power in a revocable trust.
636. The remedy for a powerholder's breach of a contract to
appoint or not to appoint appointive property is limited to damages
payable out of the appointive property or, if appropriate, specific
performance of the contract.
CHAPTER 5. RIGHTS OF POWERHOLDER'S CREDITORS IN APPOINTIVE
PROPERTY
640. (a) For purposes of this section, "power of appointment
created by the powerholder" includes a power of appointment created
in a transfer by another person to the extent the powerholder
contributed value to the transfer.
(b) Appointive property subject to a general power of appointment
created by the powerholder is subject to a claim of a creditor of the
powerholder or of the powerholder's estate to the extent provided in
Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of
Division 4 of the Civil Code.
(c) Subject to subdivision (b), appointive property subject to a
general power of appointment created by the powerholder is not
subject to a claim of a creditor of the powerholder or the
powerholder's estate to the extent the powerholder irrevocably
appointed the property in favor of a person other than the
powerholder or the powerholder's estate.
(d) Subject to subdivisions (b) and (c), and notwithstanding the
presence of a spendthrift provision or whether the claim arose before
or after the creation of the power of appointment, appointive
property subject to a general power of appointment created by the
powerholder is subject to a claim of:
(1) A creditor of the powerholder, to the same extent as if the
powerholder owned the appointive property, if the power is presently
exercisable.
(2) A creditor of the powerholder's estate, to the extent the
estate is insufficient to satisfy the claim and subject to the right
of a decedent to direct the source from which liabilities are paid,
if the power is exercisable at the powerholder's death.
641. (a) Except as otherwise provided in subdivision (b),
appointive property subject to a general power of appointment created
by a person other than the powerholder is subject to a claim of:
(1) A creditor of the powerholder, to the extent the powerholder's
property is insufficient, if the power is presently exercisable.
(2) A creditor of the powerholder's estate, to the extent the
estate is insufficient, subject to the right of a decedent to direct
the source from which liabilities are paid.
(b) Subject to subdivision (c) of Section 643, a power of
appointment created by a person other than the powerholder which is
subject to an ascertainable standard relating to an individual's
health, education, support, or maintenance within the meaning of 26
U.S.C. Section 2041(b)(1)(A) or 26 U.S.C. Section 2514(c)(1), on
January 1, 2015, is treated for purposes of this chapter as a
nongeneral power.
642. (a) For purposes of this chapter, and except as otherwise
provided in subdivision (b), a power to withdraw property from a
trust is treated, during the time the power may be exercised, as a
presently exercisable general power of appointment to the extent of
the property subject to the power to withdraw.
(b) On the lapse, release, or waiver of a power to withdraw
property from a trust, the power is treated as a presently
exercisable general power of appointment only to the extent the value
of the property affected by the lapse, release, or waiver exceeds
the greater of the amount specified in 26 U.S.C. Section 2041(b)(2)
and 26 U.S.C. Section 2514(e) or the amount specified in 26 U.S.C.
Section 2503(b), on January 1, 2015.
643. (a) Except as otherwise provided in subdivisions (b) and
(c), appointive property subject to a nongeneral power of appointment
is exempt from a claim of a creditor of the powerholder or the
powerholder's estate.
(b) Appointive property subject to a nongeneral power of
appointment is subject to a claim of a creditor of the powerholder or
the powerholder's estate to the extent that the powerholder owned
the property and, reserving the nongeneral power, transferred the
property in violation of Chapter 1 (commencing with Section 3439) of
Title 2 of Part 2 of Division 4 of the Civil Code.
(c) If the initial gift in default of appointment is to the
powerholder or the powerholder's estate, a nongeneral power of
appointment is treated for purposes of this chapter as a general
power.
CHAPTER 6. MISCELLANEOUS PROVISIONS
645. In applying and construing the uniform provisions contained
in this part, consideration shall be given to the need to promote
uniformity of the law with respect to its subject matter among states
that enact it.
646. This part modifies, limits, or supersedes the Electronic
Signatures in Global and National Commerce Act (15 U.S.C. Sec. 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)).
647. (a) Except as otherwise provided in this part, on and after
January 1, 2015, this part applies to all of the following:
(1) A power of appointment created before, on, or after January 1,
2015.
(2) A judicial proceeding concerning a power of appointment
commenced on or after January 1, 2015.
(3) A judicial proceeding concerning a power of appointment
commenced before January 1, 2015, unless the court finds that
application of a particular provision of this part would interfere
substantially with the effective conduct of the judicial proceeding
or prejudice a right of a party, in which case the particular
provision of this part does not apply and any superseded law applies.
(b) A rule of construction or presumption provided in this part
applies to an instrument executed before January 1, 2015, unless
there is a clear indication of a contrary intent in the terms of the
instrument.
(c) Except as otherwise provided in subdivision (a) or (b), an
action done before January 1, 2015, is not affected by this part.
(d) If a right is acquired, extinguished, or barred on the
expiration of a prescribed period that commenced under law of this
state other than this part before January 1, 2015, that law continues
to apply to the right.
