Bill Text: CA AB2846 | 2015-2016 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Powers of appointment.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2016-07-22 - Chaptered by Secretary of State - Chapter 81, Statutes of 2016. [AB2846 Detail]
Download: California-2015-AB2846-Amended.html
Bill Title: Powers of appointment.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2016-07-22 - Chaptered by Secretary of State - Chapter 81, Statutes of 2016. [AB2846 Detail]
Download: California-2015-AB2846-Amended.html
BILL NUMBER: AB 2846 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 9, 2016
INTRODUCED BY Assembly Member Maienschein
FEBRUARY 19, 2016
An act to amend Sections 610, 611, 613, 625, 633, 634, 640,
641, 642, 650, 651, 652, 660, 661, 662, 671, 672, 673, 674, 680,
681, and 683 682, 683, and 684
of, and to add Sections 621, 675 and 676 to, the Probate
Code, relating to power of appointments.
powers of appointment.
LEGISLATIVE COUNSEL'S DIGEST
AB 2846, as amended, Maienschein. Power of appointments.
Powers of appointment.
Existing law provides a statutory body of law relating to powers
of appointment, including the creation and exercise of, and the
revocability of the creation, exercise, or release of, a power of
appointment. Existing law provides that a power of appointment
can be created only by a donor having the capacity to transfer the
interest in property to which the power relates. Existing law for
these purposes defines a person to whom a power of appointment is
given or in whose favor a power of appointment is reserved as a
"donee ."
This bill would revise and recast those provisions. The bill
would impose additional requirements on the creation of a power of
appointment, including the existence of a legally valid creating
instrument that manifests the donor's intent to create a power of
appointment and that transfers the appointive property, except as
specified. The bill would define the term "power of appointment"
for those purposes. The bill would instead define a person to
whom a power of appointment is given or in whose favor a power of
appointment is reserved as a "powerholder. " The
bill would require, 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 to be allocated
in the permissible manner in accordance with the terms of the
creating instrument and to carry out the intent of the
powerholder. The bill would require, if a powerholder makes a valid
partial appointment to a taker in default of appointment, the taker
in default of appointment to share fully in unappointed property. The
bill would make property subject to a special power of appointment
subject to the claims of creditors of the powerholder or of the
powerholder's estate or the expenses of administration of the
powerholder's estate under specified circumstances. The bill would
make conforming changes to related provisions, and would make changes
to provisions related to an unexercised general power of
appointment, as specified.
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. Section 610 of the Probate Code is amended to read:
610. As used in this part:
(a) "Appointee" means the person in whose favor a power of
appointment is exercised.
(b) "Appointive property" means the property or interest in
property that is the subject of the power of appointment.
(c) "Creating instrument" means the deed, will, trust, or other
writing or document that creates or reserves the power of
appointment.
(d) "Donee" or "powerholder" means the person to whom a power of
appointment is given or in whose favor a power of appointment is
reserved.
(e)
(d) "Donor" means the person who creates or reserves a
power of appointment.
(f)
(e) "Permissible appointee" means a person in whose
favor a power of appointment can be exercised.
(g)
(f) "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.
(g) "Powerholder" means the person to whom a power of appointment
is given or in whose favor a power of appointment is reserved.
SEC. 2. Section 611 of the Probate Code
is amended to read:
611. (a) A power of appointment is "general" only to the extent
that it is exercisable in favor of the donee,
powerholder, the donee's powerholder's
estate, the donee's powerholder's
creditors, or creditors of the donee's
powerholder's estate, whether or not it is exercisable in favor
of others.
(b) A power to consume, invade, or appropriate property for the
benefit of a person in discharge of the donee's
powerholder's obligation of support that is limited by an
ascertainable standard relating to the person's health, education,
support, or maintenance is not a general power of appointment.
(c) A power exercisable by the donee
powerholder only in conjunction with a person having a
substantial interest in the appointive property that is adverse to
the exercise of the power in favor of the donee,
powerholder, the donee's
powerholder's estate, the donee's
powerholder's creditors, or creditors of the donee's
powerholder's estate is not a general power of
appointment.
(d) A power of appointment that is not "general" is "special."
(e) A power of appointment may be general as to some appointive
property, or an interest in or a specific portion of appointive
property, and be special as to other appointive property.
SEC. 3. Section 613 of the Probate Code
is amended to read:
613. A power of appointment is "imperative" where the creating
instrument manifests an intent that the permissible appointees be
benefited even if the donee powerholder
fails to exercise the power. An imperative power can exist even
though the donee powerholder has the
privilege of selecting some and excluding others of the designated
permissible appointees. All other powers of appointment are
"discretionary." The donee powerholder
of a discretionary power is privileged to exercise, or not to
exercise, the power as the donee powerholder
chooses.
SEC. 4. Section 621 is added to the
Probate Code , to read:
621. (a) A power of appointment is created only if all of the
following are satisfied:
(1) There is a creating instrument.
(2) The creating instrument is valid under applicable law.
(3) Except as provided in subdivision (b), the creating instrument
transfers the appointive property.
(4) The terms of the creating instrument 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) Paragraph (3) of subdivision (a) does not apply to the
creation of a power of appointment by the exercise of a power of
appointment.
SEC. 5. Section 625 of the Probate Code
is amended to read:
625. (a) A power of appointment can be exercised only by a
donee powerholder having the capacity
to transfer the interest in property to which the power relates.
(b) Unless the creating instrument otherwise provides, a
donee powerholder who is a minor may not
exercise a power of appointment during minority.
SEC. 6. Section 633 of the Probate Code
is amended to read:
633. (a) If the creating instrument requires the consent of the
donor or other person to exercise a power of appointment, the power
can only be exercised when the required consent is contained in the
instrument of exercise or in a separate written instrument, signed in
each case by the person whose consent is required.
(b) Unless expressly prohibited by the creating instrument:
(1) If a person whose consent is required dies, the power may be
exercised by the donee powerholder
without the consent of that person.
(2) If a person whose consent is required becomes legally
incapable of consenting, the person's guardian or conservator may
consent to an exercise of the power.
(3) A consent may be given before or after the exercise of the
power by the donee. powerholder.
SEC. 7. Section 634 of the Probate Code
is amended to read:
634. A power of appointment created in favor of two or more
donees powerholders can only be
exercised when all of the donees powerholders
unite in its exercise. If one or more of the donees
powerholders dies, becomes legally incapable of
exercising the power, or releases the power, the power may be
exercised by the others, unless expressly prohibited by the creating
instrument.
SEC. 8. Section 640 of the Probate Code
is amended to read:
640. (a) The exercise of a power of appointment requires a
manifestation of the donee's powerholder's
intent to exercise the power.
(b) A manifestation of the donee's
powerholder's intent to exercise a power of appointment exists
in any of the following circumstances:
(1) The donee powerholder declares,
in substance, that the donee powerholder
exercises specific powers or all the powers the donee
powerholder has.
(2) The donee powerholder purports
to transfer an interest in the appointive property that the
donee powerholder would have no power to
transfer except by virtue of the power.
(3) The donee powerholder makes a
disposition that, when considered with reference to the property
owned and the circumstances existing at the time of the disposition,
manifests the donee's powerholder's
understanding that the donee powerholder
was disposing of the appointive property.
(c) The circumstances described in subdivision (b) are
illustrative, not exclusive.
SEC. 9. Section 641 of the Probate Code
is amended to read:
641. (a) A general residuary clause in a will, or a will making
general disposition of all the testator's property, does not exercise
a power of appointment held by the testator unless specific
reference is made to the power or there is some other indication of
intent to exercise the power.
(b) This section applies in a case where the donee
powerholder dies on or after July 1, 1982.
SEC. 10. Section 642 of the Probate
Code is amended to read:
642. If a power of appointment existing at the donee's
powerholder's death, but created after the
execution of the donee's powerholder's
will, is exercised by the will, the appointment is effective except
in either of the following cases:
(a) The creating instrument manifests an intent that the power may
not be exercised by a will previously executed.
(b) The will manifests an intent not to exercise a power
subsequently acquired.
SEC. 11. Section 650 of the Probate
Code is amended to read:
650. (a) The donee powerholder of a
general power of appointment may make an appointment:
(1) Of all of the appointive property at one time, or several
partial appointments at different times, where the power is
exercisable inter vivos.
(2) Of present or future interests or both.
(3) Subject to conditions or charges.
(4) Subject to otherwise lawful restraints on the alienation of
the appointed interest.
(5) In trust.
(6) Creating a new power of appointment.
(b) The listing in subdivision (a) is illustrative, not exclusive.
SEC. 12. Section 651 of the
Probate Code is amended to read:
651. Subject to the limitations imposed by the creating
instrument, the donee powerholder of a
special power may make any of the types of appointment permissible
for the donee powerholder of a general
power under Section 650.
SEC. 13. Section 652 of the Probate
Code is amended to read:
652. (a) Except as provided in subdivision (b), the
donee powerholder of a special power of
appointment may appoint the whole or any part of the appointive
property to any one or more of the permissible appointees and exclude
others.
(b) If the donor specifies either a minimum or maximum share or
amount to be appointed to one or more of the permissible appointees,
the exercise of the power must conform to the specification.
SEC. 14. Section 660 of the Probate
Code is amended to read:
660. (a) The donee powerholder of a
power of appointment that is presently exercisable, whether general
or special, can contract to make an appointment to the same extent
that the donee powerholder could make
an effective appointment.
(b) The donee powerholder of a power
of appointment cannot contract to make an appointment while the
power of appointment is not presently exercisable. If a promise to
make an appointment under such a power is not performed, the promisee
cannot obtain either specific performance or damages, but the
promisee is not prevented from obtaining restitution of the value
given by the promisee for the promise.
(c) Unless the creating instrument expressly provides that the
donee powerholder may not contract to
make an appointment while the power of appointment is not presently
exercisable, subdivision (b) does not apply to the case where the
donor and the donee powerholder are the
same person. In this case, the donee
powerholder can contract to make an appointment to the same
extent that the donee powerholder could
make an effective appointment if the power of appointment were
presently exercisable.
SEC. 15. Section 661 of the Probate Code
is amended to read:
661. (a) Unless the creating instrument otherwise provides, a
general or special power of appointment that is a discretionary
power, whether testamentary or otherwise, may be released, either
with or without consideration, by a written instrument signed by the
donee powerholder and delivered as
provided in subdivision (c).
(b) A releasable power may be released with respect to the whole
or any part of the appointive property and may also be released in
such manner as to reduce or limit the permissible appointees. No
partial release of a power shall be deemed to make imperative the
remaining power that was not imperative before the release unless the
instrument of release expressly so provides. No release of a power
that is not presently exercisable is permissible where the donor
designated persons or a class to take in default of the
donee's powerholder's exercise of the power
unless the release serves to benefit all persons designated as
provided by the donor.
(c) A release shall be delivered as follows:
(1) If the creating instrument specifies a person to whom a
release is to be delivered, the release shall be delivered to that
person, but delivery need not be made as provided in this paragraph
if the person cannot with due diligence be found.
(2) In a case where the property to which the power relates is
held by a trustee, the release shall be delivered to the trustee.
(3) In a case not covered by paragraph (1) or (2), the release may
be delivered to any of the following:
(A) A person, other than the donee,
powerholder, who could be adversely affected by the exercise of
the power.
(B) The county recorder of the county in which the donee
powerholder resides or in which the deed, will,
or other instrument creating the power is filed.
(d) A release of a power of appointment that affects real property
or obligations secured by real property shall be acknowledged and
proved, and may be certified and recorded, in like manner and with
like effect as grants of real property, and all statutory provisions
relating to the recordation or nonrecordation of conveyances of real
property and to the effect thereof apply to a release with like
effect, without regard to the date when the release was delivered, if
at all, pursuant to subdivision (c). Failure to deliver, pursuant to
subdivision (c), a release that is recorded pursuant to this
subdivision does not affect the validity of any transaction with
respect to the real property or obligation secured thereby, and the
general laws of this state on recording and its effect govern the
transaction.
(e) This section does not impair the validity of a release made
before July 1, 1970.
SEC. 16. Section 662 of the Probate
Code is amended to read:
662. (a) A release on behalf of a minor donee
powerholder shall be made by the guardian of the estate of
the minor pursuant to an order of court obtained under this section.
(b) The guardian or other interested person may file a petition
with the court in which the guardianship of the estate proceeding is
pending for an order of the court authorizing or requiring the
guardian to release the ward's powers as a donee
powerholder or a power of appointment in whole or in part.
(c) Notice of the hearing on the petition shall be given for the
period and in the manner provided in Chapter 3 (commencing with
Section 1460) of Part 1 of Division 4 to all of the following (other
than the petitioner or persons joining in the petition):
(1) The persons required to be given notice under Chapter 3
(commencing with Section 1460) of Part 1 of Division 4.
(2) The donor of the power, if alive.
(3) The trustee, if the property to which the power relates is
held by a trustee.
(4) Other persons as ordered by the court.
(d) After hearing, the court in its discretion may make an order
authorizing or requiring the guardian to release on behalf of the
ward a general or special power of appointment as permitted under
Section 661, if the court determines, taking into consideration all
the relevant circumstances, that the ward as a prudent person would
make the release of the power of appointment if the ward had the
capacity to do so.
(e) Nothing in this section imposes any duty on the guardian to
file a petition under this section, and the guardian is not liable
for failure to file a petition under this section.
SEC. 17. Section 671 of the Probate
Code is amended to read:
671. (a) Unless the creating instrument or the donee,
powerholder, in writing, manifests a contrary
intent, where the donee powerholder
dies without having exercised an imperative power of appointment
either in whole or in part, the persons designated as permissible
appointees take equally of the property not already appointed. Where
the creating instrument establishes a minimum distribution
requirement that is not satisfied by an equal division of the
property not already appointed, the appointees who have received a
partial appointment are required to return a pro rata portion of the
property they would otherwise be entitled to receive in an amount
sufficient to meet the minimum distribution requirement.
(b) Where an imperative power of appointment has been exercised
defectively, either in whole or in part, its proper execution may be
adjudged in favor of the person intended to be benefited by the
defective exercise.
(c) Where an imperative power of appointment has been created so
that it confers on a person a right to have the power exercised in
the person's favor, the proper exercise of the power can be compelled
in favor of the person, or the person's assigns, creditors,
guardian, or conservator.
SEC. 18. Section 672 of the Probate
Code is amended to read:
672. (a) Except as provided in subdivision (b), if the
donee powerholder of a discretionary power of
appointment fails to appoint the property, releases the entire power,
or makes an ineffective appointment, in whole or in part, the
appointive property not effectively appointed passes to the person
named by the donor as taker in default or, if there is none, reverts
to the donor.
(b) If the donee powerholder of a
general power of appointment makes an ineffective appointment, an
implied alternative appointment to the donee's
powerholder's estate may be found if the donee
powerholder has manifested an intent that the
appointive property be disposed of as property of the donee
powerholder rather than as in default of
appointment.
SEC. 19. Section 673 of the Probate
Code is amended to read:
673. (a) Except as provided in subdivision (b), if an appointment
by will or by instrument effective only at the death of the
donee powerholder is ineffective because of the
death of an appointee before the appointment becomes effective and
the appointee leaves issue surviving the donee,
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 donee,
powerholder, except that the property passes only to persons
who are permissible appointees, including appointees permitted under
Section 674. 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
donee powerholder manifests an intent that some
other disposition of the appointive property shall be made.
SEC. 20. Section 674 of the Probate Code
is amended to read:
674. (a) Unless the creating instrument expressly provides
otherwise, if a permissible appointee dies before the exercise of a
special power of appointment, the donee
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 special 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.
SEC. 2. SEC. 21. Section 675 is
added to the Probate Code, to read:
675. 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 in accordance with the terms of the creating
instrument and that best carries out the powerholder's intent.
SEC. 3. SEC. 22. Section 676 is
added to the Probate Code, to read:
676. 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.
SEC. 23. Section 680 of the Probate
Code is amended to read:
680. The donor of a power of appointment cannot nullify or alter
the rights given creditors of the donee
powerholder by Sections 682, 683, and 684 by any language in
the instrument creating the power.
SEC. 4. SEC. 24. Section 681 of the
Probate Code is amended to read:
681. (a) Except as provided in subdivision (b), property covered
by a special power of appointment is not subject to the claims of
creditors of the powerholder or of the powerholder's estate or to the
expenses of the administration of the powerholder's estate.
(b) Property subject to a special power of appointment shall be
subject to the claims of creditors of the powerholder or of the
powerholder's estate or the expenses of administration of the
powerholder's estate under either of the following circumstances:
(1) To the extent that the powerholder owned the property and,
reserving the special power, transferred the property in violation of
the Uniform Voidable Transactions Act (Chapter 1 (commencing with
Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code).
(2) If the initial gift in default of the exercise of the power is
to the powerholder or the powerholder's estate.
SEC. 25. Section 682 of the Probate
Code is amended to read:
682. (a) To the extent that the property owned by the
donee powerholder is inadequate to satisfy the
claims of the donee's powerholder's
creditors, property subject to a general power of appointment that is
presently exercisable is subject to the claims to the same extent
that it would be subject to the claims if the property were owned by
the donee. powerholder.
(b) Upon the death of the donee,
powerholder, to the extent that the donee's
powerholder's estate is inadequate to satisfy the claims
of creditors of the estate and the expenses of administration of the
estate, property subject to a general testamentary power of
appointment or to a general power of appointment that was presently
exercisable at the time of the donee's
powerholder's death is subject to the claims and expenses to
the same extent that it would be subject to the claims and expenses
if the property had been owned by the donee.
powerholder.
(c) This section applies whether or not the power of appointment
has been exercised.
SEC. 5. SEC. 26. Section 683 of the
Probate Code is amended to read:
683. Property subject to a general power of appointment created
by the powerholder donor in the
powerholder's donor's favor, whether or
not presently exercisable, is subject to the claims of the
powerholder's donor's creditors or the
powerholder's donor's estate and to the expenses
of the administration of the powerholder's
donor's estate, except to the extent the powerholder
donor effectively irrevocably appointed the
property subject to the general power of appointment in favor of a
person other than the powerholder donor
or the powerholder's donor's estate.
SEC. 27. Section 684 of the Probate
Code is amended to read:
684. For the purposes of Sections 682 and 683, a person to whom
the donee powerholder owes an
obligation of support shall be considered a creditor of the
donee powerholder to the extent that a legal
obligation exists for the donee powerholder
to provide the support.
