Bill Text: TX HB1954 | 2017-2018 | 85th Legislature | Comm Sub

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Bill Title: Relating to certain accounts established at financial institutions, including disclosures related to those accounts.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Engrossed - Dead) 2017-05-22 - Not again placed on intent calendar [HB1954 Detail]

Download: Texas-2017-HB1954-Comm_Sub.html

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By: Murr (Senate Sponsor - Nichols) H.B. No. 1954
(In the Senate - Received from the House May 1, 2017;
May 4, 2017, read first time and referred to Committee on Business &
Commerce; May 19, 2017, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 8, Nays 0;
May 19, 2017, sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR H.B. No. 1954 By: Nichols

A BILL TO BE ENTITLED
AN ACT
relating to certain accounts established at financial
institutions, including disclosures related to those accounts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 113.002, Estates Code, is amended to
read as follows:
Sec. 113.002. DEFINITION OF PARTY. (a) In this chapter,
"party" means a person who, by the terms of a multiple-party
account, has a present right, subject to request, to payment from
the account. Except as otherwise required by the context, the term
includes a guardian, personal representative, or assignee,
including an attaching creditor, of a party. [The term also
includes a person identified as a trustee of an account for another
regardless of whether a beneficiary is named. The term does not
include a named beneficiary unless the beneficiary has a present
right of withdrawal.]
(b) A P.O.D. payee, including a charitable organization,
[or beneficiary of a trust account] is a party only after the
account becomes payable to the P.O.D. payee [or beneficiary] by
reason of the P.O.D. payee [or beneficiary] surviving the original
payee [or trustee].
SECTION 2. Section 113.004, Estates Code, is amended to
read as follows:
Sec. 113.004. TYPES OF ACCOUNTS. In this chapter:
(1) ["Convenience account" means an account that:
[(A) is established at a financial institution by
one or more parties in the names of the parties and one or more
convenience signers; and
[(B) has terms that provide that the sums on
deposit are paid or delivered to the parties or to the convenience
signers "for the convenience" of the parties.
[(2)] "Joint account" means an account payable on
request to one or more of two or more parties, regardless of whether
there is a right of survivorship.
(2) [(3)] "Multiple-party account" means a joint
account or[, a convenience account,] a P.O.D. account[, or a trust
account]. The term does not include an account established for the
deposit of funds of a partnership, joint venture, or other
association for business purposes, or an account controlled by one
or more persons as the authorized agent or trustee for a
corporation, unincorporated association, charitable or civic
organization, or a regular fiduciary or trust account in which the
relationship is established other than by deposit agreement.
(3) [(4)] "P.O.D. account," including an account
designated as a transfer on death or T.O.D. account, means an
account payable on request to:
(A) one person during the person's lifetime and,
on the person's death, to one or more P.O.D. payees; or
(B) one or more persons during their lifetimes
and, on the death of all of those persons, to one or more P.O.D.
payees.
[(5) "Trust account" means an account in the name of
one or more parties as trustee for one or more beneficiaries in
which the relationship is established by the form of the account and
the deposit agreement with the financial institution and in which
there is no subject of the trust other than the sums on deposit in
the account. The deposit agreement is not required to address
payment to the beneficiary. The term does not include:
[(A) a regular trust account under a testamentary
trust or a trust agreement that has significance apart from the
account; or
[(B) a fiduciary account arising from a fiduciary
relationship, such as the attorney-client relationship.]
SECTION 3. Section 113.052, Estates Code, is amended to
read as follows:
Sec. 113.052. FORM. A financial institution may use the
following form to establish the type of account selected by a party:
UNIFORM SINGLE-PARTY OR MULTIPLE-PARTY ACCOUNT SELECTION
FORM NOTICE: The type of account you select may determine how
property passes on your death. Your will may not control the
disposition of funds held in some of the following accounts.
You may choose to designate one or more convenience signers
on an account[, even if the account is not a convenience account].
A designated convenience signer may make transactions on your
behalf during your lifetime, but does not own the account during
your lifetime. The designated convenience signer owns the account
on your death only if the convenience signer is also designated as a
P.O.D. payee [or trust account beneficiary].
Select one of the following accounts by placing your initials
next to the account selected:
___ (1) SINGLE-PARTY ACCOUNT WITHOUT "P.O.D." (PAYABLE ON
DEATH) DESIGNATION. The party to the account owns the account. On
the death of the party, ownership of the account passes as a part of
the party's estate under the party's will or by intestacy.
Enter the name of the party:
________________________________________________________________
Enter the name(s) of the convenience signer(s), if you want
one or more convenience signers on this account:
________________________________________________________________
________________________________________________________________
___ (2) SINGLE-PARTY ACCOUNT WITH "P.O.D." (PAYABLE ON
DEATH) DESIGNATION. The party to the account owns the account. On
the death of the party, ownership of the account passes to the
P.O.D. beneficiaries of the account. The account is not a part of
the party's estate.
Enter the name of the party:
________________________________________________________________
Enter the name or names of the P.O.D. beneficiaries:
________________________________________________________________
________________________________________________________________
Enter the name(s) of the convenience signer(s), if you want
one or more convenience signers on this account:
________________________________________________________________
________________________________________________________________
___ (3) MULTIPLE-PARTY ACCOUNT WITHOUT RIGHT OF
SURVIVORSHIP. The parties to the account own the account in
proportion to the parties' net contributions to the account. The
financial institution may pay any sum in the account to a party at
any time. On the death of a party, the party's ownership of the
account passes as a part of the party's estate under the party's
will or by intestacy.
Enter the names of the parties:
________________________________________________________________
________________________________________________________________
________________________________________________________________
Enter the name(s) of the convenience signer(s), if you want
one or more convenience signers on this account:
________________________________________________________________
________________________________________________________________
___ (4) MULTIPLE-PARTY ACCOUNT WITH RIGHT OF
SURVIVORSHIP. The parties to the account own the account in
proportion to the parties' net contributions to the account. The
financial institution may pay any sum in the account to a party at
any time. On the death of a party, the party's ownership of the
account passes to the surviving parties.
Enter the names of the parties:
________________________________________________________________
________________________________________________________________
Enter the name(s) of the convenience signer(s), if you want
one or more convenience signers on this account:
________________________________________________________________
________________________________________________________________
___ (5) MULTIPLE-PARTY ACCOUNT WITH RIGHT OF SURVIVORSHIP
AND P.O.D. (PAYABLE ON DEATH) DESIGNATION. The parties to the
account own the account in proportion to the parties' net
contributions to the account. The financial institution may pay
any sum in the account to a party at any time. On the death of the
last surviving party, the ownership of the account passes to the
P.O.D. beneficiaries.
Enter the names of the parties:
________________________________________________________________
________________________________________________________________
Enter the name or names of the P.O.D. beneficiaries:
________________________________________________________________
________________________________________________________________
Enter the name(s) of the convenience signer(s), if you want
one or more convenience signers on this account:
________________________________________________________________
________________________________________________________________
ACKNOWLEDGMENT: I acknowledge that I have read each
paragraph of this form and have received disclosure of the
ownership rights to the accounts listed above. I have placed my
initials next to the type of account I want.
_______________________
Signature
[___ (6) CONVENIENCE ACCOUNT. The parties to the account
own the account. One or more convenience signers to the account
may make account transactions for a party. A convenience signer
does not own the account. On the death of the last surviving party,
ownership of the account passes as a part of the last surviving
party's estate under the last surviving party's will or by
intestacy. The financial institution may pay funds in the account
to a convenience signer before the financial institution receives
notice of the death of the last surviving party. The payment to a
convenience signer does not affect the parties' ownership of the
account.
[Enter the names of the parties:
________________________________________________________________
________________________________________________________________
[Enter the name(s) of the convenience signer(s):
________________________________________________________________
________________________________________________________________
[___ (7) TRUST ACCOUNT. The parties named as trustees to
the account own the account in proportion to the parties' net
contributions to the account. A trustee may withdraw funds from the
account. A beneficiary may not withdraw funds from the account
before all trustees are deceased. On the death of the last
surviving trustee, the ownership of the account passes to the
beneficiary. The trust account is not a part of a trustee's estate
and does not pass under the trustee's will or by intestacy, unless
the trustee survives all of the beneficiaries and all other
trustees.
[Enter the name or names of the trustees:
________________________________________________________________
________________________________________________________________
[Enter the name or names of the beneficiaries:
________________________________________________________________
________________________________________________________________
[Enter the name(s) of the convenience signer(s), if you want
one or more convenience signers on this account:
________________________________________________________________
_______________________________________________________________]
SECTION 4. Section 113.053, Estates Code, is amended to
read as follows:
Sec. 113.053. REQUIRED DISCLOSURE; USE OF FORM.
(a) Except as provided by Subsection (d), a [A] financial
institution shall disclose the information provided in this
subchapter to a customer before [at the time] the customer selects
or modifies an account.
(a-1) A financial institution is considered to have
disclosed the information provided in this subchapter if:
(1) the financial institution uses the form provided
by Section 113.052; and
(2) the customer signs the acknowledgment provided at
the end [places the customer's initials to the right of each
paragraph] of the form.
(b) If a financial institution varies the format of the form
provided by Section 113.052, the financial institution shall
disclose [may make disclosures in the account agreement or in any
other form that discloses] the information provided by this
subchapter[. Disclosures under this subsection must:
[(1) be given] separately from other account
information except that the financial institution may disclose that
information as part of other account documentation if the
disclosures are the first items of the documentation[;
[(2) be provided before account selection or
modification;
[(3) be printed in 14-point boldfaced type; and
[(4) if the discussions that precede the account
opening or modification are conducted primarily in a language other
than English, be in that language].
(c) The financial institution shall notify the customer of
the type of account the customer selected. This requirement is
satisfied by providing the customer with a copy of the account
opening or modification documentation, as appropriate, in paper or
electronic format.
(d) If a type of multiple-party account is not available
from a financial institution, the financial institution is not
required to make a disclosure about that type of account.
(e) This section does not apply to:
(1) a credit union; or
(2) an account that is opened or modified by a customer
who:
(A) is a legal entity, including a governmental
entity; or
(B) is acting as a legal representative for
another person.
SECTION 5. Section 113.101, Estates Code, is amended to
read as follows:
Sec. 113.101. EFFECT OF CERTAIN PROVISIONS REGARDING
OWNERSHIP BETWEEN PARTIES AND OTHERS. The provisions of this
subchapter and Subchapters B and D that relate to beneficial
ownership between parties to multiple-party accounts[,] or between
parties and P.O.D. payees [or beneficiaries] of multiple-party
accounts:
(1) are relevant only to controversies between those
persons and those persons' creditors and other successors; and
(2) do not affect the withdrawal power of those
persons under the terms of an account contract.
SECTION 6. Section 113.106, Estates Code, is amended to
read as follows:
Sec. 113.106. OWNERSHIP AND OPERATION OF [OTHER] ACCOUNT
WITH CONVENIENCE SIGNER; PAYMENT; LIABILITY. (a) One or more
convenience signers may be designated on [An account established by
one or more parties at a financial institution that is not
designated as a convenience account, but is instead designated as]
a single-party account or [another type of] multiple-party
account[, may provide that the sums on deposit may be paid or
delivered to the parties or to one or more convenience signers] "for
the convenience of the party or parties." A convenience signer is
not an owner of the account but, on behalf of the party or parties to
the account, may make deposits to and be paid or delivered sums on
deposit from the account during the lifetime of the party or
parties. A convenience signer may be designated as a P.O.D. payee
of the account.
(b) Subsections (c)-(i) apply to an account described by
Subsection (a) except [Except] as provided by Section 113.1541[:
[(1) the provisions of Sections 113.105, 113.206, and
113.208 apply to an account described by Subsection (a), including
provisions relating to the ownership of the account during the
lifetimes and on the deaths of the parties and provisions relating
to the powers and duties of the financial institution at which the
account is established; and
[(2) any other law relating to a convenience signer
applies to a convenience signer designated as provided by this
section to the extent the law applies to a convenience signer on a
convenience account].
(c) The making of a deposit in an account described by
Subsection (a) does not affect the title to the deposit.
(d) A party to an account described by Subsection (a) is not
considered to have made a gift of the deposit, or of any additions
or accruals to the deposit, to a convenience signer.
(e) An addition made to an account described by Subsection
(a) by anyone other than a party, and accruals to the addition, are
considered to have been made by a party.
(f) Deposits to an account described by Subsection (a) and
additions and accruals to the deposits may be paid to a party or a
convenience signer.
(g) A financial institution is completely released from
liability for a payment made from an account described by
Subsection (a) before the financial institution receives notice in
writing signed by a party not to make the payment in accordance with
the terms of the account. After receipt of the notice from a party,
the financial institution may require a party to approve any
further payments from the account.
(h) A financial institution that makes a payment of the sums
on deposit in an account described by Subsection (a) to a
convenience signer after the death of the last surviving party, but
before the financial institution receives written notice of the
last surviving party's death, is completely released from liability
for the payment.
(i) A financial institution that makes a payment of the sums
on deposit in an account described by Subsection (a) to the personal
representative of the deceased last surviving party's estate after
the death of the last surviving party, but before a court order
prohibiting payment is served on the financial institution, is, to
the extent of the payment, released from liability to any person
claiming a right to the funds. The personal representative's
receipt of the funds is a complete release and discharge of the
financial institution.
SECTION 7. Section 113.151(d), Estates Code, is amended to
read as follows:
(d) If there are two or more surviving parties to a joint
account that is subject to a right of survivorship agreement:
(1) during the parties' lifetimes respective
ownerships are in proportion to the parties' previous ownership
interests under Sections 113.102 and[,] 113.103[, and 113.104], as
applicable, augmented by an equal share for each survivor of any
interest a deceased party owned in the account immediately before
that party's death; and
(2) the right of survivorship continues between the
surviving parties if a written agreement signed by a party who dies
provides for that continuation.
SECTION 8. Section 113.1541, Estates Code, is amended to
read as follows:
Sec. 113.1541. OWNERSHIP OF [OTHER] ACCOUNT WITH
CONVENIENCE SIGNER ON DEATH OF LAST SURVIVING PARTY. On the death
of the last surviving party to an account that has a convenience
signer designated as provided by Section 113.106, the convenience
signer does not have a right of survivorship in the account and the
estate of the last surviving party owns the account unless the
convenience signer is also designated as a P.O.D. payee [or as a
beneficiary].
SECTION 9. Sections 113.155, 113.156, and 113.158, Estates
Code, are amended to read as follows:
Sec. 113.155. EFFECT OF DEATH OF PARTY ON CERTAIN ACCOUNTS
WITHOUT RIGHTS OF SURVIVORSHIP. The death of a party to a
multiple-party account to which Sections 113.151 and[,] 113.152[,
and 113.153] do not apply has no effect on the beneficial ownership
of the account, other than to transfer the rights of the deceased
party as part of the deceased party's estate.
Sec. 113.156. APPLICABILITY OF CERTAIN PROVISIONS ON DEATH
OF PARTY. Sections 113.151, 113.152, [113.153,] and 113.155 as to
rights of survivorship are determined by the form of the account at
the death of a party.
Sec. 113.158. NONTESTAMENTARY NATURE OF CERTAIN TRANSFERS.
Transfers resulting from the application of Sections 113.151,
113.152, [113.153,] and 113.155 are effective by reason of the
account contracts involved and this chapter and are not to be
considered testamentary transfers or subject to the testamentary
provisions of this title.
SECTION 10. Section 113.203(b), Estates Code, is amended to
read as follows:
(b) Payment may not be made to the personal representative
or heir of a deceased party unless:
(1) proofs of death are presented to the financial
institution showing that the deceased party was the last surviving
party; or
(2) there is no right of survivorship under Sections
113.151, 113.152, [113.153,] and 113.155.
SECTION 11. Section 113.209(a), Estates Code, is amended to
read as follows:
(a) Payment made in accordance with Section 113.202,
113.203, 113.204, [113.205,] or 113.207 discharges the financial
institution from all claims for those amounts paid regardless of
whether the payment is consistent with the beneficial ownership of
the account between parties, P.O.D. payees, [or beneficiaries,] or
their successors.
SECTION 12. Sections 113.251(a) and (d), Estates Code, are
amended to read as follows:
(a) A party to a multiple-party account may pledge the
account or otherwise create a security interest in the account
without the joinder of, as applicable, a P.O.D. payee, [a
beneficiary,] a convenience signer, or any other party to a joint
account, regardless of whether a right of survivorship exists.
(d) The financial institution is not required to provide the
notice described by Subsection (c) to a P.O.D. payee[,
beneficiary,] or convenience signer.
SECTION 13. Section 113.252(b), Estates Code, is amended to
read as follows:
(b) A party or[,] P.O.D. payee[, or beneficiary] who
receives payment from a multiple-party account after the death of a
deceased party is liable to account to the deceased party's
personal representative for amounts the deceased party owned
beneficially immediately before the party's death to the extent
necessary to discharge the claims and charges described by
Subsection (a) that remain unpaid after application of the deceased
party's estate. The party or[,] P.O.D. payee[, or beneficiary] is
not liable in an amount greater than the amount the party or[,]
P.O.D. payee[, or beneficiary] received from the multiple-party
account.
SECTION 14. Section 153.001(3), Estates Code, is amended to
read as follows:
(3) "P.O.D. account" has [and "trust account" have]
the meaning [meanings] assigned by Section 113.004.
SECTION 15. Section 153.002, Estates Code, is amended to
read as follows:
Sec. 153.002. INAPPLICABILITY OF CHAPTER. This chapter
does not apply to:
(1) an account with a beneficiary designation;
(2) a P.O.D. account; or
(3) [a trust account; or
[(4)] an account that provides for a right of
survivorship.
SECTION 16. Sections 113.001(2), 113.104, 113.105,
113.153, 113.154, 113.205, 113.206, and 113.208, Estates Code, are
repealed.
SECTION 17. (a) In this section, "convenience account" and
"trust account" have the meanings assigned by Section 113.004,
Estates Code, as that section existed on January 1, 2017.
(b) Except as provided by Subsection (e) of this section,
the changes in law made by this Act, including the repeal by this
Act of certain provisions of Chapter 113, Estates Code, apply only
to:
(1) a financial institution account opened on or after
the effective date of this Act; and
(2) a convenience account or trust account opened
before the effective date of this Act with respect to which a
financial institution has notified the party or parties to the
account in writing that the financial institution has converted the
account to a type of account, other than a convenience account or
trust account.
(c) A convenience account or trust account opened before the
effective date of this Act with respect to which a financial
institution has not notified the party or parties to the account in
writing that the financial institution has converted the account to
a type of account, other than a convenience account or trust
account, is governed by the law in effect on the date the account
was opened or last modified, and the former law is continued in
effect until the earliest of the date on which:
(1) the financial institution notifies the party or
parties to the account in writing that it has converted the account
to a type of account, other than a convenience account or a trust
account;
(2) the convenience account or trust account is
closed; or
(3) the last surviving party to a convenience account
or trust account dies.
(d) The repeal by this Act of provisions of Chapter 113,
Estates Code, relating to trust accounts and convenience accounts
does not affect the validity of any account or deposit agreement
between a financial institution and a depositor or other person
that is entered into before September 1, 2017.
(e) Section 113.053, Estates Code, as amended by this Act,
applies only to a financial institution account opened or modified
on or after the effective date of this Act. A financial institution
account opened or modified before the effective date of this Act is
governed by the law in effect on the date the account was opened or
modified, and the former law is continued in effect for that
purpose.
SECTION 18. This Act takes effect September 1, 2017.
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