Citations Affected: IC 32-17.5.
Synopsis: Uniform disclaimer of property interests act. Adopts the
uniform disclaimer of property interests act. Repeals statutes that are
superseded concerning disclaimer of property interests. (The
introduced version of this bill was prepared by the probate code study
Effective: July 1, 2003.
January 7, 2003, read first time and referred to Committee on Judiciary.
January 16, 2003, amended, reported _ Do Pass.
January 21, 2003, read second time, ordered engrossed. Engrossed.
January 23, 2003, read third time, passed. Yeas 93, nays 0.
A BILL FOR AN ACT to amend the Indiana Code concerning
must be given to the need to promote uniformity of the law with
respect to its subject matter among states that enact it.
Sec. 5. This article may be cited as the "Uniform Disclaimer of Property Interests Act (1999)".
Chapter 2. Definitions
Sec. 1. "Beneficiary designation" means an instrument, other than an instrument creating a trust, naming the beneficiary of:
(1) an annuity or insurance policy;
(2) an account with a designation for payment on death;
(3) a security registered in beneficiary form;
(4) a pension, profit sharing, retirement, or other employment related benefit plan; or
(5) any other nonprobate transfer at death, except for property held as joint tenants with rights of survivorship or as tenants by the entireties.
Sec. 2. "Disclaimant" means the person to whom a disclaimed interest or power would have passed had the disclaimer not been made.
Sec. 3. "Disclaimed interest" means the interest that would have passed to the disclaimant had the disclaimer not been made.
Sec. 4. "Disclaimer" means a refusal to accept an interest in or power over property.
Sec. 5. "Fiduciary" means:
(1) a personal representative, a trustee, or an agent acting under a power of attorney; or
(2) a person authorized to act as a fiduciary with respect to the property of another person.
Sec. 6. "Future interest" means an interest that, if it takes effect in possession or enjoyment, takes effect later than the time of its creation.
Sec. 7. "Jointly held property" means property held in the name of at least two (2) persons under an arrangement in which:
(1) all holders have concurrent interests; and
(2) the last surviving holder is entitled to the whole of the property.
Sec. 8. "Person" means an individual, a corporation, a business trust, an estate, a trust, a partnership, a limited liability company, an association, a joint venture, a government, a governmental subdivision, an agency, or instrumentality, a public corporation, or any other legal or commercial entity.
Sec. 9. "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any
territory or insular possession subject to the jurisdiction of the
United States. The term includes an Indian tribe or band or
Alaskan native village recognized by federal law or formally
acknowledged by a state.
Sec. 10. "Time of distribution" means the time when a disclaimed interest would otherwise have taken effect in possession or enjoyment.
Sec. 11. "Trust" means:
(1) a charitable or noncharitable express trust and any additions to the trust, regardless of when or how the trust is created; and
(2) a trust created under a statute, judgment, or decree which requires the trust to be administered in the manner of an express trust.
Chapter 3. Power to Disclaim; Irrevocability of Disclaimer
Sec. 1. A person may disclaim, in whole or part, any interest in or power over property, including a power of appointment. A person may disclaim the interest or power even if the creator of the interest or power imposed:
(1) a spendthrift provision or similar restriction on transfer; or
(2) a restriction or limitation on the right to disclaim.
Sec. 2. Except to the extent a fiduciary's right to disclaim is expressly restricted or limited by another statute or by the instrument creating the fiduciary relationship, a fiduciary may disclaim, in whole or part, any interest in or power over property, including a power of appointment, whether acting in a personal or representative capacity. A fiduciary may disclaim the interest or power even if:
(1) the creator of the power or interest imposed a spendthrift provision or similar restriction on transfer or a restriction or limitation on the right to disclaim; or
(2) an instrument other than the instrument that created the fiduciary relationship imposed a restriction or limitation on the right to disclaim.
Sec. 3. (a) As used in this section, "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.
(b) A disclaimer must:
(1) be in a writing or other record;
(2) state that it is a disclaimer;
(3) describe the interest or power disclaimed;
died before the time of distribution, the disclaimed
interest passes only to the descendants of the disclaimant
who survive at the time of distribution.
(B) If the disclaimant is not an individual, the disclaimed interest passes as if the disclaimant did not exist.
(4) Upon the disclaimer of a preceding interest:
(A) a future interest held by a person other than the disclaimant takes effect as if the disclaimant had died or ceased to exist immediately before the time of distribution; and
(B) a future interest held by the disclaimant is not accelerated in possession or enjoyment.
Chapter 5. Disclaimer of Rights of Survivorship in Jointly Held Property
Sec. 1. (a) Upon the death of a holder of jointly held property, a surviving holder may disclaim, in whole or part, the greater of the following:
(1) A fractional share of the property determined by dividing one (1) by the number of joint holders alive immediately before the death of the holder to whose death the disclaimer relates.
(2) All of the property except that part of the value of the entire interest attributable to the contribution furnished by the disclaimant.
(b) A disclaimer under subsection (a) takes effect as of the death of the holder of jointly held property to whose death the disclaimer relates.
(c) An interest in jointly held property disclaimed by a surviving holder of the property passes as if the disclaimant predeceased the holder to whose death the disclaimer relates.
Chapter 6. Disclaimer of Certain Powers or Interests
Sec. 1. If a trustee disclaims an interest in property that otherwise would have become trust property, the interest does not become trust property.
Sec. 2. If the holder of a power of appointment or other power not held in a fiduciary capacity disclaims the power, the following rules apply:
(1) If the holder has not exercised the power, the disclaimer takes effect as of the time the instrument creating the power becomes irrevocable.
(2) If the holder has exercised the power and the disclaimer is of a power other than a presently exercisable general power
of appointment, the disclaimer takes effect immediately after
the last exercise of the power.
(3) The instrument creating the power is construed as if the power expired when the disclaimer became effective.
Sec. 3. (a) A disclaimer of an interest in property by an appointee of a power of appointment takes effect as of the time the instrument by which the holder exercises the power becomes irrevocable.
(b) A disclaimer of an interest in property by:
(1) persons eligible to receive property upon exercise of the power of appointment; or
(2) a taker in default of an exercise of a power of appointment;
takes effect as of the time the instrument creating the power becomes irrevocable.
Sec. 4. (a) If a fiduciary disclaims a power held in a fiduciary capacity that has not been exercised, the disclaimer takes effect as of the time the instrument creating the power becomes irrevocable.
(b) If a fiduciary disclaims a power held in a fiduciary capacity that has been exercised, the disclaimer takes effect immediately after the last exercise of the power.
(c) A disclaimer under this section is effective as to another fiduciary if the disclaimer so provides and the fiduciary disclaiming has the authority to bind the estate, trust, or other person for whom the fiduciary is acting.
Chapter 7. Delivery or Filing of Disclaimer
Sec. 1. Subject to sections 2 through 11 of this chapter, a disclaimer may be delivered by:
(1) personal delivery;
(2) first class mail; or
(3) any other method likely to result in receipt of the disclaimer.
Sec. 2. A disclaimer of an interest created under the law of intestate succession or an interest created by will, other than an interest in a testamentary trust, must be:
(1) delivered to the personal representative of the decedent's estate; or
(2) filed with a court having jurisdiction to appoint the personal representative if no personal representative is then serving.
Sec. 3. A disclaimer of an interest in a testamentary trust must be:
a result of a disclaimer or transfer, the disclaimed or transferred
interest is treated under:
(1) Title 26 of the United States Code, in effect on July 1, 2003, or later amended or a successor statute; and
(2) the regulations promulgated under the statute referred to in subdivision (1);
as never having been transferred to the disclaimant, then the disclaimer or transfer is effective as a disclaimer under this article.
Chapter 10. Recording of Disclaimer
Sec. 1. If an instrument transferring an interest in or power over property subject to a disclaimer is required or permitted by law to be filed, recorded, or registered, the disclaimer may be so filed, recorded, or registered. However, the failure to file, record, or register the disclaimer does not affect its validity as between the disclaimant and persons to whom the property interest or power passes by reason of the disclaimer.