First Regular Session 113th General Assembly (2003)


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     HOUSE ENROLLED ACT No. 1117



     AN ACT to amend the Indiana Code concerning property.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 32-17.5; (03)HE1117.1.1. -->     SECTION 1. IC 32-17.5 IS ADDED TO THE INDIANA CODE AS A NEW ARTICLE TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]:
     ARTICLE 17.5. UNIFORM DISCLAIMER OF PROPERTY INTERESTS ACT
    Chapter 1. General Provisions
    Sec. 1. This article applies to a disclaimer of an interest in or power over property regardless of when the interest or power was created.
    Sec. 2. This chapter does not limit the right of a person to waive, release, disclaim, or renounce an interest in or power over property under a law other than this article.
    Sec. 3. Except as otherwise provided in IC 32-17.5-8, an interest in or power over property existing on July 1, 2003, may be disclaimed after June 30, 2003, if the time for delivering or filing a disclaimer under IC 32-17-7 (before its repeal) has not expired.
    Sec. 4. In applying and construing this article, consideration 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;
        (4) be signed by the person making the disclaimer; and
        (5) be delivered or filed in the manner provided in IC 32-17.5-7.
    Sec. 4. A partial disclaimer may be expressed as:
        (1) a fraction;


        (2) a percentage;
        (3) a monetary amount;
        (4) a term of years;
        (5) a limitation of a power; or
        (6) any other interest or estate in the property.
    Sec. 5. A disclaimer becomes irrevocable upon the occurrence of the later of the following to occur:
        (1) The disclaimer is delivered or filed as set forth in IC 32-17.5-7.
        (2) The disclaimer becomes effective as set forth in IC 32-17.5-4 through IC 32-17.5-6.
    Sec. 6. A disclaimer made under this article is not a transfer, an assignment, or a release.
    Chapter 4. Disclaimer of Interest in Property
    Sec. 1. Except for a disclaimer under IC 32-17.5-5 or IC 32-17.5-6-1, the following rules apply to a disclaimer of an interest in property:
        (1) A disclaimer takes effect:
            (A) when the instrument creating the interest becomes irrevocable; or
            (B) upon the intestate's death if the interest arose under the law of intestate succession.
        (2) A disclaimed interest passes according to any provision in the instrument creating the interest:
            (A) that provides for the disposition of the interest should the interest be disclaimed; or
            (B) that concerns disclaimed interests in general.
        (3) If an instrument does not contain a provision described in subdivision (2), the following rules apply:
            (A) If the disclaimant is an individual, the following rules apply:
                (i) Except as provided in item (ii), the disclaimed interest passes as if the disclaimant had died immediately before the time of distribution.
                (ii) If, by law or under the instrument, the descendants of the disclaimant would share in the disclaimed interest by any method of representation had the disclaimant 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:
        (1) delivered to the trustee then serving;
        (2) delivered to the personal representative of the decedent's estate if no trustee is then serving; or
        (3) filed with a court having jurisdiction to enforce the trust if no personal representative is then serving.


    Sec. 4. A disclaimer of an interest in an inter vivos trust must be:
        (1) delivered to the trustee then serving;
        (2) filed with a court having jurisdiction to enforce the trust if no trustee is then serving; or
        (3) delivered to the settlor of a revocable trust or the transferor of the interest if the disclaimer is made before the time the instrument creating the trust becomes irrevocable.
    Sec. 5. A disclaimer of an interest created by a beneficiary designation made before the time the designation becomes irrevocable must be delivered to the person making the beneficiary designation.
    Sec. 6. A disclaimer of an interest created by a beneficiary designation made after the time the designation becomes irrevocable must be delivered to the person obligated to distribute the interest.
    Sec. 7. A disclaimer by a surviving holder of jointly held property must be delivered to the person to whom the disclaimed interest passes.
    Sec. 8. (a) This section applies to a disclaimer of an interest in property by:
        (1) an object; or
        (2) a taker in default;
of exercise of a power of appointment.
    (b) At any time after the power was created, the disclaimer must be:
        (1) delivered to the holder of the power or to the fiduciary acting under the instrument that created the power; or
        (2) filed with a court having authority to appoint a fiduciary if no fiduciary is then serving.
    Sec. 9. A disclaimer by an appointee of a nonfiduciary power of appointment must be:
        (1) delivered to:
            (A) the holder;
            (B) the personal representative of the holder's estate; or
            (C) the fiduciary under the instrument that created the power; or
        (2) filed with a court having authority to appoint the fiduciary if no fiduciary is then serving.
    Sec. 10. A disclaimer by a fiduciary of a power over a trust or estate must be delivered as provided in section 2, 3, or 4 of this chapter as if the power disclaimed were an interest in property.
    Sec. 11. In the case of a disclaimer of a power by an agent, the disclaimer must be delivered to the principal or the principal's representative.
    Chapter 8. Limitation or Bar of Disclaimer
    Sec. 1. A disclaimer is barred by a written waiver of the right to disclaim if the waiver is:
        (1) executed before the date of the disclaimer;
        (2) executed by the person having the right to disclaim; and
        (3) delivered or filed in the same manner that a disclaimer would be delivered or filed under IC 32-17.5-7.
    Sec. 2. A disclaimer of an interest in property is barred if any of the following events occur before the disclaimer becomes effective:
        (1) The disclaimant accepts the interest sought to be disclaimed.
        (2) The disclaimant voluntarily:
            (A) assigns, conveys, encumbers, pledges, or transfers the interest sought to be disclaimed; or
            (B) contracts to take an action described in clause (A).
        (3) A judicial sale of the interest sought to be disclaimed occurs.
    Sec. 3. A disclaimer, in whole or part, of the future exercise of a power held in a fiduciary capacity is not barred by the previous exercise of the power.
    Sec. 4. A disclaimer, in whole or part, of the future exercise of a power not held in a fiduciary capacity is not barred by the previous exercise of the power unless the power is exercisable in favor of the disclaimant.
    Sec. 5. A disclaimer is barred or limited if the disclaimer is barred or limited by Indiana law other than this article.
    Sec. 6. (a) A disclaimer of a power over property that is barred by this article is ineffective.
    (b) A disclaimer of an interest in property that is barred by this article takes effect as a transfer of the interest disclaimed to the persons who would have taken the interest under this article had the disclaimer not been barred.
    Chapter 9. Tax Qualified Disclaimer
    Sec. 1. Notwithstanding any other provision of this article, if, as 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.

SOURCE: IC 32-17-7; (03)HE1117.1.2. -->     SECTION 2. IC 32-17-7 IS REPEALED [EFFECTIVE JULY 1, 2003].


HEA 1117

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