HB 1287-1_ Filed 03/19/2009, 09:48

COMMITTEE REPORT

MADAM PRESIDENT:

    The Senate Committee on Judiciary, to which was referred House Bill No. 1287, has had the same under consideration and begs leave to report the same back to the Senate with the recommendation that said bill be AMENDED as follows:

SOURCE: Page 1, line 1; (09)CR128702.1. -->     Page 1, between the enacting clause and line 1, begin a new paragraph and insert:
SOURCE: IC 2-5-16-4; (09)CR128702.1. -->     "SECTION 1. IC 2-5-16-4 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 4. (a) For calendar year 2009 and every fourth calendar year thereafter, the chairman of the legislative council president pro tempore of the senate shall appoint a chairman and a vice chairman from among the commission's legislative members, each to serve a term of one (1) year. two (2) years.
    (b) For calendar year 2011 and every fourth calendar year thereafter, the speaker of the house of representatives shall appoint a chairman and a vice chairman from among the commission's legislative members, each to serve a term of two (2) years.
".
SOURCE: Page 17, line 14; (09)CR128702.17. -->     Page 17, line 14, after "property." insert " A person providing services, merchandise, or other property subject to a declaration may not ignore or restrict a declaration on the basis of a conflicting provision contained in IC 23-14-31, IC 23-14-33, or IC 25-1-11.".
    Page 17, line 41, delete "(a) Except as provided in subsection (b), the" and insert " The".
    Page 18, delete lines 8 through 10.
    Page 23, between lines 31 and 32, begin a new paragraph and insert:
SOURCE: IC 30-2-13-9; (09)CR128702.16. -->     "SECTION 16. IC 30-2-13-9 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 9. (a) Except as provided in subsection (b), as used in this chapter, "purchaser" means a person or firm contracting with a seller for services or merchandise to be provided or delivered for a named individual.
    (b) As used in section 13(b) of this chapter, "purchaser" means:
        (1) an individual granted the authority in a funeral planning declaration executed by the decedent under IC 29-2-19;
        (1) (2) an individual described in subsection (a);
        (2) (3) the attorney in fact, appointed under IC 30-5, of an individual described in subsection (a);
        (3) (4) the guardian, appointed under IC 29-3, of an individual described in subsection (a); or
        (4) (5) if an individual described in subsection (a) is deceased:
            (A) the surviving spouse of the individual;
            (B) if there is no surviving spouse, the adult children of the individual;
            (C) if there is no surviving spouse or surviving adult child, the surviving parent or parents of the individual; or
            (D) if there is neither a surviving spouse nor adult children, nor a surviving parent, the personal representative (as defined in IC 29-1-1-3) of the individual.".
SOURCE: Page 23, line 31; (09)CR128702.23. -->     Page 23, line 31, delete "securities described by IC 32-17-9." and insert " transfers completed under IC 32-17-14.".
    Page 24, between lines 27 and 28, begin a new paragraph and insert:
SOURCE: IC 30-2-14-31; (09)CR128702.17. -->     "SECTION 17. IC 30-2-14-31 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 31. (a) This section does not apply to payments a payment to which section 32 of this chapter applies.
    (b) As used in this section, "payment" means a payment that a trustee may receive over a fixed number of years or during the life of one (1) or more individuals because of services rendered or property transferred to the payer in exchange for future payments, regardless of whether the trustee also has the option to receive the amount payment in a lump sum or other form of payment, The term includes a whether the payment is made in money or other property, and whether the payment is made from the payer's general assets or from a separate

fund created by the payer. including For purposes of subsection (h), the term also includes any payment from any separate fund, regardless of the reason for the payment.
    (c) As used in this section, "separate fund" includes
a private or commercial annuity, an individual retirement account, and a pension, profit sharing, stock bonus, or stock ownership plan (including an individual account under a plan and a separate share of any account described in this subsection).
    (c) (d) To the extent that a payment is characterized as interest, or a dividend, or a payment made in lieu of interest or a dividend, a trustee shall allocate it the payment to income. The trustee shall allocate to principal the balance of the payment and any other payment received in the same accounting period that is not characterized as interest, a dividend, or an equivalent payment.
    (d) (e) If a payment is not characterized as interest, or a dividend, and if the or an equivalent payment and is made from an individual account corresponding to an original participant, a separate fund, the payment shall be allocated between income and principal by: as follows:
        (1) determining the income occurring within the individual account by treating the account as though it were a trust; and
        (2) considering the income to be distributed as a pro rata portion of all payments made from the individual account during the year.
         (1) A trustee shall determine the internal income of each separate fund for the accounting period as if the separate fund were a trust subject to this chapter. The trustee shall allocate a payment from the separate fund to income to the extent of the internal income of the separate fund and allocate the balance of the payment to principal.
        (2) If a trustee cannot determine the internal income of the separate fund but can determine the value of the separate fund, the internal income of the separate fund is deemed to equal five percent (5%) of the fund's value, according to the most recent statement of value preceding the beginning of the accounting period. If the trustee cannot determine the internal income of the separate fund or the fund's value, the internal income of the fund is deemed to equal the product of the interest rate and the present value of the expected future

payments, as determined under section 7520 of the Internal Revenue Code, for the month preceding the accounting period for which the computation is made.
    (e) (f) If no part of a payment is characterized as interest, a dividend, or allocated under subsection (d), and all or part of an equivalent payment, and the payment is required to be made, a made otherwise than from a separate fund, then the trustee shall allocate to income ten percent (10%) of the any part of the payment that is required to be made during the accounting period and the balance to principal, If unless no part of a the payment is required to be made or the payment received is the entire amount to which the trustee is entitled, in which case the trustee shall allocate the entire payment to principal. For purposes of this subsection, a payment is not "required to be made" to the extent that it is made because the trustee exercises a right of withdrawal.
    (f) (g) Notwithstanding any other provision of this section, when a private or commercial deferred annuity is held as an asset of a charitable remainder trust, an increase in the value of the obligation over the value of the obligation at the time of the acquisition by the trust is distributable as income. For purposes of this subsection, the increase in value is available for distribution only when the trustee exercises a right of withdrawal or otherwise receives cash on account of the obligation. If the obligation is surrendered wholly or partially before annuitization, the cash available shall be attributed first to the increase. The increase is distributable to the income beneficiary who is the income beneficiary at the time the cash is received.
    (g) If, to obtain a gift or estate tax marital deduction for a trust, a trustee must allocate more of a payment to income than provided for by this section, the trustee shall allocate to income the additional amount necessary to obtain the deduction.
     (h) Except as provided in subdivision (2), trusts described in subdivision (1) are subject to the following special rules regarding allocations and distributions of income provided in subdivision (3):
        (1) This subsection applies to:
            (A) a trust to which an election to qualify for a marital deduction under Section 2056(b)(7) of the Internal Revenue Code has been made; or
            (B) a trust that qualifies for the marital deduction under

Section 2056(b)(5) of the Internal Revenue Code.
        (2) This subsection does not apply to a series of payments if and to the extent that the series of payments would, without the application of this subsection, qualify for the marital deduction under Section 2056(b)(7)(C) of the Internal Revenue Code.
        (3) Except as provided in subdivision (2), a payment made from a separate fund to a trust described in subdivision (1) shall be allocated between income and principal in accordance with subsection (e)(1) and (e)(2) and not in accordance with subsection (d) or (f), even if part or all of the payment is characterized as interest, a dividend, or an equivalent payment, and even if the payment is the entire amount to which the trustee is entitled. The trustee shall distribute to the surviving spouse the part of the payment allocated to income. Upon request of the surviving spouse, the trustee shall demand that the person administering the separate fund distribute all of the internal income of the fund to the trust. Upon request of the surviving spouse, the trustee shall allocate principal to income to the extent the internal income of the separate fund exceeds payments from the separate fund to the trust during the accounting period.

SOURCE: IC 30-2-14-42; (09)CR128702.18. -->     SECTION 18. IC 30-2-14-42 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 42. (a) A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.
    (b) A tax required to be paid by a trustee based on receipts allocated to principal must be paid from principal, even if the tax is called an income tax by the taxing authority.
    (c) A tax required to be paid by a trustee on the trust's share of an entity's taxable income must be paid: proportionately:
        (1) from income to the extent that receipts from the entity are allocated to income; and
        (2) from principal to the extent that
            (A) receipts from the entity are allocated only to principal; and
            (B) the trust's share of the entity's taxable income exceeds the total receipts described in subdivision (1) and clause (A).
         (3) proportionately from principal and income to the extent

that receipts from the entity are allocated to both income and principal; and
        (4) from principal to the extent that the tax exceeds the total receipts from the entity.

    (d) For purposes of this section, receipts allocated to principal or income must be reduced by the amount distributed to a beneficiary from principal or income for which the trust receives a deduction in calculating the tax.
     (d) After applying subsections (a) through (c), the trustee shall adjust income or principal receipts to the extent that the trust's taxes are reduced because the trust receives a deduction for payments made to a beneficiary.".

SOURCE: Page 29, line 9; (09)CR128702.29. -->     Page 29, delete lines 9 through 20, begin a new paragraph and insert:
SOURCE: IC 32-17-11-5; (09)CR128702.29. -->     "SECTION 29. IC 32-17-11-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 5. (a) As used in this chapter, "multiple party account" means any of the following types of accounts:
        (1) A joint account.
        (2) A P.O.D. account.
        (3) (2) A trust account.
    (b) The term does not include accounts established for deposit of funds of a partnership, joint venture, or other association for business purposes, or accounts controlled by one (1) or more persons as the duly authorized agent or trustee for a corporation, unincorporated association, charitable or civic organization, or a regular fiduciary or trust account where the relationship is established other than by deposit agreement.
SOURCE: IC 32-17-11-7; (09)CR128702.30. -->     SECTION 30. IC 32-17-11-7 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 7. (a) As used in this chapter, "party" means a person who, by the terms of the account, has a present right, subject to request, to payment from a multiple party account. A P.O.D. payee or beneficiary of a trust account is a party only after the account becomes payable to the payee or beneficiary by reason of the payee's or beneficiary's surviving the original payee or trustee.
    (b) Unless the context otherwise requires, the term includes a guardian, conservator, 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 whether or not a beneficiary is named.
    (c) The term does not include:
        (1) any named beneficiary unless the beneficiary has a present right of withdrawal; or
        (2) a person who is merely authorized to make a request as the agent of another.

SOURCE: IC 32-17-11-16; (09)CR128702.31. -->     SECTION 31. IC 32-17-11-16 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 16. (a) The provisions of sections 17, 18, and 19 of this chapter concerning beneficial ownership as between parties, or as between parties and P.O.D. payees or beneficiaries of multiple party accounts:
        (1) apply only to controversies between:
            (A) the parties or the P.O.D. payees or beneficiaries of multiple party accounts; and
            (B) creditors and other successors of:
                (i) the parties; or
                (ii) the P.O.D. payees or beneficiaries of multiple party accounts; and
        (2) do not affect the power of withdrawal of the parties or the P.O.D. payees or beneficiaries of multiple party accounts as determined by the terms of account contracts.
    (b) The provisions of sections 22 through 27 of this chapter govern the liability and set-off rights of financial institutions that make payments under sections 22 through 27 of this chapter.
SOURCE: IC 32-17-11-17; (09)CR128702.32. -->     SECTION 32. IC 32-17-11-17 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 17. (a) Unless there is clear and convincing evidence of a different intent, during the lifetime of all parties, a joint account belongs to the parties in proportion to the net contributions by each party to the sums on deposit.
    (b) A P.O.D. account belongs to the original payee during the original payee's lifetime and not to the P.O.D. payee or payees. If at least two (2) parties are named as original payees, subsection (a) governs the rights of the parties during their lifetimes.
    (c) (b) Unless:
        (1) a contrary intent is manifested by the terms of the account or the deposit agreement; or
        (2) there is other clear and convincing evidence of an irrevocable

trust;
a trust account belongs beneficially to the trustee during the trustee's lifetime. If at least two (2) parties are named as trustee on the account, subsection (a) governs the beneficial rights of the trustees during their lifetimes. If there is an irrevocable trust, the account belongs beneficially to the beneficiary.

SOURCE: IC 32-17-11-18; (09)CR128702.33. -->     SECTION 33. IC 32-17-11-18 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 18. (a) Sums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intention at the time the account is created. If there are at least two (2) surviving parties, their respective ownerships during lifetime are:
        (1) in proportion to their previous ownership interests under section 17 of this chapter; and
        (2) augmented by an equal share for each survivor of any interest the decedent may have owned in the account immediately before the person's death.
The right of survivorship continues between the surviving parties.
    (b) If the account is a P.O.D. account, on death of the original payee or of the survivor of at least two (2) original payees, any sums remaining on deposit belong to the P.O.D. payee or payees who survive the original payee. If at least two (2) P.O.D. payees survive, there is no right of survivorship between the P.O.D. payees unless the terms of the account or deposit agreement expressly provide for survivorship.
    (c) (b) If the account is a trust account, on death of the trustee or the survivor of at least two (2) trustees, any sums remaining on deposit belong to the person or persons named as beneficiaries who survive the trustee, unless there is clear and convincing evidence of a contrary intent. If at least two (2) beneficiaries survive, there is no right of survivorship between the beneficiaries unless the terms of the account or deposit agreement expressly provide for survivorship.
    (d) (c) Except as provided in subsections (a) through (c), and (b), the death of any party to a multiple party account has no effect on beneficial ownership of the account other than to transfer the rights of the decedent as part of the decedent's estate.
    (e) (d) A right of survivorship arising:
        (1) from the express terms of the account; or
        (2) under:
            (A) this section; or
            (B) a beneficiary designation in a trust account; or
            (C) a P.O.D. payee designation;
cannot be changed by will.
SOURCE: IC 32-17-11-21.1; (09)CR128702.34. -->     SECTION 34. IC 32-17-11-21.1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 21.1. The liability of a surviving party P.O.D. payee, or beneficiary for creditor claims and statutory allowances is determined under IC 32-17-13.
SOURCE: IC 32-17-11-26; (09)CR128702.35. -->     SECTION 35. IC 32-17-11-26 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 26. (a) Payment made under section 22, 23, 24, or 25 of this chapter discharges the financial institution from all claims for amounts paid whether or not the payment is consistent with the beneficial ownership of the account as between parties, P.O.D. payees, or beneficiaries, or their successors.
    (b) The protection provided under this section does not extend to payments made after a financial institution has received written notice from any party able to request present payment to the effect that withdrawals in accordance with the terms of the account should not be permitted.
    (c) Unless a notice described in subsection (b) is withdrawn by the person giving it, the successor of any deceased party must concur in any demand for withdrawal if the financial institution is to be protected under this section.
    (d) No other notice or any other information shown to have been available to a financial institution affects the institution's right to the protection provided under this section.
    (e) The protection provided under this section does not affect the rights of parties in disputes between themselves or their successors concerning the beneficial ownership of funds in or withdrawn from multiple party accounts.".
SOURCE: Page 29, line 35; (09)CR128702.29. -->     Page 29, line 35, reset in roman "described in".
    Page 29, line 35, delete "registered:".
    Page 29, line 36, delete "(1) under".
    Page 29, line 36, delete "(in the case of a security registered".
    Page 29, delete lines 37 through 39.
    Page 29, run in lines 35 through 40.
    Page 30, line 3, delete "(in the case".
    Page 30, delete line 4.
    Page 30, line 5, delete "the case of an account established after June 30, 2009)".
    Page 30, line 20, delete "This chapter applies to property subject to a" and insert " Except as provided elsewhere in this chapter, this chapter applies to a transfer on death security, transfer on death securities account, and pay on death account created before July 1, 2009, unless the application of this chapter would:
        (1) adversely affect a right given to an owner or beneficiary;
        (2) give a right to any owner or beneficiary that the owner or beneficiary was not intended to have when the transfer on death security, transfer on death securities account, or pay on death account was created;
        (3) impose a duty or liability on any person that was not intended to be imposed when the transfer on death security, transfer on death securities account, or pay on death account was created; or
        (4) relieve any person from any duty or liability imposed:
            (A) by the terms of the transfer on death security, transfer on death securities account, or pay on death account; or

             (B) under prior law.".
    Page 30, delete line 21.
    Page 31, delete lines 2 through 8.
    Page 31, line 9, delete "(f)" and insert " (e)".
    Page 62, between lines 13 and 14, begin a new paragraph and insert:
SOURCE: ; (09)CR128702.45. -->     "SECTION 45. [EFFECTIVE JULY 1, 2009] IC 30-2-14-31, as amended by this act, applies to a trust described in IC 30-2-14-31(h), as amended by this act, on and after the following dates:
        (1) If the trust is not funded as of July 1, 2009, the date of the decedent's death.
        (2) If the trust is initially funded in the calendar year beginning January 1, 2009, the date of the decedent's death.
        (3) If the trust is not described in subdivision (1) or (2), January 1, 2009.


SOURCE: IC 32-17-9; IC 32-17-11-10; 32-17-11-11; IC 32-17-11- 24.".
; (09)CR128702.46. -->     SECTION 46. THE FOLLOWING ARE REPEALED [EFFECTIVE JULY 1, 2009]: IC 32-17-9; IC 32-17-11-10; 32-17-11-11; IC 32-17-11-24.".
    Renumber all SECTIONS consecutively.
    (Reference is to HB 1287 as reprinted February 24, 2009.)

and when so amended that said bill do pass.

Committee Vote: Yeas 8, Nays 0.

____________________________________

    Bray
Chairperson


CR128702/DI 106    2009