SENATE BILL 503
54th legislature - STATE OF NEW MEXICO - first session, 2019
INTRODUCED BY
Peter Wirth
AN ACT
RELATING TO PROPERTY; AMENDING AND ENACTING SECTIONS OF THE UNIFORM PROBATE CODE; MAKING A TECHNICAL CHANGE TO THE UNIFORM POWERS OF APPOINTMENT ACT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the Uniform Probate Code, Section 45-2-608 NMSA 1978, is enacted to read:
"45-2-608. [NEW MATERIAL] EXERCISE OF POWER OF APPOINTMENT.--In the absence of a requirement that a power of appointment be exercised by a reference or by an express or specific reference to the power, a general residuary clause in a will or a will making general disposition of all of the testator's property expresses an intention to exercise a power of appointment held by the testator only if:
A. the power is a general power exercisable in favor of the powerholder's estate and the creating instrument does not contain an effective gift if the power is not exercised; or
B. the testator's will manifests an intention to include the property subject to the power."
SECTION 2. A new section of the Uniform Probate Code, Section 45-2-704 NMSA 1978, is enacted to read:
"45-2-704. [NEW MATERIAL] POWER OF APPOINTMENT-- COMPLIANCE WITH SPECIFIC REFERENCE REQUIREMENT.--A powerholder's substantial compliance with a formal requirement of appointment imposed in a governing instrument by the donor, including a requirement that the instrument exercising the power of appointment make reference or specific reference to the power, is sufficient if:
A. the powerholder knows of and intends to exercise the power; and
B. the powerholder's manner of attempted exercise does not impair a material purpose of the donor in imposing the requirement."
SECTION 3. Section 45-2-802 NMSA 1978 (being Laws 1993, Chapter 174, Section 61, as amended) is amended to read:
"45-2-802. EFFECT OF DIVORCE, ANNULMENT AND DECREE OF SEPARATION.--
A. An individual who is divorced from the decedent or whose marriage to the decedent has been annulled is not a surviving spouse unless, by virtue of a subsequent marriage, [he] the individual is married to the decedent at the time of death. A decree of separation that does not terminate the status of [husband and wife] spouse is not a divorce for purposes of this section.
B. For purposes of Chapter 45, Article 2, Parts 1 through 4 and Section 45-3-203 NMSA 1978, a surviving spouse does not include:
(1) an individual who obtains or consents to a final decree or judgment of divorce from the decedent or an annulment of their marriage, which decree or judgment is not recognized as valid in this state, unless subsequently they participate in a marriage ceremony purporting to marry each to the other or live together as [husband and wife] spouses;
(2) an individual who, following an invalid decree or judgment of divorce or annulment obtained by the decedent, participates in a marriage ceremony with a third individual; or
(3) an individual who was a party to a valid proceeding concluded by an order purporting to terminate all marital property rights, including a property division judgment entered pursuant to the provisions of Section 40-4-20 NMSA 1978."
SECTION 4. Section 45-2-804 NMSA 1978 (being Laws 1993, Chapter 174, Section 63, as amended) is amended to read:
"45-2-804. REVOCATION OF PROBATE AND NONPROBATE TRANSFERS BY DIVORCE--NO REVOCATION BY OTHER CHANGES OF CIRCUMSTANCES.--
A. As used in this section:
(1) "disposition or appointment of property" includes a transfer of an item of property or [any] other benefit to a beneficiary designated in a [revocable trust or other] governing instrument;
(2) "divorce or annulment" means a divorce, [or] annulment [a] or dissolution or declaration of invalidity of a marriage that would exclude the spouse as a surviving spouse within the meaning of Section 45-2-802 NMSA 1978 or the commencement of a valid proceeding concluded either before or after an individual's death by an order purporting to terminate all marital property rights, including a property division judgment entered pursuant to the provisions of Section 40-4-20 NMSA 1978. A decree of separation that does not terminate the status of [husband and wife] spouse is not a divorce for purposes of this section;
(3) "divorced individual" includes an individual whose marriage has been annulled;
(4) "governing instrument" means a governing instrument executed by the divorced individual before the divorce or annulment of the divorced individual's marriage to the former spouse;
(5) "relative of the divorced individual's former spouse" means an individual who is related to the divorced individual's former spouse by blood, adoption or affinity and who, after the divorce or annulment, is not related to the divorced individual by blood, adoption or affinity; and
(6) "revocable", with respect to a disposition, appointment, provision or nomination, means one under which the divorced individual, at the time of the divorce or annulment, was alone empowered by law or under the governing instrument to cancel the designation in favor of the former spouse or former spouse's relative whether or not the divorced individual was then empowered to designate the divorced individual's own self in place of the former spouse or in place of the former spouse's relative and whether or not the divorced individual then had the capacity to exercise the power.
B. Except as provided by the express terms of a governing instrument, a court order or a contract relating to the division of the marital estate made between the divorced individuals before or after the marriage, divorce or annulment, the divorce or annulment of a marriage:
(1) revokes any revocable:
(a) disposition or appointment of property made by a divorced individual to the former spouse in a governing instrument and any disposition or appointment created by law or in a governing instrument to a relative of the divorced individual's former spouse;
(b) provision in a governing instrument conferring a general or nongeneral power of appointment on the divorced individual's former spouse or on a relative of the divorced individual's former spouse; and
(c) nomination in a governing instrument, nominating a divorced individual's former spouse or a relative of the divorced individual's former spouse to serve in any fiduciary or representative capacity, including a personal representative, executor, trustee, conservator, agent or guardian; and
(2) severs the interests of the former spouses in property held by them at the time of the divorce or annulment as joint tenants with the right of survivorship, transforming the interests of the former spouses into equal tenancies in common.
C. A severance pursuant to the provisions of Paragraph (2) of Subsection B of this section does not affect any third-party interest in property acquired for value and in good faith reliance on an apparent title by survivorship in the survivor of the former spouses unless a writing declaring the severance has been noted, registered, filed or recorded in records appropriate to the kind and location of the property that are relied upon in the ordinary course of transactions involving such property as evidence of ownership.
D. Provisions of a governing instrument are given effect as if the former spouse and relatives of the former spouse disclaimed all provisions revoked by this section or, in the case of a revoked nomination in a fiduciary or representative capacity, as if the former spouse and relatives of the former spouse died immediately before the divorce or annulment.
E. Provisions revoked solely by this section are revived by the divorced individual's remarriage to the former spouse or by a nullification of the divorce or annulment.
F. No change of circumstances other than as described in this section and in Section 45-2-803 NMSA 1978 effects a revocation.
G. A payor or other third party is not liable for having made a payment or transferred an item of property or any other benefit to a beneficiary designated in a governing instrument affected by a divorce, annulment or remarriage or for having taken any other action in good faith reliance on the validity of the governing instrument before the payor or other third party received written notice of the divorce, annulment or remarriage. A payor or other third party is liable for a payment made or other action taken after the payor or other third party received written notice of a claimed forfeiture or revocation pursuant to the provisions of this section.
Written notice of the divorce, annulment or remarriage pursuant to the provisions of this section shall be mailed to the payor's or other third party's main office or home by registered or certified mail, return receipt requested, or served upon the payor or other third party in the same manner as a summons in a civil action. Upon receipt of the written notice of the divorce, annulment or remarriage, a payor or other third party may pay any amount owed or transfer or deposit any item of property held by it to or with the court having jurisdiction of the probate proceedings relating to the decedent's estate or, if no proceedings have been commenced, to or with the court having jurisdiction of probate proceedings relating to decedents' estates located in the county of the decedent's residence. The court shall hold the funds or item of property and, upon its determination pursuant to the provisions of this section, shall order disbursement or transfer in accordance with the determination. Payments, transfers or deposits made to or with the court discharge the payor or other third party from all claims for the value of amounts paid to or items of property transferred to or deposited with the court.
H. A person who purchases property from a former spouse, relative of a former spouse or any other person for
value and without notice or who receives from a former spouse,
relative of a former spouse or any other person a payment or other item of property in partial or full satisfaction of a legally enforceable obligation is neither obligated pursuant to the provisions of this section to return the payment, item of property or benefit nor is liable pursuant to the provisions of this section for the amount of the payment or the value of the item of property or benefit. But a former spouse, relative of a former spouse or other person who, not for value, received a payment, item of property or any other benefit to which that person is not entitled pursuant to the provisions of this section is obligated to return the payment, item of property or benefit or is personally liable for the amount of the payment or the value of the item of property or benefit to the person who is entitled to it pursuant to the provisions of this section.
I. If this section or any part of this section is preempted by federal law with respect to a payment, an item of property or any other benefit covered by this section, a former spouse, relative of the former spouse or any other person who, not for value, received a payment, item of property or any other benefit to which that person is not entitled pursuant to the provisions of this section is obligated to return that payment, item of property or benefit or is personally liable for the amount of the payment or the value of the item of property or benefit to the person who would have been entitled to it were this section or part of this section not preempted."
SECTION 5. Section 45-7-507 NMSA 1978 (being Laws 1992, Chapter 66, Section 54) is amended to read:
"45-7-507. MULTIPLE BENEFICIARIES--SEPARATE CUSTODIAL TRUSTS--SURVIVORSHIP.--
A. Beneficial interests in a custodial trust created for multiple beneficiaries are deemed to be separate custodial trusts of equal undivided interests for each beneficiary. Except in a transfer or declaration for use and benefit of [husband and wife] spouses, for whom a right of survivorship is presumed, a right of survivorship does not exist unless the instrument creating the custodial trust specifically provides for a right of survivorship.
B. Custodial trust property held under the Uniform Custodial Trust Act by the same custodial trustee for the use and benefit of the same beneficiary may be administered as a single custodial trust.
C. A custodial trustee of custodial trust property held for more than one beneficiary shall separately account to each beneficiary pursuant to Sections 45-7-508 and 45-7-516 NMSA 1978 for the administration of the custodial trust."
SECTION 6. Section 46-11-305 NMSA 1978 (being Laws 2016, Chapter 69, Section 305) is amended to read:
"46-11-305. PERMISSIBLE APPOINTMENT.--
A. A powerholder of a general power of appointment that permits appointment to the powerholder or the powerholder's estate may make any appointment, including an appointment in trust or creating a new power of appointment, that the powerholder could make in disposing of the powerholder's own property.
B. A powerholder of a general power of appointment that permits appointment only to the creditors of the powerholder or of the powerholder's estate may appoint only to those creditors.
C. Unless the terms of the instrument creating a power of appointment manifest a contrary intent, the powerholder of a nongeneral power may:
(1) make an appointment in any form, including an appointment in trust, in favor of a permissible appointee;
(2) create a general power in a permissible appointee; [or]
(3) create a nongeneral power in any person to appoint to one or more of the permissible appointees of the original nongeneral power; or
(4) create a nongeneral power in a permissible appointee to appoint to one or more persons if the permissible appointees of the new nongeneral power include the permissible appointees of the original nongeneral power."
SECTION 7. APPLICABILITY.--The provisions of this act apply to:
A. a governing instrument created before, on or after July 1, 2019;
B. a judicial proceeding commenced on or after July 1, 2019; and
C. a judicial proceeding commenced before July 1, 2019, unless the court finds that application of a particular provision of this act would substantially interfere with the effective conduct of the judicial proceeding or prejudice a right of a party, in which case the particular provision does not apply and the previous law applies.
SECTION 8. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2019.
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