75-2-706 - Definitions -- Life insurance -- Retirement plan -- Account with POD designation -- Transfer-on-death registration -- Deceased beneficiary -- Substitute gift -- Protection of payors and bon
75-2-706. Definitions -- Life insurance -- Retirement plan -- Account with PODdesignation -- Transfer-on-death registration -- Deceased beneficiary -- Substitute gift --Protection of payors and bona fide purchasers -- Personal liability of recipient.
(1) As used in this section:
(a) "Alternative beneficiary designation" means a beneficiary designation that is expresslycreated by the governing instrument and, under the terms of the governing instrument, can takeeffect instead of another beneficiary designation on the happening of one or more events,including survival of the decedent or failure to survive the decedent, whether an event isexpressed in condition-precedent, condition-subsequent, or any other form.
(b) "Beneficiary" means the beneficiary of a beneficiary designation under which thebeneficiary shall survive the decedent and includes:
(i) a class member if the beneficiary designation is in the form of a class gift; and
(ii) an individual or class member who was deceased at the time the beneficiarydesignation was executed as well as an individual or class member who was then living but whofailed to survive the decedent, but excludes a joint tenant of a joint tenancy with the right ofsurvivorship and a party to a joint and survivorship account.
(c) "Beneficiary designation" includes an alternative beneficiary designation and abeneficiary designation in the form of a class gift.
(d) "Class member" includes an individual who fails to survive the decedent but whowould have taken under a beneficiary designation in the form of a class gift had he survived thedecedent.
(e) "Stepchild" means a child of the decedent's surviving, deceased, or former spouse, andnot of the decedent.
(f) "Surviving beneficiary" or "surviving descendant" means a beneficiary or a descendantwho neither predeceased the decedent nor is considered to have predeceased the decedent underSection 75-2-702.
(2) If a beneficiary fails to survive the decedent and is a grandparent, a descendant of agrandparent, or a stepchild of the decedent, the following apply:
(a) Except as provided in Subsection (2)(d), if the beneficiary designation is not in theform of a class gift and the deceased beneficiary leaves surviving descendants, a substitute gift iscreated in the beneficiary's surviving descendants. They take per capita at each generation theproperty to which the beneficiary would have been entitled had the beneficiary survived thedecedent.
(b) Except as provided in Subsection (2)(d), if the beneficiary designation is in the formof a class gift, other than a beneficiary designation to "issue," "descendants," "heirs of the body,""heirs," "next-of-kin," "relatives," or "family," or a class described by language of similar import,a substitute gift is created in the surviving descendants of any deceased beneficiary. The propertyto which the beneficiaries would have been entitled had all of them survived the decedent passesto the surviving beneficiaries and the surviving descendants of the deceased beneficiaries. Eachsurviving beneficiary takes the share to which he would have been entitled had the deceasedbeneficiaries survived the decedent. Each deceased beneficiary's surviving descendants who aresubstituted for the deceased beneficiary take per capita at each generation the share to which thedeceased beneficiary would have been entitled had the deceased beneficiary survived thedecedent. For the purposes of this paragraph, "deceased beneficiary" means a class member whofailed to survive the decedent and left one or more surviving descendants.
(c) For the purposes of Section 75-2-701, words of survivorship, such as in a beneficiarydesignation to an individual "if he survives me," or in a beneficiary designation to "my survivingchildren," are, in the absence of clear and convincing evidence, a sufficient indication of an intentcontrary to the application of this section.
(d) If a governing instrument creates an alternative beneficiary designation with respect toa beneficiary designation for which a substitute gift is created by Subsection (2)(a) or (b), thesubstitute gift is superseded by the alternative beneficiary designation only if an expresslydesignated beneficiary of the alternative beneficiary designation is entitled to take.
(3) (a) A payor is protected from liability in making payments under the terms of thebeneficiary designation until the payor has received written notice of a claim to a substitute giftunder this section. Payment made before the receipt of written notice of a claim to a substitutegift under this section discharges the payor, but not the recipient, from all claims for the amountspaid. A payor is liable for a payment made after the payor has received written notice of theclaim. A recipient is liable for a payment received, whether or not written notice of the claim isgiven.
(b) The written notice of the claim shall be mailed to the payor's main office or home byregistered or certified mail, return receipt requested, or served upon the payor in the same manneras a summons in a civil action. Upon receipt of written notice of the claim, a payor may pay anyamount owed by it to the court having jurisdiction of the probate proceedings relating to thedecedent's estate or, if no proceedings have been commenced, to the court having jurisdiction ofprobate proceedings relating to the decedent's estates located in the county of the decedent'sresidence. The court shall hold the funds and, upon its determination under this section, shallorder disbursement in accordance with the determination. Payment made to the court dischargesthe payor from all claims for the amounts paid.
(4) (a) A person who purchases property for value and without notice, or who receives apayment or other item of property in partial or full satisfaction of a legally enforceable obligation,is neither obligated under this section to return the payment, item of property, or benefit nor isliable under this section for the amount of the payment or the value of the item of property orbenefit. But a person who, not for value, receives a payment, item of property, or any otherbenefit to which the person is not entitled under 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 ofthe item of property or benefit, to the person who is entitled to it under this section.
(b) If this section or any part of this section is preempted by federal law with respect to apayment, an item of property, or any other benefit covered by this section, a person who, not forvalue, receives the payment, item of property, or any other benefit to which the person is notentitled under this section is obligated to return the payment, item of property, or benefit, or ispersonally liable for the amount of the payment or the value of the item of property or benefit, tothe person who would have been entitled to it were this section or part of this section notpreempted.
Enacted by Chapter 39, 1998 General Session