California ‘TOD’ Security Registration Act

California has numerous formals acts in statute. Probate Code Division 5, Part 3 provides the Uniform TOD Security Registration Act, which is contained in Sections 5500 to 5512. Part 3 was added in 1998 by Chapter 242.

The “California Uniform Transfer on Death Security Registration Act” says that securities qualify if the registration says “transfer on death” or “TOD” after the original owner’s name and before the beneficiary’s (new owner’s) name.

Section 5500 sets forth the name of the act. It requires this part to be liberally construed and applied to promote its underlying purposes and policy. In addition, the underlying purposes and policy of this act are to (1) encourage development of a title form for use by individuals that is effective, without probate and estate administration, for transferring property at death in accordance with directions of a deceased owner of a security as included in the title form in which the security is held, and (2) protect issuers offering and implementing the new title form.

Section 5501 defines the following terms: “beneficiary form”; “register”; “registering entity”; “security”; “security account”; and, “cash equivalent.”

Section 5502 provides that only individuals whose registration of a security shows sole ownership by one individual or multiple ownership by two or more individuals with right of survivorship, rather than as tenants in common, may obtain registration in beneficiary form. Multiple owners of a security registered in beneficiary form hold as joint tenants with right of survivorship, as tenants by the entireties, or as owners of community property held in survivorship form, and not as tenants in common.

Section 5503 states that a security may be registered in beneficiary form if the form is authorized by this or a similar statute of the state of organization of the issuer or registering entity, the location of the registering entity’s principal office, the office of its transfer agent or its office making the registration, or by this or a similar statute of the law of the state listed as the owner’s address at the time of registration. A registration governed by the law of a jurisdiction in which this or similar legislation is not in force or was not in force when a registration in beneficiary form was made is nevertheless presumed to be valid and authorized as a matter of contract law.

Section 5504 specifies that a security, whether evidenced by certificate or account, is registered in beneficiary form when the registration includes a designation of a beneficiary to take the ownership at the death of the owner or the deaths of all multiple owners.

Section 5505 provides that registration in beneficiary form may be shown by the words “transfer on death” or the abbreviation “TOD,” or by the words “pay on death” or the abbreviation “POD,” after the name of the registered owner and before the name of a beneficiary.

Section 5506 states that the designation of a TOD beneficiary on a registration in beneficiary form has no effect on ownership until the owner’s death. A registration of a security in beneficiary form may be canceled or changed at any time by the sole owner or all then surviving owners without the consent of the beneficiary.

Section 5507 provides that, on death of a sole owner or the last to die of all multiple owners, ownership of securities registered in beneficiary form passes to the beneficiary or beneficiaries who survive all owners. On proof of death of all owners and compliance with any applicable requirements of the registering entity, a security registered in beneficiary form may be reregistered in the name of the beneficiary or beneficiaries who survive the death of all owners. 

Section 5508 provides that a registering entity is not required to offer or to accept requests for security registration in beneficiary form. If a registration in beneficiary form is offered by a registering entity, the owner requesting registration in beneficiary form assents to the protections given to the registering entity by this part.

Section 5509 states that any transfer on death resulting from a registration in beneficiary form is effective by reason of the contract regarding the registration between the owner and the registering entity and this part and is not testamentary. This part does not limit the rights of a surviving spouse or creditors of security owners against beneficiaries and other transferees under other laws of this state.

Section 5510 specifies that a registering entity offering to accept registrations in beneficiary form may establish the terms and conditions under which it will receive requests for (1) registrations in beneficiary form, and (2) implementation of registrations in beneficiary form, including requests for cancellation of previously registered TOD beneficiary designations and requests for reregistration to effect a change of beneficiary. There are illustrations of registrations in beneficiary form that a registering entity may authorize.

Section 5511 provides that nothing in this part alters the community character of community property or community rights in community property. Section 5512 specifies that this part applies to registrations of securities in beneficiary form made before, on, or after January 1, 1999, by decedents dying on or after January 1, 1999.