HF 2082

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:58am

A bill for an act
relating to property; enacting the Uniform Disclaimer of Property Interests Act;
proposing coding for new law in Minnesota Statutes, chapter 524; repealing
Minnesota Statutes 2008, sections 501B.86; 525.532.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [524.2-1101] SHORT TITLE.
new text end

new text begin Sections 524.2-1101 to 524.2-1116 may be cited as the "Uniform Disclaimer of
Property Interests Act."
new text end

Sec. 2.

new text begin [524.2-1102] DEFINITIONS.
new text end

new text begin As used in sections 524.2-1101 to 524.2-1116:
new text end

new text begin (1) "benefactor means the creator of the interest that is subject to a disclaimer;
new text end

new text begin (2) "beneficiary designation" means an instrument, other than an instrument creating
or amending a trust, naming the beneficiary of:
new text end

new text begin (i) an annuity or insurance policy;
new text end

new text begin (ii) an account with a designation for payment on death;
new text end

new text begin (iii) a security registered in beneficiary form;
new text end

new text begin (iv) a pension, profit-sharing, retirement, or other employment-related benefit plan;
or
new text end

new text begin (v) any other nonprobate transfer at death;
new text end

new text begin (3) "disclaimant" means the person to whom a disclaimed interest or power would
have passed had the disclaimer not been made;
new text end

new text begin (4) "disclaimed interest" or "power" means the portion of the interest that would
have passed to the disclaimant had the disclaimer not been made;
new text end

new text begin (5) "disclaimer" means the refusal to accept an interest in or power over property;
new text end

new text begin (6) "fiduciary" means a personal representative, trustee of a trust, agent acting under
a power of attorney, conservator, or other person authorized to act as a fiduciary with
respect to the property of another person;
new text end

new text begin (7) "future interest" means an interest that takes effect in possession or enjoyment, if
at all, later than the time of its creation;
new text end

new text begin (8) "holder" means a person who has an interest in or power over property;
new text end

new text begin (9) "insolvent" means that the sum of a person's debts is greater than all of the
person's assets at fair valuation. A person is presumed to be "insolvent" if the person is
generally not paying debts as they become due. Assets do not include property that has
been transferred, concealed, or removed, with intent to hinder, delay, or defraud creditors,
or has been transferred in a manner making the transfer voidable. Debts do not include
an obligation to the extent it is secured by a valid lien or property of the debtor not
included as an asset;
new text end

new text begin (10) "jointly held property" means property held in the names of two or more
persons under an arrangement in which all holders have concurrent interests and under
which the last surviving holder is entitled to the whole of the property;
new text end

new text begin (11) "person" means an individual, living, deceased, or unborn, ascertained
or unascertained, whether entitled to an interest by right of intestacy or otherwise,
corporation, business trust, partnership, limited liability company, association, joint
venture, government, government subdivision, agency or instrumentality, public
corporation, or other commercial entity;
new text end

new text begin (12) "time of distribution" means the time when a disclaimed interest would have
taken effect in possession or enjoyment;
new text end

new text begin (13) "state" means a state of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, the United States Virgin Islands, or any territory of
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; and
new text end

new text begin (14) "trust" means:
new text end

new text begin (i) an express trust charitable or noncharitable, with additions thereto, whenever
and however created; and
new text end

new text begin (ii) a trust created pursuant to a statute, judgment, or decree which requires the trust
be administered in the manner of an express trust.
new text end

Sec. 3.

new text begin [524.2-1103] SCOPE.
new text end

new text begin Sections 524.2-1101 to 524.2-1116 apply to disclaimers of any interest in or power
over property, whenever created. Except as provided in section 524.2-1116, sections
524.2-1101 to 524.2-1116 are the exclusive means by which a disclaimer may be made
under Minnesota law regardless of whether it is qualified under section 2518 of the
Internal Revenue Code of 1986 in effect on January 1, 2010.
new text end

Sec. 4.

new text begin [524.2-1104] TAX-QUALIFIED DISCLAIMER.
new text end

new text begin Notwithstanding any other provision of sections 524.2-1101 to 524.2-1116, if, as a
result of a disclaimer or transfer, the disclaimed or transferred interest is treated pursuant
to the provisions of section 2518 of the Internal Revenue Code of 1986, as in effect on
January 1, 2010, as never having been transferred to the disclaimant, then the disclaimer
or transfer is effective as a disclaimer under sections 524.2-1101 to 524.2-1116.
new text end

Sec. 5.

new text begin [524.2-1105] WHEN DISCLAIMER IS PERMITTED.
new text end

new text begin A disclaimer may be made at any time unless it is barred under section 524.2-1106.
new text end

Sec. 6.

new text begin [524.2-1106] WHEN DISCLAIMER IS BARRED OR LIMITED.
new text end

new text begin (a) A disclaimer is barred by a written waiver of the right to disclaim.
new text end

new text begin (b) A disclaimer of an interest in property is barred if any of the following events
occur before the disclaimer becomes effective:
new text end

new text begin (1) the disclaimant accepts the portion of the interest sought to be disclaimed;
new text end

new text begin (2) the disclaimant voluntarily assigns, conveys, encumbers, pledges, or transfers the
portion of the interest sought to be disclaimed or contracts to do so;
new text end

new text begin (3) the portion of the interest sought to be disclaimed is sold pursuant to a judicial
sale; or
new text end

new text begin (4) the disclaimant is insolvent when the disclaimer becomes irrevocable.
new text end

new text begin (c) A disclaimer, in whole or in part, of the future exercise of a power held in a
fiduciary capacity is not barred by its previous exercise.
new text end

new text begin (d) A disclaimer, in whole or in part, of the future exercise of a power not held in a
fiduciary capacity is not barred by its previous exercise unless the power is exercisable in
favor of the disclaimant.
new text end

new text begin (e) A disclaimer of an interest in, or a power over, property which is barred by
this section is ineffective.
new text end

Sec. 7.

new text begin [524.2-1107] POWER TO DISCLAIM; GENERAL REQUIREMENTS;
WHEN IRREVOCABLE.
new text end

new text begin (a) A person may disclaim, in whole or in part, any interest in or power over
property, including a power of appointment. A person may disclaim the interest or power
even if its creator imposed a spendthrift provision or similar restriction on transfer or a
restriction or limitation on the right to disclaim.
new text end

new text begin (b) With court approval, a fiduciary may disclaim, in whole or in part, any interest in
or power over property, including a power of appointment when acting in a representative
capacity. Without court approval, a fiduciary may disclaim, in whole or in part, any interest
in or power over property, including a power of appointment, if and to the extent that the
instrument creating the fiduciary relationship explicitly grants the fiduciary the right to
disclaim. With court approval, a custodial parent may disclaim on behalf of a minor child
for whom no conservator has been appointed, in whole or in part, any interest in or power
over property, including a power of appointment, which the minor child is to receive.
new text end

new text begin (c) To be effective, a disclaimer must be in writing, declare the writing as a
disclaimer, describe the interest or power disclaimed, and be signed by the person or
fiduciary making the disclaimer and acknowledged in the manner provided for deeds of
real estate to be recorded in this state. In addition, for a disclaimer to be effective, an
original of the disclaimer must be delivered or filed in the manner provided in section
524.2-1114.
new text end

new text begin (d) A partial disclaimer may be expressed as a fraction, percentage, monetary
amount, term of years, limitation of a power, or any other interest or estate in the property.
new text end

new text begin (e) A disclaimer becomes irrevocable when the disclaimer is delivered or filed
pursuant to section 524.2-1114 or it becomes effective as provided in sections 524.2-1108
to 524.2-1113, whichever occurs later.
new text end

new text begin (f) A disclaimer made under sections 524.2-1101 to 524.2-1116 is not a transfer,
assignment, or release.
new text end

Sec. 8.

new text begin [524.2-1108] DISCLAIMER OF INTEREST IN PROPERTY.
new text end

new text begin (a) Except for a disclaimer governed by section 524.2-1109 or 524.2-1110, the rules
in paragraphs (b) to (d) apply to a disclaimer of an interest in property.
new text end

new text begin (b) The disclaimer takes effect as of the time the instrument creating the interest
becomes irrevocable, or, if the interest arose under the law of intestate succession, as of
the time of the intestate's death.
new text end

new text begin (c) The disclaimed interest passes according to any provision in the instrument
creating the interest providing for the disposition of the interest, should it be disclaimed,
or as disclaimed interests in general.
new text end

new text begin (d) If the instrument does not contain a provision described in paragraph (c), the
following rules apply:
new text end

new text begin (1) if the disclaimant is an individual, the disclaimed interest passes as if the
disclaimant had died immediately before the interest was created, unless under the
governing instrument or other applicable law, the disclaimed interest is contingent on
surviving to the time of distribution, in which case the disclaimed interest passes as if
the disclaimant had died immediately before the time for distribution. However, if, by
law or under the governing 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 the time of distribution. For purposes of this paragraph, a
disclaimed interest is created at the death of the benefactor or such earlier time, if any, that
the benefactor's transfer of the interest is a completed gift for federal gift tax purposes.
Also for purposes of this paragraph, a disclaimed interest in an inter vivos trust and other
will substitutes that do not lapse with certainty under state law shall pass as if the interest
had been created under a will;
new text end

new text begin (2) if the disclaimant is not an individual, the disclaimed interest passes as if the
disclaimant did not exist; and
new text end

new text begin (3) upon the disclaimer of a preceding interest, 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, but a future interest held by the disclaimant is
not accelerated in possession or enjoyment as a result of the disclaimer.
new text end

Sec. 9.

new text begin [524.2-1109] DISCLAIMER OF RIGHTS OF SURVIVORSHIP IN
JOINTLY HELD PROPERTY.
new text end

new text begin (a) Upon the death of a holder of jointly held property:
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new text begin (1) if, during the deceased holder's lifetime, the deceased holder could have
unilaterally regained a portion of the property attributable to the deceased holder's
contributions without the consent of any other holder, another holder may disclaim, in
whole or in part, a fractional share of that portion of the property attributable to the
deceased holder's contributions determined by dividing the number one by the number of
joint holders alive immediately after the death of the holder to whose death the disclaimer
relates; and
new text end

new text begin (2) for all other jointly held property, another holder may disclaim, in whole or
in part, a fraction of the whole of the property the numerator of which is one and the
denominator of which is the product of the number of joint holders alive immediately
before the death of the holder to whose death the disclaimer relates multiplied by the
number of joint holders alive immediately after the death of the holder to whose death the
disclaimer relates.
new text end

new text begin (b) A disclaimer under paragraph (a) takes effect as of the death of the holder of
jointly held property to whose death the disclaimer relates.
new text end

new text begin (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.
new text end

Sec. 10.

new text begin [524.2-1110] DISCLAIMER OF INTEREST BY TRUSTEE.
new text end

new text begin If a trustee having the power to disclaim under the instrument creating the fiduciary
relationship or pursuant to court order disclaims an interest in property that otherwise
would have become trust property, the interest does not become trust property.
new text end

Sec. 11.

new text begin [524.2-1111] DISCLAIMER OF POWER OF APPOINTMENT OR
OTHER POWER NOT HELD IN A FIDUCIARY CAPACITY.
new text end

new text begin If a holder disclaims a power of appointment or other power not held in a fiduciary
capacity, the following rules apply:
new text end

new text begin (1) if the holder has not exercised the power, the disclaimer takes effect as of the
time the instrument creating the power becomes irrevocable;
new text end

new text begin (2) if the holder has exercised the power, the disclaimer takes effect immediately
after the last exercise of the power; and
new text end

new text begin (3) the instrument creating the power is construed as if the power expired when
the disclaimer became effective.
new text end

Sec. 12.

new text begin [524.2-1112] DISCLAIMER BY APPOINTEE, OBJECT, OR TAKER IN
DEFAULT OF EXERCISE OF POWER OF APPOINTMENT.
new text end

new text begin (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.
new text end

new text begin (b) A disclaimer of an interest in property by an object, or taker in default of an
exercise of a power of appointment, takes effect as of the time the instrument creating
the power becomes irrevocable.
new text end

Sec. 13.

new text begin [524.2-1113] DISCLAIMER OF POWER HELD IN FIDUCIARY
CAPACITY.
new text end

new text begin (a) If a fiduciary disclaims a power held in a fiduciary capacity which has not been
exercised, the disclaimer takes effect as of the time the instrument creating the power
becomes irrevocable.
new text end

new text begin (b) If a fiduciary disclaims a power held in a fiduciary capacity which has been
exercised, the disclaimer takes effect immediately after the last exercise of the power.
new text end

new text begin (c) A disclaimer under this section is effective as to another fiduciary if:
new text end

new text begin (1) the disclaimer so provides; and
new text end

new text begin (2) the fiduciary disclaiming has the authority to bind the estate, trust, or other
person for whom the fiduciary is acting.
new text end

Sec. 14.

new text begin [524.2-1114] DELIVERY OR FILING.
new text end

new text begin (a) Subject to paragraphs (b) to (l), delivery of a disclaimer may be effective
by personal delivery, first-class mail, or any other method that results in its receipt.
A disclaimer sent by first-class mail is deemed to have been delivered on the date it is
postmarked. Delivery by any other method is effective upon receipt by the person to
whom the disclaimer is to be delivered under this section.
new text end

new text begin (b) In the case of 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:
new text end

new text begin (1) the disclaimer must be delivered to the personal representative of the decedent's
estate; or
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new text begin (2) if no personal representative is serving when the disclaimer is sought to be
delivered, the disclaimer must be filed with the clerk of the court in any county where
venue of administration would be proper.
new text end

new text begin (c) In the case of a disclaimer of an interest in a testamentary trust:
new text end

new text begin (1) the disclaimer must be delivered to the trustee serving when the disclaimer is
delivered or, if no trustee is then serving, to the personal representative of the decedent's
estate; or
new text end

new text begin (2) if no personal representative is serving when the disclaimer is sought to be
delivered, the disclaimer must be filed with the clerk of the court in any county where
venue of administration of the decedent's estate would be proper.
new text end

new text begin (d) In the case of a disclaimer of an interest in an inter vivos trust:
new text end

new text begin (1) the disclaimer must be delivered to the trustee serving when the disclaimer is
delivered;
new text end

new text begin (2) if no trustee is then serving, it must be filed with the clerk of the court in any
county where the filing of a notice of trust would be proper; or
new text end

new text begin (3) if the disclaimer is made before the time the instrument creating the trust becomes
irrevocable, the disclaimer must be delivered to the person with the power to revoke the
revocable trust or the transferor of the interest or to such person's legal representative.
new text end

new text begin (e) In the case of a disclaimer of an interest created by a beneficiary designation
made before the time the designation becomes irrevocable, the disclaimer must be
delivered to the person with the person making the beneficiary designation or to such
person's legal representative.
new text end

new text begin (f) In the case of a disclaimer of an interest created by a beneficiary designation
made after the time the designation becomes irrevocable, the disclaimer must be delivered
to the person obligated to distribute the interest.
new text end

new text begin (g) In the case of a disclaimer by a surviving holder of jointly held property, the
disclaimer must be delivered to the person to whom the disclaimed interest passes or, if
such person cannot reasonably be located by the disclaimant, the disclaimer must be
delivered as provided in paragraph (b).
new text end

new text begin (h) In the case of a disclaimer by an object, or taker in default of exercise, of a
power of appointment at any time after the power was created, the disclaimer must be
delivered to:
new text end

new text begin (1) the holder of the power; or
new text end

new text begin (2) the fiduciary acting under the instrument that created the power or, if no fiduciary
is serving when the disclaimer is sought to be delivered, filed with a court having authority
to appoint the fiduciary.
new text end

new text begin (i) In the case of a disclaimer by an appointee of a nonfiduciary power of
appointment, the disclaimer must be delivered to:
new text end

new text begin (1) the holder of the power or the personal representative of the holder's estate; or
new text end

new text begin (2) the fiduciary under the instrument that created the power or, if no fiduciary is
serving when the disclaimer is sought to be delivered, filed with a court having authority
to appoint the fiduciary.
new text end

new text begin (j) In the case of a disclaimer by a fiduciary of a power over a trust or estate, the
disclaimer must be delivered as provided in paragraph (b), (c), or (d) as if the power
disclaimed were an interest in property.
new text end

new text begin (k) In the case of a disclaimer of a power exercisable by an agent, other than a power
exercisable by a fiduciary over a trust or estate, the disclaimer must be delivered to the
principal or the principal's representative.
new text end

new text begin (l) Notwithstanding paragraph (a), delivery of a disclaimer of an interest in or
relating to real estate shall be presumed upon the recording of the disclaimer in the office
of the clerk of the court of the county or counties where the real estate is located.
new text end

new text begin (m) A fiduciary or other person having custody of the disclaimed interest is not
liable for any otherwise proper distribution or other disposition made without actual
notice of the disclaimer or, if the disclaimer is barred under section 524.2-1106, for any
otherwise proper distribution or other disposition made in reliance on the disclaimer, if
the distribution or disposition is made without actual knowledge of the facts constituting
the bar of the right to disclaim.
new text end

Sec. 15.

new text begin [524.2-1115] RECORDING OF DISCLAIMER RELATING TO REAL
ESTATE.
new text end

new text begin (a) A disclaimer of an interest in or relating to real estate does not provide
constructive notice to all persons unless the disclaimer contains a legal description of the
real estate to which the disclaimer relates and unless the disclaimer is filed for recording in
the office of the county recorder in the county or counties where the real estate is located.
new text end

new text begin (b) An effective disclaimer meeting the requirements of paragraph (a) constitutes
constructive notice to all persons from the time of filing. Failure to record 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.
new text end

Sec. 16.

new text begin [524.2-1116] APPLICATION TO EXISTING RELATIONSHIPS.
new text end

new text begin Except as otherwise provided in section 524.2-1106, an interest in or power over
property existing on January 1, 2010, as to which the time for delivering or filing a
disclaimer under laws superseded by sections 524.2-1101 to 524.2-1116 has not expired,
may be disclaimed after January 1, 2010.
new text end

Sec. 17. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2008, sections 501B.86; and 525.532, new text end new text begin are repealed.
new text end

Sec. 18. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 17 are effective January 1, 2010.
new text end