THE SENATE

S.B. NO.

1342

THIRTIETH LEGISLATURE, 2019

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to the probate code.

 

 

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

 


SECTION 1. Chapter 560, Hawaii Revised Statutes, is amended by adding two new sections to article III to be appropriately designated and to read as follows:

"560:3-A Restrictions on donative transfers. (a) Except as provided by Section 560:3-B, no provision of any instrument shall be valid to make any donative transfer to any of the following:

(1) The person who drafted the instrument;

(2) A person who is related by blood or marriage to, is a civil union partner of, is a reciprocal beneficiary of, is a cohabitant with, or is an employee of, the person who drafted the instrument;

(3) Any partner or shareholder of any law partnership or law corporation in which the person described in paragraph (1) has an ownership interest, and any employee of that law partnership or law corporation;

(4) Any person who has a fiduciary relationship with the transferor, including but not limited to a conservator or trustee, who transcribes the instrument or causes it to be transcribed;

(5) A person who is related by blood or marriage to, is a civil union partner of, is a cohabitant with, is a reciprocal beneficiary of, or is an employee of a person who is described in paragraph (4);

(6) A care custodian of an incapacitated person who is the transferor; or

(7) A person who is related by blood or marriage to, is a civil union partner of, is a cohabitant with, is a reciprocal beneficiary of, or is an employee of, a person who is described in paragraph (6).

(b) For the purposes of this section, a person who is related by blood or marriage to a person includes the following:

(1) The person's spouse or predeceased spouse;

(2) Relatives within the third degree of the person and of the person's spouse; and

(3) The spouse of any person described in paragraph (2).

(c) For the purposes of this section:

"Care custodian" means a person who provides a broad range of paid or unpaid assistance for an incapacitated person.

"Incapacitated person" means the same as defined in section 560:5-102.

560:3-B Restricted donative transfers; permitted when.

(a) Section 560:3-A shall not apply when:

(1) The transferor is related by blood or marriage to, is a cohabitant with, is the registered civil union partner, or is a reciprocal beneficiary of the transferee or the person who drafted the instrument; provided that this paragraph shall retroactively apply to an instrument that becomes irrevocable on or after December 31, 2018;

(2) The instrument has been reviewed by an independent attorney who:

(A) Counsels the transferor about the nature and consequences of the intended transfer;

(B) Attempts to determine if the intended consequence is the result of fraud, menace, duress, or undue influence; and

(C) Signs and delivers to the transferor an original certificate in substantially the following form, with a copy delivered to the drafter:

CERTIFICATE OF INDEPENDENT REVIEW

I, __________ (attorney's name) __________ , have reviewed __________ (name of instrument __________ and counseled my client, __________ (name of client) __________ , on the nature and consequences of the transfer, or transfers, of property to __________ (name of potentially disqualified person) __________ contained in the instrument. I am so disassociated from the interest of the transferee as to be in a position to advise my client independently, impartially, and confidentially as to the consequences of the transfer. On the basis of this counsel, I conclude that the transfer, or transfers, in the instrument that otherwise might be invalid under section 560:3-A of the Probate Code are valid because the transfer, or transfers, are not the product of fraud, menace, duress, or undue influence.

 

____________________ _______

(Name of Attorney) (Date);

 

Any attorney whose written engagement signed by the client is expressly limited solely to the preparation of a certificate under this subparagraph, including the prior counseling, shall not be considered to otherwise represent the client;

(3) After full disclosure of the relationships of the persons involved, the instrument is approved pursuant to an order by a court with competent jurisdiction;

(4) A court with competent jurisdiction determines, upon clear and convincing evidence, but not based solely upon the testimony of any person described in section 560:3-A(a), that the transfer was not the product of fraud, menace, duress, or undue influence; provided that if the court finds that the transfer was the product of fraud, menace, duress, or undue influence, the disqualified person shall bear all costs of the proceeding, including reasonable attorneys' fees; provided further that this paragraph shall only apply to:

(A) Any instrument described by section 560:3-A(a) other than one making a transfer to a person described in section 560:3-A(a)(1);

(B) Any instrument executed on or before December 31, 2018, by a person who was a resident of this State at the time the instrument was executed; or

(C) Any instrument executed by a resident of Hawaii who was not a resident at the time the instrument was executed;

(5) The transferee is a federal, state, or local public entity, an entity that qualifies for an exemption from taxation under Section 501(c)(3) or 501(c)(19) of the Internal Revenue Code, or a trust holding an interest for this entity, but only to the extent of the interest of the entity, or the trustee of this trust; provided that this paragraph shall retroactively apply to an instrument that becomes irrevocable on or after December 31, 2018;

(6) The transfer does not exceed the sum of twenty thousand dollars; provided that this paragraph shall not apply if the total value of the property in the estate of the transferor does not exceed the amount prescribed in Section 560:3-1205; or

(7) The transfer is made by an instrument executed by a nonresident of Hawaii who was not a resident at the time the instrument was executed, and that was not signed within Hawaii.

(b) For the purposes of this section, a person who is related by blood or marriage shall include persons within the fifth degree or heirs of the transferor.

(c) For the purposes of this section, "cohabitant" means a person living in same household as the transferor for more than eighteen months."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Probate Code; Donative Transfers; Restrictions

 

Description:

Establishes restrictions on donative transfers to protect transferors from coercive, exploitative, or otherwise improper transfers benefitting persons involved with drafting the transfer instrument or persons who have significant influence over the transferor.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.