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December 14, 1989
TO: BOARD OF GOVERNORS NO. 76-89
SEC RULES MEMBERS NO. 70-89
OPERATIONS MEMBERS NO. 35-89
RE: UNIFORM TOD SECURITY REGISTRATION ACT
__________________________________________________________
In March 1986, the National Conference of Commissioners on
Uniform State Laws began a drafting project designed to promote
legal recognition and protection for automatic transfers at death
of securities registered in the name of a single owner. The
purpose of transfer-on-death (TOD) registration of a security is
to provide an alternative to the joint tenancy form of title for
shareholders who wish to arrange a non-probate transfer upon
their death but not share ownership and control during their
lifetime. Since 1986, an Institute representative has served as
an advisor to the drafting committee.
The Institute is pleased to report that the National
Conference has approved and recommended for enactment in all
states the attached Uniform TOD Security Registration Act. The
conference approved this free-standing act as well as identical
language in new Part 3 of Article VI of the Uniform Probate Code.
The final version of the act includes several provisions
recommended by the Institute. First, the drafters' comment to
the definitional section specifically notes that the definition
of security in section 1(9) includes shares in investment
companies. Second, the comment to section 3 on applicable law
explains that the section was designed to permit TOD registration
whenever a state with which either the shareholder, the issuer or
the issuer's transfer agent has contact has enacted the uniform
act. Third, the comment to section 5 clarifies that the use of
the designation "POD" (pay on death) does not require that
investment company shares must be redeemed on the owner's death
and the proceeds paid to the death beneficiary. Rather, the
shares would be transferred to the new owner. Finally, the
registering entity (generally the transfer agent) would be
protected by section 8(c) against claims by the deceased owner's
estate, creditors, heirs or devisees, and the accompanying
comment clarifies that the Uniform Commercial Code supplies such
protection for the issuer.
We will keep you informed of further developments.
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Kathy D. Ireland
Associate General Counsel
Attachment