(1) Definitions. This section shall not apply to wills; beneficiary deeds; insurance or annuity
policies; pension, profit sharing, retirement, or similar benefit plans; or a transfer of
a vehicle title as described in section 42-6-110.5. As used in this section, unless the
context otherwise requires:
(a) Alternative beneficiary designation means a beneficiary designation
that is expressly created by the governing instrument and, under the terms of the
governing instrument, can take effect 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 is expressed in condition-precedent,
condition-subsequent, or any other form.
(b) Beneficiary means the beneficiary of a beneficiary designation under
which the beneficiary must 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 beneficiary designation was executed
as well as an individual or class member who was then living but who failed to
survive the decedent, but excludes a joint tenant of a joint tenancy with the right of
survivorship and a party to a joint and survivorship account.
(c) Beneficiary designation includes an alternative beneficiary designation
and a beneficiary designation in the form of a class gift.
(d) Class member includes an individual who fails to survive the decedent
but who would have taken under a beneficiary designation in the form of a class gift
had he or she survived the decedent.
(e) (Reserved)
(f) Surviving beneficiary or surviving descendant means a beneficiary or a
descendant who neither predeceased the decedent nor is deemed to have
predeceased the decedent under section 15-11-702.
(2) Substitute gift. If a beneficiary fails to survive the decedent and is a
grandparent, or a descendant of a grandparent of the decedent, the following
apply:
(a) Except as provided in paragraph (d) of this subsection (2), if the
beneficiary designation is not in the form of a class gift and the deceased
beneficiary leaves surviving descendants, a substitute gift is created in the
beneficiary's surviving descendants. They take per capita at each generation the
property to which the beneficiary would have been entitled had the beneficiary
survived the decedent.
(b) Except as provided in paragraph (d) of this subsection (2), if the
beneficiary designation is in the form of 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 deceased beneficiary's or beneficiaries' surviving
descendants. The property to which the beneficiaries would have been entitled had
all of them survived the decedent passes to the surviving beneficiaries and the
surviving descendants of the deceased beneficiaries. Each surviving beneficiary
takes the share to which he or she would have been entitled had the deceased
beneficiaries survived the decedent. Each deceased beneficiary's surviving
descendants who are substituted for the deceased beneficiary take per capita at
each generation the share to which the deceased beneficiary would have been
entitled had the deceased beneficiary survived the decedent. For the purposes of
this paragraph (b), deceased beneficiary means a class member who failed to
survive the decedent and left one or more surviving descendants.
(c) Except as otherwise provided in a governing instrument, for the purposes
of this part 7, words of survivorship, such as in a beneficiary designation to an
individual if he survives me, or in a beneficiary designation to my surviving
children, are not, in the absence of additional evidence, a sufficient indication of an
intent contrary to the application of this section. The use of language such as and
if he does not survive me the gift shall lapse or to A and not to A's descendants
shall be sufficient indication of an intent contrary to the application of this section.
(d) If a governing instrument creates an alternative beneficiary designation
with respect to a beneficiary designation for which a substitute gift is created by
paragraph (a) or (b) of this subsection (2), the substitute gift is superseded by the
alternative beneficiary designation only if an expressly designated beneficiary of
the alternative beneficiary designation is entitled to take.
(3) More than one substitute gift; which one takes. If, under subsection (2)
of this section, substitute gifts are created and not superseded with respect to
more than one beneficiary designation and the beneficiary designations are
alternative beneficiary designations, one to the other, the determination of which of
the substitute gifts takes effect is resolved as follows:
(a) Except as provided in paragraph (b) of this subsection (3), the property
passes under the primary substitute gift.
(b) If there is a younger-generation beneficiary designation, the property
passes under the younger-generation substitute gift and not under the primary
substitute gift.
(c) As used in this subsection (3), unless the context otherwise requires:
(I) Primary beneficiary designation means the beneficiary designation that
would have taken effect had all the deceased beneficiaries of the alternative
beneficiary designations who left surviving descendants survived the decedent.
(II) Primary substitute gift means the substitute gift created with respect
to the primary beneficiary designation.
(III) Younger-generation beneficiary designation means a beneficiary
designation that:
(A) Is to a descendant of a beneficiary of the primary beneficiary designation;
(B) Is an alternative beneficiary designation with respect to the primary
beneficiary designation;
(C) Is a beneficiary designation for which a substitute gift is created; and
(D) Would have taken effect had all the deceased beneficiaries who left
surviving descendants survived the decedent except the deceased beneficiary or
beneficiaries of the primary beneficiary designation.
(IV) Younger-generation substitute gift means the substitute gift created
with respect to the younger-generation beneficiary designation.
(4) Protection of payers. (a) A payer or other third party is not liable for
having made a payment or transferred an item of property or any other benefit to a
beneficiary designated in a governing instrument who, under this section, is not
entitled to the payment or item of property, or for having taken any other action in
reliance on the beneficiary's apparent entitlement under the terms of the governing
instrument, before the payer or other third party has received written notice as
described in paragraph (b) of this subsection (4). A payer or other third party shall
have no duty or obligation to inquire as to the existence of a substituted gift under
this section or to seek any evidence with respect to any such substituted gift. A
payer or other third party is only liable for actions taken two or more business days
after the payer or other third party has actual receipt of such written notice. Any
form or service of notice other than that described in paragraph (b) of this
subsection (4) shall not be sufficient to impose liability on a payer or other third
party for actions taken pursuant to the governing instrument.
(b) The written notice shall indicate the name of the decedent, the name of
the person asserting an interest, the nature of the payment or item of property or
other benefit, and a statement that a claim to a substitute gift is being made under
this section. The written notice shall be mailed to the payer's or other third party's
main office or home by registered or certified mail, return receipt requested, or
served upon the payer or other third party in the same manner as a summons in a
civil action.
(c) Upon receipt of the written notice described in paragraph (b) of this
subsection (4), a payer or other third party may pay to the court any amount owed
or transfer to or deposit with the court any item of property held by it. The
availability of such actions under this section shall not prevent the payer or other
third party from taking any other action authorized by law or the governing
instrument. The court is the court having jurisdiction of the probate proceedings
relating to the decedent's estate, or if no proceedings have been commenced, the
court having jurisdiction of probate proceedings relating to decedents' estates
located in the county of the decedent's residence. If no probate proceedings have
been commenced, the payer or other third party shall file with the court a copy of
the written notice received by the payer or other third party, with the payment of
funds or transfer or deposit of property. The court shall not charge a filing fee to
the payer or other third party for the payment to the court of amounts owed or
transfer to or deposit with the court of any item of property, even if no probate
proceedings have been commenced before such payment, transfer, or deposit.
Payment of amounts to the court or transfer to or deposit with the court of any item
of property pursuant to this section by the payer or other third party discharges the
payer or other third party from all claims under the governing instrument or
applicable law for the value of amounts paid to the court or items of property
transferred to or deposited with the court.
(d) The court shall hold the funds or item of property and, upon its
determination under this section, shall order disbursement in accordance with the
determination. A filing fee, if any, shall be charged upon disbursement either to the
recipient or against the funds or property on deposit with the court, in the discretion
of the court.
(e) Upon petition to the court by the beneficiary designated in a governing
instrument, the court may order that all or part of the property be paid to the
beneficiary in an amount and subject to conditions consistent with this section.
(5) Protection of bona fide purchasers; personal liability of recipient. (a) A
person who purchases property for value and without notice, or who receives a
payment 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 is liable under this section for the amount
of the payment or the value of the item of property or benefit. However, a person
who, not for value, receives a payment, item of property, or any other benefit 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 of the 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
(other than the federal Employee Retirement Income Security Act of 1974, as
amended) with respect to a payment, an item of property, or any other benefit
covered by this section, a person who, not for value, receives the payment, item of
property, or any other benefit 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 of the item of property or benefit,
to the person who would have been entitled to it were this section or part of this
section not preempted.