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Second Substitute H.B. 65

This document includes House Committee Amendments incorporated into the bill on Fri, Feb 15, 2013 at 11:33 AM by lerror. --> This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Thu, Feb 28, 2013 at 4:35 PM by lpoole. -->

Representative Jim Bird proposes the following substitute bill:


             1     
INSURANCE BENEFICIARY CHANGES

             2     
2013 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Jim Bird

             5     
Senate Sponsor: Wayne A. Harper

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill requires a life insurance or annuity policyholder to change a beneficiary
             10      according to the insurer's requirements after a divorce or annulment.
             11      Highlighted Provisions:
             12          This bill:
             13          .    exempts life insurance policies and annuity contracts from the operation of Section
             14      75-2-804 ;
             15          .    requires a policyholder or contract holder to follow the insurer's requirements for
             16      changing beneficiaries after a divorce;
             17          .    requires a judge in a divorce to ask parties about insurance or annuities; and
             18          .    makes technical corrections.
             19      Money Appropriated in this Bill:
             20          None
             21      Other Special Clauses:
             22          None
             23      Utah Code Sections Affected:
             24      AMENDS:
             25          30-3-5, as last amended by Laws of Utah 2010, Chapter 285


             26          31A-22-413, as last amended by Laws of Utah 2006, Chapter 62
             27          75-2-804, as repealed and reenacted by Laws of Utah 1998, Chapter 39
             28     
             29      Be it enacted by the Legislature of the state of Utah:
             30          Section 1. Section 30-3-5 is amended to read:
             31           30-3-5. Disposition of property -- Maintenance and health care of parties and
             32      children -- Division of debts -- Court to have continuing jurisdiction -- Custody and
             33      parent-time -- Determination of alimony -- Nonmeritorious petition for modification.
             34          (1) When a decree of divorce is rendered, the court may include in it equitable orders
             35      relating to the children, property, debts or obligations, and parties. The court shall include the
             36      following in every decree of divorce:
             37          (a) an order assigning responsibility for the payment of reasonable and necessary
             38      medical and dental expenses of the dependent children including responsibility for health
             39      insurance out-of-pocket expenses such as co-payments, co-insurance, and deductibles;
             40          (b) (i) if coverage is or becomes available at a reasonable cost, an order requiring the
             41      purchase and maintenance of appropriate health, hospital, and dental care insurance for the
             42      dependent children; and
             43          (ii) a designation of which health, hospital, or dental insurance plan is primary and
             44      which health, hospital, or dental insurance plan is secondary in accordance with the provisions
             45      of Section 30-3-5.4 which will take effect if at any time a dependent child is covered by both
             46      parents' health, hospital, or dental insurance plans;
             47          (c) pursuant to Section 15-4-6.5 :
             48          (i) an order specifying which party is responsible for the payment of joint debts,
             49      obligations, or liabilities of the parties contracted or incurred during marriage;
             50          (ii) an order requiring the parties to notify respective creditors or obligees, regarding
             51      the court's division of debts, obligations, or liabilities and regarding the parties' separate,
             52      current addresses; S. [ [ ] and [ ] ] .S
             53          (iii) provisions for the enforcement of these orders; S. [ and ] .S
             54          (d) provisions for income withholding in accordance with Title 62A, Chapter 11,
             55      Recovery Services[.]; and
             56          (e) if either party owns a life insurance policy or an annuity contract, an


             57      acknowledgment by the court that the owner S. [ has ] .S :
             58          (i) S. has .S reviewed and updated, where appropriate, the list of beneficiaries;
             58a      S. [ and ] .S
             59          (ii) S. has .S affirmed that those listed as beneficiaries are in fact the intended
             59a      beneficiaries after
             60      the divorce becomes final S. ; and
             60a          (iii) understands that if no changes are made to the policy or contract, the beneficiaries
             60b      currently listed will receive any funds paid by the insurance company under the terms of the
             60c      policy or contract .S .
             61          (2) The court may include, in an order determining child support, an order assigning
             62      financial responsibility for all or a portion of child care expenses incurred on behalf of the
             63      dependent children, necessitated by the employment or training of the custodial parent. If the
             64      court determines that the circumstances are appropriate and that the dependent children would
             65      be adequately cared for, it may include an order allowing the noncustodial parent to provide
             66      child care for the dependent children, necessitated by the employment or training of the
             67      custodial parent.
             68          (3) The court has continuing jurisdiction to make subsequent changes or new orders for
             69      the custody of the children and their support, maintenance, health, and dental care, and for
             70      distribution of the property and obligations for debts as is reasonable and necessary.
             71          (4) Child support, custody, visitation, and other matters related to children born to the
             72      mother and father after entry of the decree of divorce may be added to the decree by
             73      modification.
             74          (5) (a) In determining parent-time rights of parents and visitation rights of grandparents
             75      and other members of the immediate family, the court shall consider the best interest of the
             76      child.
             77          (b) Upon a specific finding by the court of the need for peace officer enforcement, the
             78      court may include in an order establishing a parent-time or visitation schedule a provision,
             79      among other things, authorizing any peace officer to enforce a court-ordered parent-time or
             80      visitation schedule entered under this chapter.
             81          (6) If a petition for modification of child custody or parent-time provisions of a court
             82      order is made and denied, the court shall order the petitioner to pay the reasonable attorneys'
             83      fees expended by the prevailing party in that action, if the court determines that the petition
             84      was without merit and not asserted or defended against in good faith.
             85          (7) If a petition alleges noncompliance with a parent-time order by a parent, or a
             86      visitation order by a grandparent or other member of the immediate family where a visitation or
             87      parent-time right has been previously granted by the court, the court may award to the


             88      prevailing party costs, including actual attorney fees and court costs incurred by the prevailing
             89      party because of the other party's failure to provide or exercise court-ordered visitation or
             90      parent-time.
             91          (8) (a) The court shall consider at least the following factors in determining alimony:
             92          (i) the financial condition and needs of the recipient spouse;
             93          (ii) the recipient's earning capacity or ability to produce income;
             94          (iii) the ability of the payor spouse to provide support;
             95          (iv) the length of the marriage;
             96          (v) whether the recipient spouse has custody of minor children requiring support;
             97          (vi) whether the recipient spouse worked in a business owned or operated by the payor
             98      spouse; and
             99          (vii) whether the recipient spouse directly contributed to any increase in the payor
             100      spouse's skill by paying for education received by the payor spouse or allowing the payor
             101      spouse to attend school during the marriage.
             102          (b) The court may consider the fault of the parties in determining alimony.
             103          (c) As a general rule, the court should look to the standard of living, existing at the
             104      time of separation, in determining alimony in accordance with Subsection (8)(a). However, the
             105      court shall consider all relevant facts and equitable principles and may, in its discretion, base
             106      alimony on the standard of living that existed at the time of trial. In marriages of short
             107      duration, when no children have been conceived or born during the marriage, the court may
             108      consider the standard of living that existed at the time of the marriage.
             109          (d) The court may, under appropriate circumstances, attempt to equalize the parties'
             110      respective standards of living.
             111          (e) When a marriage of long duration dissolves on the threshold of a major change in
             112      the income of one of the spouses due to the collective efforts of both, that change shall be
             113      considered in dividing the marital property and in determining the amount of alimony. If one
             114      spouse's earning capacity has been greatly enhanced through the efforts of both spouses during
             115      the marriage, the court may make a compensating adjustment in dividing the marital property
             116      and awarding alimony.
             117          (f) In determining alimony when a marriage of short duration dissolves, and no
             118      children have been conceived or born during the marriage, the court may consider restoring


             119      each party to the condition which existed at the time of the marriage.
             120          (g) (i) The court has continuing jurisdiction to make substantive changes and new
             121      orders regarding alimony based on a substantial material change in circumstances not
             122      foreseeable at the time of the divorce.
             123          (ii) The court may not modify alimony or issue a new order for alimony to address
             124      needs of the recipient that did not exist at the time the decree was entered, unless the court
             125      finds extenuating circumstances that justify that action.
             126          (iii) In determining alimony, the income of any subsequent spouse of the payor may not
             127      be considered, except as provided in this Subsection (8).
             128          (A) The court may consider the subsequent spouse's financial ability to share living
             129      expenses.
             130          (B) The court may consider the income of a subsequent spouse if the court finds that
             131      the payor's improper conduct justifies that consideration.
             132          (h) Alimony may not be ordered for a duration longer than the number of years that the
             133      marriage existed unless, at any time prior to termination of alimony, the court finds extenuating
             134      circumstances that justify the payment of alimony for a longer period of time.
             135          (9) Unless a decree of divorce specifically provides otherwise, any order of the court
             136      that a party pay alimony to a former spouse automatically terminates upon the remarriage or
             137      death of that former spouse. However, if the remarriage is annulled and found to be void ab
             138      initio, payment of alimony shall resume if the party paying alimony is made a party to the
             139      action of annulment and his rights are determined.
             140          (10) Any order of the court that a party pay alimony to a former spouse terminates
             141      upon establishment by the party paying alimony that the former spouse is cohabitating with
             142      another person.
             143          Section 2. Section 31A-22-413 is amended to read:
             144           31A-22-413. Designation of beneficiary.
             145          (1) Subject to Subsection 31A-22-412 (2), no life insurance policy or annuity contract
             146      may restrict the right of a policyholder or certificate holder:
             147          (a) to make an irrevocable designation of beneficiary effective immediately or at some
             148      subsequent time; or
             149          (b) if the designation of beneficiary is not explicitly irrevocable, to change the


             150      beneficiary without the consent of the previously designated beneficiary. Subsection
             151      75-6-201 (1)(c) applies to designations by will or by separate writing.
             152          (2) (a) An insurer may prescribe formalities to be complied with for the change of
             153      beneficiaries, but those formalities may only be designed for the protection of the insurer.
             154      [The] Notwithstanding Section 75-2-804 , the insurer discharges its obligation under the
             155      insurance policy or certificate of insurance if it pays the properly designated beneficiary unless
             156      it has actual notice of either an assignment or a change in beneficiary designation made
             157      pursuant to Subsection (1)(b) [or Section 75-2-804 ].
             158          (b) The insurer has actual notice if the formalities prescribed by the policy are
             159      complied with, or if the change in beneficiary has been requested in the form prescribed by the
             160      insurer and delivered to an agent representing the insurer at least three days prior to payment to
             161      the earlier properly designated beneficiary.
             162          Section 3. Section 75-2-804 is amended to read:
             163           75-2-804. Definitions -- Revocation of probate and nonprobate transfers by
             164      divorce -- Effect of severance -- Revival -- Protection of payors, third parties, and bona
             165      fide purchasers -- Personal liability of recipient -- No revocation by other changes of
             166      circumstances -- No revocation of life insurance beneficiary.
             167          (1) As used in this section:
             168          (a) "Disposition or appointment of property" includes a transfer of an item of property
             169      or any other benefit to a beneficiary designated in a governing instrument.
             170          (b) "Divorce or annulment" means any divorce or annulment, or any dissolution or
             171      declaration of invalidity of a marriage, that would exclude the spouse as a surviving spouse
             172      within the meaning of Section 75-2-802 . A decree of separation that does not terminate the
             173      status of husband and wife is not a divorce for purposes of this section.
             174          (c) "Divorced individual" includes an individual whose marriage has been annulled.
             175          (d) "Governing instrument" means a governing instrument executed by the divorced
             176      individual before the divorce or annulment of [his] the individual's marriage to [his] the
             177      individual's former spouse.
             178          (e) "Relative of the divorced individual's former spouse" means an individual who is
             179      related to the divorced individual's former spouse by blood, adoption, or affinity and who, after
             180      the divorce or annulment, is not related to the divorced individual by blood, adoption, or


             181      affinity.
             182          (f) "Revocable," with respect to a disposition, appointment, provision, or nomination,
             183      means one under which the divorced individual, at the time of the divorce or annulment, was
             184      alone empowered, by law or under the governing instrument, to cancel the designation in favor
             185      of [his] the individual's former spouse or former spouse's relative, whether or not the divorced
             186      individual was then empowered to designate [himself] another in place of [his] the individual's
             187      former spouse or in place of [his] the individual's former spouse's relative and whether or not
             188      the divorced individual then had the capacity to exercise the power.
             189          (2) Except as provided by the express terms of a governing instrument, a court order,
             190      or a contract relating to the division of the marital estate made between the divorced
             191      individuals before or after the marriage, divorce, or annulment, the divorce or annulment of a
             192      marriage:
             193          (a) revokes any revocable:
             194          (i) disposition or appointment of property made by a divorced individual to [his] the
             195      individual's former spouse in a governing instrument and any disposition or appointment
             196      created by law or in a governing instrument to a relative of the divorced individual's former
             197      spouse;
             198          (ii) provision in a governing instrument conferring a general or nongeneral power of
             199      appointment on the divorced individual's former spouse or on a relative of the divorced
             200      individual's former spouse; and
             201          (iii) nomination in a governing instrument, [nominating] which nominates a divorced
             202      individual's former spouse or a relative of the divorced individual's former spouse to serve in
             203      any fiduciary or representative capacity, including a personal representative, executor, trustee,
             204      conservator, agent, or guardian; and
             205          (b) severs the interests of the former spouses in property held by them at the time of the
             206      divorce or annulment as joint tenants with the right of survivorship, transforming the interests
             207      of the former spouses into tenancies in common.
             208           H. [ (3) This section does not apply to the designation of a beneficiary of a life insurance
             209      policy or annuity contract. A policyholder or certificate holder who obtains a divorce or
             210      annulment shall request a beneficiary change in the form required by the insurer in accordance
             211      with Section 31A-22-413 .
] .H


             212           H. [ [ ] (3) [ ] ] [ (4) ] .H A severance under Subsection (2)(b) does not affect any third-party
             212a      interest in
             213      property acquired for value and in good faith reliance on an apparent title by survivorship in the
             214      survivor of the former spouses unless a writing declaring the severance has been noted,
             215      registered, filed, or recorded in records appropriate to the kind and location of the property,
             216      which are relied upon, in the ordinary course of transactions involving such property, as
             217      evidence of ownership.
             218           H. [ [ ] (4) [ ] ] [ (5) ] .H Provisions of a governing instrument are given effect as if the
             218a      former spouse
             219      and relatives of the former spouse disclaimed all provisions revoked by this section or, in the
             220      case of a revoked nomination in a fiduciary or representative capacity, as if the former spouse
             221      and relatives of the former spouse died immediately before the divorce or annulment.
             222           H. [ [ ] (5) [ ] ] [ (6) ] .H Provisions revoked solely by this section are revived by the
             222a      divorced
             223      individual's remarriage to the former spouse or by a nullification of the divorce or annulment.
             224           H. [ [ ] (6) [ ] ] [ (7) ] .H No change of circumstances other than as described in this section
             224a      and in
             225      Section 75-2-803 effects a revocation.
             226           H. [ [ ] (7) [ ] ] [ (8) ] .H (a) A payor or other third party is not liable for having made a
             226a      payment or
             227      transferred an item of property or any other benefit to a beneficiary designated in a governing
             228      instrument affected by a divorce, annulment, or remarriage, or for having taken any other
             229      action in good faith reliance on the validity of the governing instrument, before the payor or
             230      other third party received written notice of the divorce, annulment, or remarriage. A payor or
             231      other third party is liable for a payment made or other action taken after the payor or other third
             232      party received written notice of a claimed forfeiture or revocation under this section.
             233          (b) Written notice of the divorce, annulment, or remarriage under Subsection [(7)]
             234      (8)(a) shall be mailed to the payor's or other third party's main office or home by registered or
             235      certified mail, return receipt requested, or served upon the payor or other third party in the
             236      same manner as a summons in a civil action. Upon receipt of written notice of the divorce,
             237      annulment, or remarriage, a payor or other third party may pay any amount owed or transfer or
             238      deposit any item of property held by it to or with the court having jurisdiction of the probate
             239      proceedings relating to the decedent's estate or, if no proceedings have been commenced, to or
             240      with the court having jurisdiction of probate proceedings relating to the decedent's estates
             241      located in the county of the decedent's residence. The court shall hold the funds or item of
             242      property and, upon its determination under this section, shall order disbursement or transfer in


             243      accordance with the determination. Payments, transfers, or deposits made to or with the court
             244      discharge the payor or other third party from all claims for the value of amounts paid to or
             245      items of property transferred to or deposited with the court.
             246           H. [ [ ] (8) [ ] ] [ (9) ] .H (a) A person who purchases property from a former spouse,
             246a      relative of a
             247      former spouse, or any other person for value and without notice, or who receives from a former
             248      spouse, relative of a former spouse, or any other person a payment or other item of property in
             249      partial or full satisfaction of a legally enforceable obligation, is neither obligated under this
             250      section to return the payment, item of property, or benefit, nor is liable under this section for
             251      the amount of the payment or the value of the item of property or benefit. But a former spouse,
             252      relative of a former spouse, or other person who, not for value, received a payment, item of
             253      property, or any other benefit to which that person is not entitled under this section is obligated
             254      to return the payment, item of property, or benefit, or is personally liable for the amount of the
             255      payment or the value of the item of property or benefit, to the person who is entitled to it under
             256      this section.
             257          (b) If this section or any part of this section is preempted by federal law with respect to
             258      a payment, an item of property, or any other benefit covered by this section, a former spouse,
             259      relative of the former spouse, or any other person who, not for value, received a payment, item
             260      of property, or any other benefit to which that person is not entitled under this section is
             261      obligated to return that payment, item of property, or benefit, or is personally liable for the
             262      amount of the payment or the value of the item of property or benefit, to the person who would
             263      have been entitled to it were this section or part of this section not preempted.


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