H. B. 2568
(By Delegate Hall)
[Introduced February 20, 1995; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact section one, article one; and section
two, article three, both of chapter forty-two of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended, all relating to life insurance and annuities under
the laws of descent and distribution.
Be it enacted by the Legislature of West Virginia:
That section one, article one; and section two, article
three, both of chapter forty-two of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, be amended and
reenacted to read as follows:
ARTICLE 1. DESCENT.
§42-1-1. General definitions.
Subject to additional definitions contained in the
subsequent articles that are applicable to specific articles,
parts, or sections, and unless the context otherwise requires in
(1) "Agent" includes an attorney-in-fact under a durable or
nondurable power of attorney, an individual authorized to make
decisions concerning another's health care, and an individual
authorized to make decisions for another under a natural death
(2) "Beneficiary" as it relates to a trust beneficiary,
includes a person who has any present or future interest, vested
or contingent, and also includes the owner of an interest by
assignment or other transfer; as it relates to a charitable
trust, includes any person entitled to enforce the trust; as it
relates to a "beneficiary of a beneficiary designation," refers
to a beneficiary
of an insurance or annuity policy, of an account
with POD designation, of a security registered in beneficiary
form (TOD), or of a pension, profit-sharing, retirement or
similar benefit plan, or other nonprobate transfer at death; and,
as it relates to a "beneficiary designated in a governing
instrument," includes a grantee of a deed, a devisee, a trust
beneficiary, a beneficiary of a beneficiary designation, a donee,
appointee, or taker in default of a power of appointment, or a
person in whose favor a power of attorney or a power held in any
individual, fiduciary or representative capacity is exercised.
(3) "Court" means the county commission or branch in this
state having jurisdiction in matters relating to the affairs of
(4) "Conservator" means a person who is appointed by a
court to manage the estate of a protected person.
(5) "Descendant" of an individual means all of his or her
descendants of all generations, with the relationship of parent
and child at each generation being determined by the definition
of child and parent contained in this code.
(6) "Devise" when used as a noun, means a testamentary
disposition of real or personal property and, when used as a
verb, means to dispose of real or personal property by will.
(7) "Devisee" means a person designated in a will to
receive a devise. In the case of a devise to an existing trust
or trustee, or to a trustee on trust described by will, the trust
or trustee is the devisee and the beneficiaries are not devisees.
(8) "Distributee" means any person who has received
property of a decedent from his or her personal representative
other than as a creditor or purchaser. A testamentary trustee is
a distributee only to the extent of distributed assets or
increment thereto remaining in his or her hands. A beneficiary
of a testamentary trust to whom the trustee has distributed
property received from a personal representative is a distributee
of the personal representative. For the purposes of this
provision, "testamentary trustee" includes a trustee to whom
assets are transferred by will, to the extent of the devised
(9) "Estate" includes the property of the decedent, trust,
or other person whose affairs are subject to this code as
originally constituted and as it exists from time to time during
(10) "Exempt property" means that property of a decedent's
estate which is provided for in Section 48, Article VI of the
(11) "Fiduciary" includes a personal representative,
guardian, conservator and trustee.
(12) "Foreign personal representative" means a personal
representative appointed by another jurisdiction.
(13) "Formal proceedings" means proceedings conducted
before a judge with notice to interested persons.
(14) "Governing instrument" means a deed, will, trust,
insurance or annuity policy, account with POD designation,
security registered in beneficiary form (TOD), pension,
profit-sharing, retirement or similar benefit plan, instrument
creating or exercising a power of appointment or a power of
attorney, or a donative, appointive or nominative instrument of
any other type.
(15) "Guardian" means a person who has qualified as a
guardian of a minor or incapacitated person pursuant to
testamentary or court appointment, but excludes one who is merely
a guardian ad litem.
(16) "Heirs" means persons, including the surviving spouse
and the state, who are entitled under the statutes of intestate
succession to the property of a decedent.
(17) "Informal proceedings" mean those conducted without
notice to interested persons by an officer of the court acting as a registrar for probate of a will or appointment of a personal
(18) "Interested person" includes heirs, devisees,
children, spouses, creditors, beneficiaries, and any others
having a property right in or claim against a trust estate or the
estate of a decedent, ward or protected person. It also includes
persons having priority for appointment as personal
representative, and other fiduciaries representing interested
persons. The meaning as it relates to particular persons may
vary from time to time and must be determined according to the
particular purposes of, and matter involved in, any proceeding.
(19) "Issue" of a person means descendant as defined in
(20) "Joint tenants with the right of survivorship" and
"community property with the right of survivorship" includes
coowners of property held under circumstances that entitle one or
more to the whole of the property on the death of the other or
others, but excludes forms of coownership registration in which
the underlying ownership of each party is in proportion to that
(21) "Lease" includes an oil, gas or other mineral lease.
(22) "Letters" includes letters testamentary, letters of
guardianship, letters of administration, and letters of
(23) "Minor" means a person who is under eighteen years of
(24) "Mortgage" means any deed of trust, conveyance,
agreement or arrangement in which property is encumbered or used
(25) "Nonresident decedent" means a decedent who was
domiciled in another jurisdiction at the time of his or her
(26) "Parent" includes any person entitled to take, or who
would be entitled to take if the child died without a will, as a
parent under this code by intestate succession from the child
whose relationship is in question and excludes any person who is
only a stepparent, foster parent or grandparent.
(27) "Payor" means a trustee, insurer, business entity,
employer, government, governmental agency or subdivision, or any
other person authorized or obligated by law or a governing
instrument to make payments.
(28) "Person" means an individual or an organization.
(29) "Personal representative" includes executor,
administrator, successor personal representative, special
administrator, and persons who perform substantially the same
function under the law governing their status. "General personal
representative" excludes special administrator.
(30) "Petition" means a written request to the court for an
order after notice.
(31) "Proceeding" includes action at law and suit in
(32) "Property" includes both real and personal property or
any interest therein and means anything that may be the subject
(33) "Security" includes any note, stock, treasury stock,
bond, debenture, evidence of indebtedness, certificate of
interest or participation in an oil, gas, or mining title or
lease or in payments out of production under such a title or
lease, collateral trust certificate, transferable share, voting
trust certificate or, in general, any interest or instrument
commonly known as a security, or any certificate of interest or
participation, any temporary or interim certificate, receipt, or
certificate of deposit for, or any warrant or right to subscribe
to or purchase, any of the foregoing.
(34) "Settlement" in reference to a decedent's estate,
includes the full process of administration, distribution and
(35) "State" means a state of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, or any
territory or insular possession subject to the jurisdiction of
the United States.
(36) "Successor personal representative" means a personal
representative, other than a special administrator, who is
appointed to succeed a previously appointed personal
(37) "Successors" means persons, other than creditors, who
are entitled to property of a decedent under his or her will or
(38) "Survive" means that an individual has neither
predeceased an event, including the death of another individual,
nor is deemed to have predeceased an event. The term includes
its derivatives, such as "survives," "survived," "survivor,"
(39) "Surviving spouse" means the person to whom the
decedent was married at the time of the decedent's death.
(40) "Testacy proceeding" means a proceeding to establish
a will or determine intestacy.
(41) "Testator" includes an individual of either sex.
(42) "Trust" includes an express trust, private or
charitable, with additions thereto, wherever and however created.
The term also includes a trust created or determined by judgment
or decree under which the trust is to be administered in the
manner of an express trust. The term excludes other constructive
trusts and excludes resulting trusts, conservatorships, personal
representatives and custodial arrangements, including that
relating to gifts or transfers to minors, dealing with special
custodial situations, business trusts providing for certificates
to be issued to beneficiaries.
(43) "Trustee" includes an original, additional or
successor trustee, whether or not appointed or confirmed by
(44) "Will" includes codicil and any testamentary
instrument that merely appoints an executor, revokes or revises
another will, nominates a guardian, or expressly excludes or
limits the right of an individual or class to succeed to property
of the decedent passing by intestate succession.
ARTICLE 3. PROVISIONS RELATING TO HUSBAND OR WIFE OF DECEDENT.
§42-3-2. Augmented estate.
(1) In this section:
(i) "Bona fide purchaser" means a purchaser for value in
good faith and without notice of an adverse claim. The notation
of a state documentary fee on a recorded instrument is prima
facie evidence that the transfer described therein was made to a
bona fide purchaser.
(ii) "Nonadverse party" means a person who does not have a
substantial beneficial interest in the trust or other property
arrangement that would be adversely affected by the exercise or
nonexercise of the power that he or she possesses respecting the
trust or other property arrangement. A person having a general
power of appointment over property is deemed to have a beneficial
interest in the property.
(iii) "Presently exercisable general power of appointment"
means a power of appointment under which, at the time in
question, the decedent by an exercise of the power could have
created an interest, present or future, in himself or herself or
his or her creditors.
(iv) "Probate estate" means property, whether real or
personal, movable or immovable, wherever situated, that would
pass by intestate succession if the decedent died without a valid
(v) "Right to income" includes a right to payments under an
annuity or similar contractual arrangement.
(vi) "Value of property owned by the surviving spouse at the
decedent's death" and "value of property to which the surviving
spouse succeeds by reason of the decedent's death" include the
commuted value of any present or future interest then held by the
surviving spouse and the commuted value of amounts payable to the
surviving spouse after the decedent's death under any trust, life
insurance settlement option, annuity contract, public or private
pension, disability compensation, death benefit or retirement
plan, or any similar arrangement, exclusive of the federal social
subsections (b) (2) (iii) and (iv), paragraph (iii),
subdivision (2), subsection (b) of this section "transfer"
includes an exercise or release of a power of appointment, but
does not include a lapse of a power of appointment.
(b) The augmented estate consists of the sum of:
(1) The value of the decedent's probate estate, reduced by
funeral and administration expenses, homestead exemption,
property exemption, and enforceable claims;
(2) The value of the decedent's reclaimable estate. The
decedent's reclaimable estate is composed of all property, whether real or personal, movable or immovable, wherever
situated, not included in the decedent's probate estate, of any
of the following types:
(i) Property to the extent the passing of the principal
thereof to or for the benefit of any person, other than the
decedent's surviving spouse, was subject to a presently
exercisable general power of appointment held by the decedent
alone, if the decedent held that power immediately before his or
her death, or if and to the extent the decedent, while married to
his or her surviving spouse and during the two-year period next
preceding the decedent's death, released that power or exercised
that power in favor of any person other than the decedent or the
decedent's estate, spouse or surviving spouse;
(ii) Property, to the extent of the decedent's unilaterally
severable interest therein, held by the decedent and any other
person, except the decedent's surviving spouse, with right of
survivorship, acquired during the marriage of the decedent and
the surviving spouse, if the decedent held that interest
immediately before his or her death or if and to the extent the
decedent, while married to his or her surviving spouse and during
the two-year period preceding the decedent's death, transferred
that interest to any person other than the decedent's surviving
(iii) Proceeds of insurance, including accidental death
benefits, on the life of the decedent payable to any person other
than the decedent's surviving spouse, if the decedent owned the insurance policy, had the power to change the beneficiary of the
insurance policy, or the insurance policy was subject to a
presently exercisable general power of appointment held by the
decedent alone immediately before his or her death or if and to
the extent the decedent, while married to his or her surviving
spouse and during the two-year period next preceding the
decedent's death, transferred that policy to any person other
than the decedent's surviving spouse; and
iv) iii) Property transferred by the decedent to any person
other than a bona fide purchaser at any time during the
decedent's marriage to the surviving spouse, to or for the
benefit of any person, other than the decedent's surviving
spouse, if the transfer is of any of the following types:
(A) Any transfer to the extent that, at the time of or
during the two-year period next preceding his or her death the
possession or enjoyment of, or right to income from the property;
(B) Any transfer to the extent that, at the time of or
during the two-year period next preceding the decedent's death,
the income or principal was subject to a power, exercisable by
the decedent alone or in conjunction with any other person or
exercisable by a nonadverse party, for the benefit of the
decedent or the decedent's estate;
(C) Any transfer of property, to the extent the decedent's
contribution to it, as a percentage of the whole, was made within
two years before the decedent's death, by which the property is
held, at the time of or during the two-year period next preceding the decedent's death, by the decedent and another, other than the
decedent's surviving spouse, with right of survivorship; or
(D) Any transfer made to a donee within two years before the
decedent's death to the extent that the aggregate transfers to
any one donee in either of the years exceed ten thousand dollars.
(3) The value of property to which the surviving spouse
succeeds by reason of the decedent's death, other than by
homestead exemption, exempt property, testate succession, or
intestate succession, including the proceeds of insurance,
including accidental death benefits, on the life of the decedent
and benefits payable under a retirement plan in which the
decedent was a participant, exclusive of the federal social
security system; and
(4) The value of property owned by the surviving spouse at
the decedent's death, reduced by enforceable claims against that
property or that spouse, plus the value of amounts that would
have been includible in the surviving spouse's reclaimable estate
had the spouse predeceased the decedent.
But amounts that would
have been includible in the surviving spouse's reclaimable estate
under subsection (b)(2)(iii) are not valued as if he or she were
(c) Any transfer or exercise or release of a power of
appointment is excluded from the decedent's reclaimable estate
(i) to the extent the decedent received adequate and full
consideration in money or money's worth for the transfer,
exercise or release, or (ii) if irrevocably made with the written consent or joinder of the surviving spouse. Life insurance,
accident insurance, and annuity proceeds payable to persons other
than the decedent's surviving spouse or the decedent's estate is
(d) Property is valued as of the decedent's death, but
property irrevocably transferred during the two-year period next
preceding the decedent's death which is included in the
decedent's reclaimable estate under paragraphs (i),(ii) and
(iii), subdivision (2), subsection (b) of this section
(ii) and (iv) is valued as of the time of the transfer. If the
terms of more than one of the subparagraphs or sub-subparagraphs
of subdivision (2), subsection (b) of this section (2) apply, the
property is included in the augmented estate under the
subparagraph or sub-subparagraph that yields the highest value.
For the purposes of this subsection, an "irrevocable transfer of
property" includes an irrevocable exercise or release of a power
(e)(1) Although under this section a payment, item of
property, or other benefit is included in the decedent's
reclaimable estate, a payor or other third party is not liable
for having made a payment or transferred an item of property or
other benefit to a beneficiary designated in a governing
instrument, or for having taken any other action in good faith
reliance on the validity of a governing instrument, upon request
and satisfactory proof of the decedent's death, before the payor
or other third party received written notice from the surviving spouse or spouse's representative of an intention to file a
petition for the elective share or that a petition for the
elective share has been filed. A payor or other third party is
liable for payments made or other actions taken after the payor
or other third party received written notice of an intention to
file a petition for the elective share or that a petition for the
elective share has been filed.
(2) The written notice of intention to file a petition for
the elective share or that a petition for the elective share has
been filed must be mailed to the payor's or other third party's
main office or home by registered or certified mail, return
receipt requested, or served upon the payor or other third party
in the same manner as a summons in a civil action. Upon receipt
of written notice of intention to file a petition for the
elective share or that a petition for the elective share has been
filed, a payor or other third party may pay any amount owed or
transfer or deposit any item of property held by it to or with
the court having jurisdiction of the probate proceedings relating
to the decedent's estate, or if no proceedings have been
commenced, to or with the court having jurisdiction of probate
proceedings relating to decedents' estates located in the county
of the decedent's residence. The court shall hold the funds or
item of property and, upon its determination under subsection (d)
of section four of this article, shall order disbursement in
accordance with the determination. If no petition is filed in
the court within the specified time under subsection (a) of section four of this article or, if filed, the demand for an
elective share is withdrawn under subsection (c) of section four
of this article, the court shall order disbursement to the
designated beneficiary. Payments, transfers, or deposits made to
or with the court discharge the payor or other third party from
all claims for the value of amounts paid to or items of property
transferred to or deposited with the court.
(3) Upon petition to the probate 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.
(f)(1) A person who purchases property from a recipient 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 part to
return the payment, item or property, or benefit nor is liable
under this part for the amount of the payment or the value of the
item of property or benefit. But a person who, not for value,
receives a payment, item of property, or any other benefit
included in the decedent's reclaimable estate 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, as provided in section six of
(2) If any section or part of any section of this part is
preempted by federal law with respect to a payment, an item of property, or any other benefit included in the decedent's
reclaimable estate, a person who, not for value, receives the
payment, item of property, or any other benefit is obligated to
return that payment, item of property, or benefit, or is
personally liable for the amount of that payment or the value of
that item of property or benefit, as provided in section six of
this article to the person who would have been entitled to it
were that section or part of that section not preempted.
NOTE: The purpose of this bill is to amend the laws of
descent and distribution with respect to life insurance and
annuities and to amend the requirements for an augmented estate
as they apply to life insurance and accident insurance.
Strike-throughs indicate language that would be stricken
from the present law and underscoring indicates new language that
would be added.