SB 118 — Legacy Giving to Charitable Organizations

SecondNOTE: Regular Session Seventy-fifth General Assembly STATE OF COLORADO REREVISED This Version Includes All Amendments Adopted in the Second House LLS NO.

26-0126.01This Richardbill Sweetmanhas x4333been SENATEprepared BILLfor 26-118the SENATEsignatures SPONSORSHIPof ColemanandSimpson,the Ball,Cutter,Daugherty,Frizell,GonzalesJ.,Jodeh,Kipp,Kolker,appropriate Marchman,legislative Snyderofficers HOUSEand SPONSORSHIPthe Clifford,Bacon,Governor. Boesenecker, Camacho, Froelich, Lindsay, Nguyen, Rutinel d d e 2 E a 2 S U 7 U g 2 H d c e a Senate Committees House Committees R M Finance Finance 3 A BILL FOR AN ACT e n 2 C ONCERNING THE PAYMENT OF DESIGNATED BENEFITS TO A E m 2 S n 6 CHARITABLE ORGANIZATION UPON THE DEATH OF A DONOR .

OTo Udetermine hwhether Hthe iGovernor rhas asigned Mthe Rbill Billor Summarytaken dother (Note:action on it, please consult the legislative status sheet, the legislative history, or the Session Laws.

ThisSENATE summaryBILL applies26-118 toBYSENATOR(S)ColemanandSimpson,Ball,Cutter,Daugherty,Frizell, thisGonzales billJ., asJodeh, introducedKipp, andKolker, doesMarchman, notreflectanyamendmentsthatmaybesubsequentlyadopted.IfthisbillSnyder; d d passes third reading in the house of introduction, a bill summary that e 2 E a 2 applies to the reengrossed version of this bill will be available at T U 6 http://leg.colorado.gov.) N g 1 S d c e a The bill requires a bank, broker-dealer, depository institution, R M credit union, or financial or institutional investor (covered entity) that holds benefits that are designated bya donor to a charitable organization to pay the designated benefits not later than 60 calendar days after the charitable organization submits an affidavit attesting to the death of the i a 6 donor and including certain other information, except as described in e 0 T d , A 2 1 E d h Shading denotes HOUSE amendment.

Doublealso underliningREPRESENTATIVE(S) denotesClifford, SENATEBacon, amendment.Boesenecker, Camacho, Froelich, Lindsay, Nguyen, Rutinel.

SCONCERNING dTHE rPAYMENT CapitalOF lettersDESIGNATED orBENEFITS boldTO &A italicCHARITABLE numbersORGANIZATION indicateUPON newTHE materialDEATH toOF beA addedDONOR to. existing law.e M Dashes through the words or numbers indicate deletions from existing law.

m A federallaw.If acoveredentitythatholdsdesignatedbenefits is unable to pay the designated benefits to a charitable organization because federal law requires the covered entity to take certain actions or satisfy certain criteria in order to pay the designated benefits, the covered entity must take such actions or satisfy the criteria and comply with the bill not less than120daysafterthecharitableorganizationsubmitstheaffidavittothe covered entity.

If a charitable organization receives designated benefits that concern a creditor claim, statutory allowance, or elective-share or supplemental elective-share claim (outstanding claim) for which the charitable organization may be liable, the charitable organization must return to the donor's estate a portion or all of the designated benefits in order to satisfy the outstanding claim within 60 days after receiving written notice of the liability, with certain exceptions.

If the charitable organization fails to comply, it must pay statutory interest to the donor's estate for each day the unreturned amount remains outstanding.

Upon receivingnoticeoftheoutstandingclaimfromthepersonalrepresentative ofthedonor'sestate,thecharitableorganizationmustholdalloraportion of thedesignatedbenefitsina constructive trust pending a determination of the outstanding claim.

Moreover, the charitable organization may be subject to one or more court actions.

A covered entity that holds benefits that are designated to a charitable organization shall not:

! Requirethecharitableorganization to establish anaccount with the covered entity as a condition of receiving the designated benefits;

or ! Requireanindividualemployedby,orservingontheboard of, the charitable organization to submit personal informationasaconditionofreceivingdesignatedbenefits.

The bill maybe enforced bythe division of banking, the financial services board, or the division of securities, as appropriate.

(1) A S USED IN THIS SECTION ,UNLESS THE CONTEXT OTHERWISE -2- 118 REQUIRES :

(a) "BENEFITS"MEANS"BENEFITS " MEANS :

________ Capital letters or bold & italic numbers indicate new material added to existing law;

dashes through words or numbers indicate deletions from existing law and such material is not part of the act.

(II) A SAVINGS OR CHECKING ACCOUNT WITH A PAYABLE -UPON DEATH-DEATH DESIGNATION ;

(III) A SECURITY REGISTERED IN BENEFICIARY FORM WITH A PAYABLE -UPON DEATH-DEATH DESIGNATION ;OR (IV) PROCEEDSPAYABLEUPONDEATHPURSUANTTOAPENSIONORP ROCEEDS PAYABLE UPON DEATH PURSUANT TO A PROFIT-SHARINGPENSION ,AOR A PROFIT SHARING , A RETIREMENT ,OR OTHER EMPLOYMENT RELATED BENEFIT PLAN.PLAN .

(b) "CHARITABLE ORGANIZATION ""HAS HAS THE MEANING SET FORTH IN SECTION39-26-102SECTION 39-26-102 (2.5).

(I) A BANK,ASBANK ,AS DEFINED IN SECTION11-51-201 (1);

(II) ABROKERA BROKER -DEALER ,AS DEFINED IN SECTIO11-51-201SECTION11-51-201 (2);

(III) AADEPOSITORYINSTITUTION DEPOSITORY,ASDEFINEDINSECTION INSTITUTION , AS DEFINED IN SECTION 11-51-201 (5);

(IV) A CREDIT UNION ,AS DEFINED IN SECTIO11-30-101SECTION11-30-101 (1)(a);(1)(a)OR (V) A FINANCIAL OR INSTITUTIONAL INVESTOR , AS DEFINED IN SECTION 11-51-201 (6).

OR(d) (V)"DESIGNATED ABENEFITS FINANCIAL" ORMEANS INSTITUTIONALBENEFITS INVESTOR,THAT ASARE DEFINEDDESIGNATED INTO SECTIONBE 11-51-201TRANSFERRED (6).TO A CHARITABLE ORGANIZATION UPON THE DEATH OF AN INDIVIDUAL .

(d)(e) "DESIGNATED"IRS" BENEFITS " MEANS BENEFITS THAT ARE DESIGNATEDTOBETRANSFERREDTOACHARITABLEORGANIZATIONUPON THE DEATHFEDERAL OFINTERNAL ANREVENUE INDIVIDUAL.SERVICE .

(e)(2) "IRS"MEANS(a) UNLESS A COURT HAS ORDERED OTHERWISE ,AND EXCEPT AS MAYBEPROVIDEDOTHERWISEBYFEDERALLAWANDBYSUBSECTION (2)(c) OF THIS SECTION,A COVERED ENTITY THAT HOLDS DESIGNATED BENEFITS SHALLPAY THE FEDERALDESIGNATED INTERNALBENEFITS REVENUETO SERVICETHE .CHARITABLE ORGANIZATION PAGE 2-SENATE BILL 26-118 NOT LATER THAN SIXTY CALENDAR DAYS AFTER THE CHARITABLE ORGANIZATION SUBMITS TO THE COVERED ENTITY AN AFFIDAVIT THAT ATTESTS TO THE DEATH OF THE DONOR AND INCLUDES THE FOLLOWING INFORMATION :

(2)(I) (a) ULESS A COURT HAS ORDERED OTHERWISE AND EXCEPT -3- 118 AS MAY BE PROVIDED OTHERWISE BY FEDERAL LAW AND BY SUBSECTION (2)(c)OF THIS SECTIO, A COVERED ENTITY THAT HOLDS DESIGNATED BENEFITS SHALL PAY THE DESIGNATEDDONOR BENEFITSS TONAME THE CHARITABLE ORGANIZATION NOT LATER THAN SIXTY CALENDAR DAYS AFTER THE CHARITABLE ORGANIZATION SUBMITS TO THE COVERED ENTITY AN AFFIDAVIT THAT ATTESTS TO THE DEATH OF THE DONOR AND INCLUDESLAST THE-KNOWN FOLLOWINGADDRESS INFORMATION; :

(I)(II) THEAGENERAL DONORDESCRIPTION SOF NAMETHE ANDDESIGNATED LAST-KNOWNBENEFITS ADDRESS ;

(II)(III) AGENERALTECHARITABLEORGANIZATION DESCRIPTIONSNAME OF,ADDRESS THE,TELEPHONE DESIGNATEDNUMBER BENEFITS;,AND INTERNET WEBSITE ADDRESS ,IF ANY;

(III) THE CHARITABLE ORGANIZATION 'S NAME , ADDRESS , TELEPHONE NUMBER ,AND INTERNET WEBSITE ADDRESS,IF ANY;

(V) A COPYOFTHECHARITABLEORGANIZATIONCOPY SIRSOF THE CHARITABLE ORGANIZATION S IRS FORM W-9, SIGNED BY A DULY AUTHORIZED REPRESENTATIVE OF THE CHARITABLE ORGANIZATION ;

(VI) A REQUEST THAT THE DESIGNATED BENEFITS BE PAID OR TRANSFERREDTOTHECHARITABLEORGANIZATIONINACCORDANCEWITHTRANSFERRED TO THE CHARITABLE ORGANIZATION IN ACCORDANCE WITH THIS SECTION,INCLUDING INSTRUCTIONS ON WHERE AND HOW TO REMIT PAYMENT ;

(VII) A COPY OF THE DEATH CERTIFICATE;EXCEPTCERTIFICATE THAT,IF;EXCEPT THAT ,IF THE COVEREDENTITYHASALREADYRECEIVEDNOTICEOFTHEDONORCOVERED SDEATHENTITY ,HAS ALREADY RECEIVED NOTICE OF THE DONOR S DEATH, THIS REQUIREMENT DOES NOT APPLY;APPLY ;

(VIII) A STATEMENT THAT THE INFORMATION PROVIDED IN THE AFFIDAVIT IS TRUE AND CORREC;CORRECT;

-4- 118 (X) A COPY OF THE CHARITABLE ORGANIZATION S'S CORPORATE RESOLUTIONS CERTIFYING THAT THE SIGNATORY OF THE AFFIDAVIT IS AUTHORIZEDTOACTONBEHALFOFTHECHARITABLEORGANIZATIONAUTHORIZED TO ACT ON BEHALF OF THE CHARITABLE ORGANIZATION ;AND (XI) AWAIVERSIGNEDBYADULYAUTHORIZEDREPRESENTATIVEA OFWAIVERSIGNEDBYADULYAUTHORIZEDREPRESENTATIVEOF THE CHARITABLE ORGANIZATION , STATING THAT THE CHARITABLE PAGE 3-SENATE BILL 26-118 ORGANIZATION ACKNOWLEDGES AND AGREES TO THE FOLLOWING :

(A) THET HE DESIGNATED BENEFITS MAYCONCERNCREDITORMAY CONCERN CREDITOR CLAIMS AGAINST THE DONOR S'S PROBATE ESTATE AND STATUTORY ALLOWANCES TO THETHEDONOR DONORSSPOUSEANDCHILDREN SFORWHICHCLAIMSANDALLOWANCES SPOUSE AND CHILDREN , FOR WHICH CLAIMS AND ALLOWANCES THE CHARITABLE ORGANIZATION MAY BE LIABLE IF THE DONOR 'SS ESTATE IS INSUFFICIENT TO SATISFY THOSE CLAIMS AND ALLOWANCES ,UNLESS THE DESIGNATED BENEFITS ARE SPECIFICALLY EXCEPTED UNDER SECTION 15-15-103 (1)(b);

(B) THET HE DESIGNATED BENEFITS MAY CONCERN THE UNSATISFIED BALANCE OF A SURVIVING SPOUSESSPOUSE ELECTIV-SHARES ELECTIVE-SHARE OR SUPPLEMENTAL ELECTIVE-SHARECLAIMUNDERSECTIONELECTIVE-SHARE 15-11-209(3)FORWHICHCLAIMCLAIM UNDER SECTION 15-11-209 (3),FOR WHICH CLAIM THE CHARITABLE ORGANIZATION MAY BE LIABLE IF THE DONOSDONOR 'S ESTATE IS INSUFFICIENT TO PAY SUCH CLA;ANDCLAIM;AND (C) A PROCEEDINGPROCEEDINGUNDERSECTION UNDER15-15-103MUSTBECOMMENCED SECTION 15-15-103 MUST BE COMMENCED WITHIN THE TIME FRAME DESCRIBED IN SECTION15-15-103SECTION 15-15-103 (8),AND A SURVIVINGSURVIVINGSPOUSEMUSTFILEANELECTIONFORANELECTIVE SPOUSE-SHARECLAIM MUST FILE AN ELECTION FOR AN ELECTIVE-SHARE CLAIM WITHIN THE TIME LIMITS SET FORTH IN SECTIONSECTION5-11-211. 15-11-211.