Legislation Extends Notification Protections for Nonprofit Beneficiaries

PLESANTON, Calif., Sept. 30, 2026 /CourierPR/ -- A California law designed to ensure all beneficiaries are notified of securities left to them has been signed into effect by Governor Gavin Newsom. The new law, known as the Legacy Act (SB 1288), was authored by Senator John Laird (D-Santa Cruz) and co-sponsored by Valley Humane Society, San Diego Humane Society, and CalNonprofits. The legislation, which is the first of its kind in the nation, addresses a gap in California's system for securities registered for nonprobate transfer, which allows an account owner to designate beneficiaries to receive assets directly after death without probate or estate administration.

The issue came to light after Valley Humane Society, a nonprofit organization based in Pleasanton, discovered they were named as one of nine nonprofit beneficiaries of a donor's IRA. The organization knew about the gift only because the donor's sister found paperwork identifying the account and contacted the beneficiaries. Even with that information, administrative requirements delayed the distribution of the gift for approximately two and a half years. This experience raised a larger question: What happens when no one finds the paperwork?

Nonprobate transfers are intended to provide a direct path for assets to reach designated beneficiaries without probate administration. However, if a beneficiary does not know an asset exists, the institution does not notify them, and those handling the deceased person's affairs cannot obtain the beneficiary information, that intended path can break down. Over time, dormant financial property can ultimately be transferred to California's Unclaimed Property Program, creating an entirely different process for recovering assets that the owner had already designated to specific beneficiaries.

The Valley Humane Society's experience highlighted the importance of having a reliable way to connect assets with the beneficiaries already named on the account.

The new Legacy Act places responsibility for notification with the registering entity that already possesses the beneficiary information. Once a registering entity receives information establishing knowledge of an owner's death, it must initiate its beneficiary notification process and, within 60 days, make a reasonable and good-faith effort to notify each named beneficiary. The initial notification does not disclose account balances, transaction history, or other private financial information.

The law also addresses barriers beneficiaries may encounter when attempting to receive designated assets. Among its provisions, registering entities must make a reasonable and good-faith effort to notify each named beneficiary within 60 days after receiving information establishing knowledge of the owner's death. Nonprofits can establish their legal identity using organizational information without requiring employees or board members to provide extensive personal information. Beneficiaries cannot be required to open an account or become customers of the financial institution simply to receive assets designated to them. Multiple beneficiaries cannot be required to coordinate their claims or submit them simultaneously. Once all required documentation has been provided, a beneficiary must receive the designated share within 60 days, subject to specific legal, regulatory, and asset-related exceptions.

The legislation does not change an account owner's beneficiary designation or determine who is entitled to an asset. It establishes a process intended to help ensure that the designation already on file is carried out. The law applies to qualifying nonprofit and charitable beneficiaries when the death of the final owner occurs on or after January 1, 2027. Beginning January 1, 2028, the protections extend to other beneficiaries, including individuals, when the death of the final owner occurs on or after that date.

The Valley Humane Society worked with San Diego Humane Society, which had experienced similar barriers, and CalNonprofits to pursue the legislative solution. The three organizations co-sponsored SB 1288, with Senator Laird authoring and carrying the legislation. Throughout the legislative process, the co-sponsors worked with Senator Laird and his staff, legislators, financial institutions, and other stakeholders through multiple rounds of amendments. The final legislation addressed notification, documentation, distribution timelines, legal exceptions, and implementation. Financial-industry organizations that initially opposed the legislation ultimately moved to neutral.

Senator Laird and his staff took a problem the Valley Humane Society was experiencing in the real world and helped turn it into workable legislation. San Diego Humane Society and CalNonprofits brought their experience and expertise, and the financial industry worked with them to address legitimate implementation concerns. The Valley Humane Society's experience helped create a first-in-the-nation solution for nonprofits, families, and individual beneficiaries throughout California.

The Legacy Act is a significant step forward in ensuring that beneficiaries are notified of securities left to them, closing a gap in California's system for nonprobate transfers. It is the first such measure in the nation to extend these protections beyond charitable organizations to individual beneficiaries. The Valley Humane Society's struggle to receive their share of a donor's IRA gift has resulted in a law that will help ensure all beneficiaries are notified of securities left to them, providing a reliable path for assets to reach designated beneficiaries without probate administration.