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AB-1079 Trusts: revocation. (2021-2022)

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Date Published: 04/07/2021 09:00 PM
AB1079:v98#DOCUMENT

Amended  IN  Assembly  April 07, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 1079


Introduced by Assembly Member Gallagher

February 18, 2021


An act to amend Sections 15800 and 16069 of the Probate Code, relating to trusts.


LEGISLATIVE COUNSEL'S DIGEST


AB 1079, as amended, Gallagher. Trusts: revocation.
Existing law establishes procedures for the creation, modification, and termination of a trust, and regulates the administration of trusts by trustees on behalf of beneficiaries. Except as specified, existing law authorizes the revocation of a trust when the person holding the power to revoke the trust is competent. Existing law provides that, during this time, the duties of the trustee are owed to the person holding the power to revoke the trust.
This bill would impose additional requirements on the trustee of a trust if, during the time that a trust is revocable, it is found that the settlor or any other person holding the power to revoke the trust is not competent, including, but not limited to, requiring the trustee to provide a copy of the trust instrument and any amendments to the beneficiaries under the trust instrument, as specified. The bill would authorize the trustee to rely on specified methods to establish incompetency. The bill would make conforming changes to a related provision.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 15800 of the Probate Code is amended to read:

15800.
 (a) Except to the extent that the trust instrument otherwise provides or where the joint action of the settlor and all beneficiaries is required, during the time that a trust is revocable and the person holding the power to revoke the trust, in whole, if the trust has more than one settlor and all settlors are then living, or in part, is competent, the following shall apply:
(1) The person holding the power to revoke, and not the beneficiary, has the rights afforded beneficiaries under this division.
(2) The duties of the trustee are owed to the person holding the power to revoke.
(b) Except to the extent that the trust instrument otherwise provides or where the joint action of the settlor and all beneficiaries is required, if, during the time that a trust is revocable, the settlor or any other person holding the power to revoke the trust, in whole or in part, is not competent, the following shall apply:
(1) The trustee shall provide a true and complete copy of the trust instrument and any amendments within 60 days of the obtaining of information establishing the incompetency to each beneficiary to whom income or principal would be required required, or authorized in the trustee’s discretion discretion, to be distributed if the settlor were deemed to have died as of the date of receipt of the information. If the trust has been completely restated, the trustee need not include the trust instrument or amendments that are superseded by the last restatement. The trustee may rely on information received establishing the incompetency either in the form of a physician’s certificate of incapacity which, if a provision for establishing competency is in the trust instrument, follows that procedure, or in the form of a judicial determination.
(2) The duties of the trustee to account at least annually or provide information requested under Section 16061 shall be owed to each beneficiary to whom income or principal would be required or authorized in the trustee’s discretion to be distributed if the settlor were deemed to have died during either the account period or the period relating to the administration of the trust relevant to the report, as the case may be.
(3) A beneficiary whose interest is conditional on some factor not yet in existence or not yet determinable shall not be considered a beneficiary for purposes of this section, unless the trustee, in the trustee’s discretion, believes it is likely that the condition or conditions will be satisfied at the time of the settlor’s death.
(4) If the interest of a beneficiary fails because a condition to receiving that interest has not been satisfied or the trustee does not believe that the condition will be satisfied at the time of the settlor’s death, the duties in paragraphs (1) and (2) shall be owed to the beneficiary or beneficiaries who would next succeed to that interest at the relevant time or period as determined under the trust instrument, as amended and restated.
(c) To establish the incompetency, the trustee may rely on either of the following:
(1) The method for determining incompetency specified by the trust instrument, as amended or restated, and if no such method is specified, a certification of incapacity by one or more physicians pursuant to an examination of the settlor’s condition.
(2) A judicial determination of incompetency.

SEC. 2.

 Section 16069 of the Probate Code is amended to read:

16069.
 (a) The trustee is not required to account to the beneficiary, provide the terms of the trust to a beneficiary, or provide requested information to the beneficiary pursuant to Section 16061, in any of the following circumstances:
(1) In the case of a beneficiary of a revocable trust, as provided in subdivision (a) of Section 15800, for the period when the trust may be revoked.
(2) If the beneficiary and the trustee are the same person.
(b) Notwithstanding subdivision (a), in the case of a revocable trust, if the settlor or any other person holding the power to revoke the trust, in whole or in part, is not competent, the trustee is required to account but only to those beneficiaries as provided in subdivision (b) of Section 15800.