Code Section Group

Probate Code - PROB

DIVISION 9. TRUST LAW [15000 - 19530]

  ( Division 9 enacted by Stats. 1990, Ch. 79. )

PART 2. CREATION, VALIDITY, MODIFICATION, AND TERMINATION OF TRUSTS [15200 - 15414]

  ( Part 2 enacted by Stats. 1990, Ch. 79. )

CHAPTER 3. Modification and Termination of Trusts [15400 - 15414]
  ( Chapter 3 enacted by Stats. 1990, Ch. 79. )

15400.
  

Unless a trust is expressly made irrevocable by the trust instrument, the trust is revocable by the settlor. This section applies only where the settlor is domiciled in this state when the trust is created, where the trust instrument is executed in this state, or where the trust instrument provides that the law of this state governs the trust.

(Enacted by Stats. 1990, Ch. 79.)

15401.
  

(a) A trust that is revocable by the settlor or any other person may be revoked in whole or in part by any of the following methods:

(1) By compliance with any method of revocation provided in the trust instrument.

(2) By a writing, other than a will, signed by the settlor or any other person holding the power of revocation and delivered to the trustee during the lifetime of the settlor or the person holding the power of revocation. If the trust instrument explicitly makes the method of revocation provided in the trust instrument the exclusive method of revocation, the trust may not be revoked pursuant to this paragraph.

(b) (1) Unless otherwise provided in the instrument, if a trust is created by more than one settlor, each settlor may revoke the trust as to the portion of the trust contributed by that settlor, except as provided in Section 761 of the Family Code.

(2) Notwithstanding paragraph (1), a settlor may grant to another person, including, but not limited to, his or her spouse, a power to revoke all or part of that portion of the trust contributed by that settlor, regardless of whether that portion was separate property or community property of that settlor, and regardless of whether that power to revoke is exercisable during the lifetime of that settlor or continues after the death of that settlor, or both.

(c) A trust may not be modified or revoked by an attorney in fact under a power of attorney unless it is expressly permitted by the trust instrument.

(d) This section shall not limit the authority to modify or terminate a trust pursuant to Section 15403 or 15404 in an appropriate case.

(e) The manner of revocation of a trust revocable by the settlor or any other person that was created by an instrument executed before July 1, 1987, is governed by prior law and not by this section.

(Amended by Stats. 2012, Ch. 55, Sec. 1. (AB 1683) Effective January 1, 2013.)

15402.
  

Unless the trust instrument provides otherwise, if a trust is revocable by the settlor, the settlor may modify the trust by the procedure for revocation.

(Enacted by Stats. 1990, Ch. 79.)

15403.
  

(a) Except as provided in subdivision (b), if all beneficiaries of an irrevocable trust consent, they may petition the court for modification or termination of the trust.

(b) If the continuance of the trust is necessary to carry out a material purpose of the trust, the trust cannot be modified or terminated unless the court, in its discretion, determines that the reason for doing so under the circumstances outweighs the interest in accomplishing a material purpose of the trust. If the trust is subject to a valid restraint on the transfer of a beneficiary’s interest as provided in Chapter 2 (commencing with Section 15300), the trust may not be terminated unless the court determines there is good cause to do so.

(c) If the trust provides for the disposition of principal to a class of persons described only as “heirs” or “next of kin” of the settlor, or using other words that describe the class of all persons who would take under the rules of intestacy, the court may limit the class of beneficiaries whose consent is necessary to modify or terminate a trust to the beneficiaries who are reasonably likely to take under the circumstances.

(Amended by Stats. 2017, Ch. 61, Sec. 1. (SB 333) Effective January 1, 2018.)

15404.
  

(a) A trust may be modified or terminated by the written consent of the settlor and all beneficiaries without court approval of the modification or termination.

(b) If any beneficiary does not consent to the modification or termination of the trust, the court may modify or partially terminate the trust upon petition to the court by the other beneficiaries, with the consent of the settlor, if the interests of the beneficiaries who do not consent are not substantially impaired.

(c) If the trust provides for the disposition of principal to a class of persons described only as “heirs” or “next of kin” of the settlor, or using other words that describe the class of all persons who would take under the rules of intestacy, the court may limit the class of beneficiaries whose consent is necessary to modify or terminate a trust to the beneficiaries who are reasonably likely to take under the circumstances.

(Amended by Stats. 2017, Ch. 61, Sec. 2. (SB 333) Effective January 1, 2018.)

15405.
  

For the purposes of Sections 15403 and 15404, the consent of a beneficiary who lacks legal capacity, including a minor, or who is an unascertained or unborn person may be given in proceedings before the court by a guardian ad litem, if it would be appropriate to do so. In determining whether to give consent, the guardian ad litem may rely on general family benefit accruing to living members of the beneficiary’s family as a basis for approving a modification or termination of the trust.

(Enacted by Stats. 1990, Ch. 79.)

15406.
  

In determining the class of beneficiaries whose consent is necessary to modify or terminate a trust pursuant to Section 15403 or 15404, the presumption of fertility is rebuttable.

(Enacted by Stats. 1990, Ch. 79.)

15407.
  

(a) A trust terminates when any of the following occurs:

(1) The term of the trust expires.

(2) The trust purpose is fulfilled.

(3) The trust purpose becomes unlawful.

(4) The trust purpose becomes impossible to fulfill.

(5) The trust is revoked.

(b) On termination of the trust, the trustee continues to have the powers reasonably necessary under the circumstances to wind up the affairs of the trust.

(Enacted by Stats. 1990, Ch. 79.)

15408.
  

(a) On petition by a trustee or beneficiary, if the court determines that the fair market value of the principal of a trust has become so low in relation to the cost of administration that continuation of the trust under its existing terms will defeat or substantially impair the accomplishment of its purposes, the court may, in its discretion and in a manner that conforms as nearly as possible to the intention of the settlor, order any of the following:

(1) Termination of the trust.

(2) Modification of the trust.

(3) Appointment of a new trustee.

(b) Notwithstanding subdivision (a), if the trust principal does not exceed fifty thousand dollars ($50,000) in value, the trustee has the power to terminate the trust.

(c) The existence of a trust provision restraining transfer of the beneficiary’s interest does not prevent application of this section.

(Amended by Stats. 2018, Ch. 78, Sec. 1. (AB 2426) Effective January 1, 2019.)

15409.
  

(a) On petition by a trustee or beneficiary, the court may modify the administrative or dispositive provisions of the trust or terminate the trust if, owing to circumstances not known to the settlor and not anticipated by the settlor, the continuation of the trust under its terms would defeat or substantially impair the accomplishment of the purposes of the trust. In this case, if necessary to carry out the purposes of the trust, the court may order the trustee to do acts that are not authorized or are forbidden by the trust instrument.

(b) The court shall consider a trust provision restraining transfer of the beneficiary’s interest as a factor in making its decision whether to modify or terminate the trust, but the court is not precluded from exercising its discretion to modify or terminate the trust solely because of a restraint on transfer.

(Enacted by Stats. 1990, Ch. 79.)

15410.
  

At the termination of a trust, the trust property shall be disposed of as follows:

(a) In the case of a trust that is revoked by the settlor, the trust property shall be disposed of in the following order of priority:

(1) As directed by the settlor.

(2) As provided in the trust instrument.

(3) To the extent that there is no direction by the settlor or in the trust instrument, to the settlor, or his or her estate, as the case may be.

(b) In the case of a trust that is revoked by any person holding a power of revocation other than the settlor, the trust property shall be disposed of in the following order of priority:

(1) As provided in the trust instrument.

(2) As directed by the person exercising the power of revocation.

(3) To the extent that there is no direction in the trust instrument or by the person exercising the power of revocation, to the person exercising the power of revocation, or his or her estate, as the case may be.

(c) In the case of a trust that is terminated by the consent of the settlor and all beneficiaries, as agreed by the settlor and all beneficiaries.

(d) In any other case, as provided in the trust instrument or in a manner directed by the court that conforms as nearly as possible to the intention of the settlor as expressed in the trust instrument.

(e) If a trust is terminated by the trustee pursuant to subdivision (b) of Section 15408, the trust property may be distributed as determined by the trustee pursuant to the standard provided in subdivision (d) without the need for a court order. If the trust instrument does not provide a manner of distribution at termination and the settlor’s intent is not adequately expressed in the trust instrument, the trustee may distribute the trust property to the living beneficiaries on an actuarial basis.

(Amended by Stats. 2012, Ch. 55, Sec. 2. (AB 1683) Effective January 1, 2013.)

15411.
  

If the terms of two or more trusts are substantially similar, on petition by a trustee or beneficiary, the court, for good cause shown, may combine the trusts if the court determines that administration as a single trust will not defeat or substantially impair the accomplishment of the trust purposes or the interests of the beneficiaries.

(Enacted by Stats. 1990, Ch. 79.)

15412.
  

On petition by a trustee or beneficiary, the court, for good cause shown, may divide a trust into two or more separate trusts, if the court determines that dividing the trust will not defeat or substantially impair the accomplishment of the trust purposes or the interests of the beneficiaries.

(Enacted by Stats. 1990, Ch. 79.)

15413.
  

A trust provision, express or implied, that the trust may not be terminated is ineffective insofar as it purports to be applicable after the expiration of the longer of the periods provided by the statutory rule against perpetuities, Article 2 (commencing with Section 21205) of Chapter 1 of Part 2 of Division 11.

(Added by Stats. 1991, Ch. 156, Sec. 22.)

15414.
  

Notwithstanding any other provision in this chapter, if a trust continues in existence after the expiration of the longer of the periods provided by the statutory rule against perpetuities, Article 2 (commencing with Section 21205) of Chapter 1 of Part 2 of Division 11, the trust may be terminated in either of the following manners:

(a) On petition by a majority of the beneficiaries.

(b) On petition by the Attorney General or by any person who would be affected by the termination, if the court finds that the termination would be in the public interest or in the best interest of a majority of the persons who would be affected by the termination.

(Added by Stats. 1991, Ch. 156, Sec. 23.)

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