Law:Division 9. Trust Law (California)

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Contents

Part 1. General Provisions

Ca Codes (prob:15000-15004) Probate Code Section 15000-15004



15000. This division shall be known and may be cited as the Trust Law.

15001. Except as otherwise provided by statute: (a) This division applies to all trusts regardless of whether they were created before, on, or after July 1, 1987. (b) This division applies to all proceedings concerning trusts commenced on or after July 1, 1987. (c) This division applies to all proceedings concerning trusts commenced before July 1, 1987, unless in the opinion of the court application of a particular provision of this division would substantially interfere with the effective conduct of the proceedings or the rights of the parties and other interested persons, in which case the particular provision of this division does not apply and prior law applies.


15002. Except to the extent that the common law rules governing trusts are modified by statute, the common law as to trusts is the law of this state.

15003. (a) Nothing in this division affects the substantive law relating to constructive or resulting trusts. (b) The repeal of Title 8 (commencing with Section 2215) of Part 4 of Division 3 of the Civil Code by Chapter 820 of the Statutes of 1986 was not intended to alter the rules applied by the courts to fiduciary and confidential relationships, except as to express trusts governed by this division. (c) Nothing in this division or in Section 82 is intended to prevent the application of all or part of the principles or procedures of this division to an entity or relationship that is excluded from the definition of "trust" provided by Section 82 where these principles or procedures are applied pursuant to statutory or common law principles, by court order or rule, or by contract.


15004. Unless otherwise provided by statute, this division applies to charitable trusts that are subject to the jurisdiction of the Attorney General to the extent that the application of the provision is not in conflict with the Uniform Supervision of Trustees for Charitable Purposes Act, Article 7 (commencing with Section 12580) of Chapter 6 of Part 2 of Division 3 of Title 2 of the Government Code.



Part 2. Creation, Validity, Modification, And Termination Of Trusts

Chapter 1. Creation And Validity Of Trusts

Ca Codes (prob:15200-15212) Probate Code Section 15200-15212



15200. Subject to other provisions of this chapter, a trust may be created by any of the following methods: (a) A declaration by the owner of property that the owner holds the property as trustee. (b) A transfer of property by the owner during the owner's lifetime to another person as trustee. (c) A transfer of property by the owner, by will or by other instrument taking effect upon the death of the owner, to another person as trustee. (d) An exercise of a power of appointment to another person as trustee. (e) An enforceable promise to create a trust.


15201. A trust is created only if the settlor properly manifests an intention to create a trust.


15202. A trust is created only if there is trust property.


15203. A trust may be created for any purpose that is not illegal or against public policy.


15204. A trust created for an indefinite or general purpose is not invalid for that reason if it can be determined with reasonable certainty that a particular use of the trust property comes within that purpose.

15205. (a) A trust, other than a charitable trust, is created only if there is a beneficiary. (b) The requirement of subdivision (a) is satisfied if the trust instrument provides for either of the following: (1) A beneficiary or class of beneficiaries that is ascertainable with reasonable certainty or that is sufficiently described so it can be determined that some person meets the description or is within the class. (2) A grant of a power to the trustee or some other person to select the beneficiaries based on a standard or in the discretion of the trustee or other person.


15206. A trust in relation to real property is not valid unless evidenced by one of the following methods: (a) By a written instrument signed by the trustee, or by the trustee's agent if authorized in writing to do so. (b) By a written instrument conveying the trust property signed by the settlor, or by the settlor's agent if authorized in writing to do so. (c) By operation of law.

15207. (a) The existence and terms of an oral trust of personal property may be established only by clear and convincing evidence. (b) The oral declaration of the settlor, standing alone, is not sufficient evidence of the creation of a trust of personal property. (c) In the case of an oral trust, a reference in this division or elsewhere to a trust instrument or declaration means the terms of the trust as established pursuant to subdivision (a).


15208. Consideration is not required to create a trust, but a promise to create a trust in the future is enforceable only if the requirements for an enforceable contract are satisfied.


15209. If a trust provides for one or more successor beneficiaries after the death of the settlor, the trust is not invalid, merged, or terminated in either of the following circumstances: (a) Where there is one settlor who is the sole trustee and the sole beneficiary during the settlor's lifetime. (b) Where there are two or more settlors, one or more of whom are trustees, and the beneficial interest in the trust is in one or more of the settlors during the lifetime of the settlors.


15210. A trust created pursuant to this chapter which relates to real property may be recorded in the office of the county recorder in the county where all or a portion of the real property is located.


15211. A trust for a noncharitable corporation or unincorporated society or for a lawful noncharitable purpose may be performed by the trustee for only 21 years, whether or not there is a beneficiary who can seek enforcement or termination of the trust and whether or not the terms of the trust contemplate a longer duration.


15212. (a) Subject to the requirements of this section, a trust for the care of an animal is a trust for a lawful noncharitable purpose. Unless expressly provided in the trust, the trust terminates when no animal living on the date of the settlor's death remains alive. The governing instrument of the animal trust shall be liberally construed to bring the trust within this section, to presume against the merely precatory or honorary nature of the disposition, and to carry out the general intent of the settlor. Extrinsic evidence is admissible in determining the settlor's intent. (b) A trust for the care of an animal is subject to the following requirements: (1) Except as expressly provided otherwise in the trust instrument, the principal or income shall not be converted to the use of the trustee or to any use other than for the benefit of the animal. (2) Upon termination of the trust, the trustee shall distribute the unexpended trust property in the following order: (A) As directed in the trust instrument. (B) If the trust was created in a nonresiduary clause in the settlor's will or in a codicil to the settlor's will, under the residuary clause in the settlor's will. (C) If the application of subparagraph (A) or (B) does not result in distribution of unexpended trust property, to the settlor's heirs under Section 21114. (3) For the purposes of Section 21110, the residuary clause described in subparagraph (B) of paragraph (2) shall be treated as creating a future interest under the terms of a trust. (c) The intended use of the principal or income may be enforced by a person designated for that purpose in the trust instrument or, if none is designated, by a person appointed by a court. In addition to a person identified in subdivision (a) of Section 17200, any person interested in the welfare of the animal or any nonprofit charitable organization that has as its principal activity the care of animals may petition the court regarding the trust as provided in Chapter 3 (commencing with Section 17200) of Part 5. (d) If a trustee is not designated or no designated or successor trustee is willing or able to serve, a court shall name a trustee. A court may order the transfer of the trust property to a court-appointed trustee, if it is required to ensure that the intended use is carried out and if a successor trustee is not designated in the trust instrument or if no designated successor trustee agrees to serve or is able to serve. A court may also make all other orders and determinations as it shall deem advisable to carry out the intent of the settlor and the purpose of this section. (e) The accountings required by Section 16062 shall be provided to the beneficiaries who would be entitled to distribution if the animal were then deceased and to any nonprofit charitable corporation that has as its principal activity the care of animals and that has requested these accountings in writing. However, if the value of the assets in the trust does not exceed forty thousand dollars ($40,000), no filing, report, registration, periodic accounting, separate maintenance of funds, appointment, or fee is required by reason of the existence of the fiduciary relationship of the trustee, unless ordered by the court or required by the trust instrument. (f) Any beneficiary, any person designated by the trust instrument or the court to enforce the trust, or any nonprofit charitable corporation that has as its principal activity the care of animals may, upon reasonable request, inspect the animal, the premises where the animal is maintained, or the books and records of the trust. (g) A trust governed by this section is not subject to termination pursuant to subdivision (b) of Section 15408. (h) Section 15211 does not apply to a trust governed by this section. (i) For purposes of this section, "animal" means a domestic or pet animal for the benefit of which a trust has been established.


Chapter 2. Restrictions On Voluntary And Involuntary Transfers

Ca Codes (prob:15300-15309) Probate Code Section 15300-15309



15300. Except as provided in Sections 15304 to 15307, inclusive, if the trust instrument provides that a beneficiary's interest in income is not subject to voluntary or involuntary transfer, the beneficiary's interest in income under the trust may not be transferred and is not subject to enforcement of a money judgment until paid to the beneficiary.


15301. (a) Except as provided in subdivision (b) and in Sections 15304 to 15307, inclusive, if the trust instrument provides that a beneficiary's interest in principal is not subject to voluntary or involuntary transfer, the beneficiary's interest in principal may not be transferred and is not subject to enforcement of a money judgment until paid to the beneficiary. (b) After an amount of principal has become due and payable to the beneficiary under the trust instrument, upon petition to the court under Section 709.010 of the Code of Civil Procedure by a judgment creditor, the court may make an order directing the trustee to satisfy the money judgment out of that principal amount. The court in its discretion may issue an order directing the trustee to satisfy all or part of the judgment out of that principal amount.


15302. Except as provided in Sections 15304 to 15307, inclusive, if the trust instrument provides that the trustee shall pay income or principal or both for the education or support of a beneficiary, the beneficiary's interest in income or principal or both under the trust, to the extent the income or principal or both is necessary for the education or support of the beneficiary, may not be transferred and is not subject to the enforcement of a money judgment until paid to the beneficiary.


15303. (a) If the trust instrument provides that the trustee shall pay to or for the benefit of a beneficiary so much of the income or principal or both as the trustee in the trustee's discretion sees fit to pay, a transferee or creditor of the beneficiary may not compel the trustee to pay any amount that may be paid only in the exercise of the trustee's discretion. (b) If the trustee has knowledge of the transfer of the beneficiary's interest or has been served with process in a proceeding under Section 709.010 of the Code of Civil Procedure by a judgment creditor seeking to reach the beneficiary's interest, and the trustee pays to or for the benefit of the beneficiary any part of the income or principal that may be paid only in the exercise of the trustee's discretion, the trustee is liable to the transferee or creditor to the extent that the payment to or for the benefit of the beneficiary impairs the right of the transferee or creditor. This subdivision does not apply if the beneficiary's interest in the trust is subject to a restraint on transfer that is valid under Section 15300 or 15301. (c) This section applies regardless of whether the trust instrument provides a standard for the exercise of the trustee's discretion. (d) Nothing in this section limits any right the beneficiary may have to compel the trustee to pay to or for the benefit of the beneficiary all or part of the income or principal.


15304. (a) If the settlor is a beneficiary of a trust created by the settlor and the settlor's interest is subject to a provision restraining the voluntary or involuntary transfer of the settlor's interest, the restraint is invalid against transferees or creditors of the settlor. The invalidity of the restraint on transfer does not affect the validity of the trust. (b) If the settlor is the beneficiary of a trust created by the settlor and the trust instrument provides that the trustee shall pay income or principal or both for the education or support of the beneficiary or gives the trustee discretion to determine the amount of income or principal or both to be paid to or for the benefit of the settlor, a transferee or creditor of the settlor may reach the maximum amount that the trustee could pay to or for the benefit of the settlor under the trust instrument, not exceeding the amount of the settlor's proportionate contribution to the trust.


15305. (a) As used in this section, "support judgment" means a money judgment for support of the trust beneficiary's spouse or former spouse or minor child. (b) If the beneficiary has the right under the trust to compel the trustee to pay income or principal or both to or for the benefit of the beneficiary, the court may, to the extent that the court determines it is equitable and reasonable under the circumstances of the particular case, order the trustee to satisfy all or part of the support judgment out of all or part of those payments as they become due and payable, presently or in the future. (c) Whether or not the beneficiary has the right under the trust to compel the trustee to pay income or principal or both to or for the benefit of the beneficiary, the court may, to the extent that the court determines it is equitable and reasonable under the circumstances of the particular case, order the trustee to satisfy all or part of the support judgment out of all or part of future payments that the trustee, pursuant to the exercise of the trustee's discretion, determines to make to or for the benefit of the beneficiary. (d) This section applies to a support judgment notwithstanding any provision in the trust instrument.


15305.5. (a) As used in this section, "restitution judgment" means a judgment awarding restitution for the commission of a felony or a money judgment for damages incurred as a result of conduct for which the defendant was convicted of a felony. (b) If the beneficiary has the right under the trust to compel the trustee to pay income or principal or both to or for the benefit of the beneficiary, the court may, to the extent that the court determines it is equitable and reasonable under the circumstances of the particular case, order the trustee to satisfy all or part of the restitution judgment out of all or part of those payments as they become due and payable, presently or in the future. (c) Whether or not the beneficiary has the right under the trust to compel the trustee to pay income or principal or both to or for the benefit of the beneficiary, the court may, to the extent that the court determines it is equitable and reasonable under the circumstances of the particular case, order the trustee to satisfy all or part of the restitution judgment out of all or part of future payments that the trustee, pursuant to the exercise of the trustee's discretion, determines to make to or for the benefit of the beneficiary. (d) This section applies to a restitution judgment notwithstanding any provision in the trust instrument.

15306. (a) Notwithstanding any provision in the trust instrument, if a statute of this state makes the beneficiary liable for reimbursement of this state or a local public entity in this state for public support furnished to the beneficiary or to the beneficiary' s spouse or minor child, upon petition to the court under Section 709.010 of the Code of Civil Procedure by the appropriate state or local public entity or public official, to the extent the court determines it is equitable and reasonable under the circumstances of the particular case, the court may do the following: (1) If the beneficiary has the right under the trust to compel the trustee to pay income or principal or both to or for the benefit of the beneficiary, order the trustee to satisfy all or part of the liability out of all or part of the payments as they become due, presently or in the future. (2) Whether or not the beneficiary has the right under the trust to compel the trustee to pay income or principal or both to or for the benefit of the beneficiary, order the trustee to satisfy all or part of the liability out of all or part of the future payments that the trustee, pursuant to the exercise of the trustee's discretion, determines to make to or for the benefit of the beneficiary. (3) If the beneficiary is a settlor or the spouse or minor child of the settlor and the beneficiary does not have the right under the trust to compel the trustee to pay income or principal or both to or for the benefit of the beneficiary, to the extent that the trustee has the right to make payments of income or principal or both to or for the beneficiary pursuant to the exercise of the trustee's discretion, order the trustee to satisfy all or part of the liability without regard to whether the trustee has then exercised or may thereafter exercise the discretion in favor of the beneficiary. (b) Subdivision (a) does not apply to any trust that is established for the benefit of an individual who has a disability that substantially impairs the individual's ability to provide for his or her own care or custody and constitutes a substantial handicap. If, however, the trust results in the individual being ineligible for needed public social services under Division 9 (commencing With Section 10000) of the Welfare and Institutions Code, this subdivision is not applicable and the provisions of subdivision (a) are to be applied.


15306.5. (a) Notwithstanding a restraint on transfer of the beneficiary's interest in the trust under Section 15300 or 15301, and subject to the limitations of this section, upon a judgment creditor' s petition under Section 709.010 of the Code of Civil Procedure, the court may make an order directing the trustee to satisfy all or part of the judgment out of the payments to which the beneficiary is entitled under the trust instrument or that the trustee, in the exercise of the trustee's discretion, has determined or determines in the future to pay to the beneficiary. (b) An order under this section may not require that the trustee pay in satisfaction of the judgment an amount exceeding 25 percent of the payment that otherwise would be made to, or for the benefit of, the beneficiary. (c) An order under this section may not require that the trustee pay in satisfaction of the judgment any amount that the court determines is necessary for the support of the beneficiary and all the persons the beneficiary is required to support. (d) An order for satisfaction of a support judgment, as defined in Section 15305, has priority over an order to satisfy a judgment under this section. Any amount ordered to be applied to the satisfaction of a judgment under this section shall be reduced by the amount of an order for satisfaction of a support judgment under Section 15305, regardless of whether the order for satisfaction of the support judgment was made before or after the order under this section. (e) If the trust gives the trustee discretion over the payment of either principal or income of a trust, or both, nothing in this section affects or limits that discretion in any manner. The trustee has no duty to oppose a petition to satisfy a judgment under this section or to make any claim for exemption on behalf of the beneficiary. The trustee is not liable for any action taken, or omitted to be taken, in compliance with any court order made under this section. (f) Subject to subdivision (d), the aggregate of all orders for satisfaction of money judgments against the beneficiary's interest in the trust may not exceed 25 percent of the payment that otherwise would be made to, or for the benefit of, the beneficiary.


15307. Notwithstanding a restraint on transfer of a beneficiary's interest in the trust under Section 15300 or 15301, any amount to which the beneficiary is entitled under the trust instrument or that the trustee, in the exercise of the trustee's discretion, has determined to pay to the beneficiary in excess of the amount that is or will be necessary for the education and support of the beneficiary may be applied to the satisfaction of a money judgment against the beneficiary. Upon the judgment creditor's petition under Section 709.010 of the Code of Civil Procedure, the court may make an order directing the trustee to satisfy all or part of the judgment out of the beneficiary's interest in the trust.

15308. Any order entered by a court under Section 15305, 15306, 15306.5, or 15307 is subject to modification upon petition of an interested person filed in the court where the order was made.


15309. A disclaimer or renunciation by a beneficiary of all or part of his or her interest under a trust shall not be considered a transfer under Section 15300 or 15301.


Chapter 3. Modification And Termination Of Trusts

Ca Codes (prob:15400-15414) Probate Code Section 15400-15414



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.


15401. (a) A trust that is revocable by the settlor 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 and delivered to the trustee during the lifetime of the settlor. 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) 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. (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) Nothing in this section limits 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 that was created by an instrument executed before July 1, 1987, is governed by prior law and not by this section.


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.


15403. (a) Except as provided in subdivision (b), if all beneficiaries of an irrevocable trust consent, they may compel modification or termination of the trust upon petition to the court. (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. Under this section the court does not have discretion to permit termination of a trust that is subject to a valid restraint on transfer of the beneficiary's interest as provided in Chapter 2 (commencing with Section 15300).


15404. (a) If the settlor and all beneficiaries of a trust consent, they may compel the modification or termination of the trust. (b) If any beneficiary does not consent to the modification or termination of the trust, upon petition to the court, the other beneficiaries, with the consent of the settlor, may compel a modification or a partial termination of the trust 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 needed to compel the modification or termination of the trust to the beneficiaries who are reasonably likely to take under the circumstances.


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.


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.


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.


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 forty thousand dollars ($40,000) 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.


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.


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, as directed by the settlor. (b) 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. (c) 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. (d) 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 (c) without the need for a court order. Where 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.


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.


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.

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.


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.


Part 3. Trustees And Beneficiaries

Chapter 1. Trustees

Article 1. General Provisions

Ca Codes (prob:15600-15604) Probate Code Section 15600-15604



15600. (a) The person named as trustee may accept the trust, or a modification of the trust, by one of the following methods: (1) Signing the trust instrument or the trust instrument as modified, or signing a separate written acceptance. (2) Knowingly exercising powers or performing duties under the trust instrument or the trust instrument as modified, except as provided in subdivision (b). (b) In a case where there is an immediate risk of damage to the trust property, the person named as trustee may act to preserve the trust property without accepting the trust or a modification of the trust, if within a reasonable time after acting the person delivers a written rejection of the trust or the modification of the trust to the settlor or, if the settlor is dead or incompetent, to a beneficiary. This subdivision does not impose a duty on the person named as trustee to act.


15601. (a) A person named as trustee may in writing reject the trust or a modification of the trust. (b) If the person named as trustee does not accept the trust or a modification of the trust by a method provided in subdivision (a) of Section 15600 within a reasonable time after learning of being named as trustee or of the modification, the person has rejected the trust or the modification. (c) A person named as trustee who rejects the trust or a modification of the trust is not liable with respect to the rejected trust or modification.

15602. (a) A trustee is not required to give a bond to secure performance of the trustee's duties, unless any of the following circumstances occurs: (1) A bond is required by the trust instrument. (2) Notwithstanding a waiver of a bond in the trust instrument, a bond is found by the court to be necessary to protect the interests of beneficiaries or other persons having an interest in the trust. (3) An individual who is not named as a trustee in the trust instrument is appointed as a trustee by the court. (b) Notwithstanding paragraphs (1) and (3) of subdivision (a), the court may excuse a requirement of a bond, reduce or increase the amount of a bond, release a surety, or permit the substitution of another bond with the same or different sureties. The court may not, however, excuse the requirement of a bond for an individual described in paragraph (3) of subdivision (a), except under compelling circumstances. For the purposes of this section, a request by all the adult beneficiaries of a trust that bond be waived for an individual described in paragraph (3) of subdivision (a) for their trust is deemed to constitute a compelling circumstance. (c) If a bond is required, it shall be filed or served and shall be in the amount and with sureties and liabilities ordered by the court. (d) Except as otherwise provided in the trust instrument or ordered by the court, the cost of the bond shall be charged against the trust. (e) A trust company may not be required to give a bond, notwithstanding a contrary provision in the trust instrument.


15603. On application by the trustee, the court clerk shall issue a certificate that the trustee is a duly appointed and acting trustee under the trust if the court file shows the incumbency of the trustee.

15604. (a) Notwithstanding any other provision of law, a nonprofit charitable corporation may be appointed as trustee of a trust created pursuant to this division, if all of the following conditions are met: (1) The corporation is incorporated in this state. (2) The articles of incorporation specifically authorize the corporation to accept appointments as trustee. (3) For the three years prior to the filing of a petition under this section, the nonprofit charitable corporation has been exempt from payment of income taxes pursuant to Section 501(c)(3) of the Internal Revenue Code and has served as a private professional conservator in the state. (4) The settlor or an existing trustee consents to the appointment of the nonprofit corporation as trustee or successor trustee, either in the petition or in a writing signed either before or after the petition is filed. (5) The court determines the trust to be in the best interest of the settlor. (6) The court determines that the appointment of the nonprofit corporation as trustee is in the best interest of the settlor and the trust estate. (b) A petition for appointment of a nonprofit corporation as trustee under this section may be filed by any of the following: (1) The settlor or the spouse of the settlor. (2) The nonprofit charitable corporation. (3) An existing trustee. (c) The petition shall include in the caption the name of a responsible corporate officer who shall act for the corporation for purposes of this section. If, for any reason, the officer so named ceases to act as the responsible corporate officer for purposes of this section, the corporation shall file with the court a notice containing (1) the name of the successor responsible corporate officer and (2) the date the successor becomes the responsible corporate officer. (d) The petition shall request that a trustee be appointed for the estate, shall specify the name, address, and telephone number of the proposed trustee and the name, address, and telephone number of the settlor or proposed settlor, and state the reasons why the appointment of the trustee is necessary. (e) The petition shall set forth, so far as the information is known to the petitioner, the names and addresses of all persons entitled to notice of a conservatorship petition, as specified in subdivision (b) of Section 1821. (f) Notice of the hearing on the petition shall be given in the same manner as provided in Sections 1822 and 1824. (g) The trustee appointed by the court pursuant to this section shall do all of the following: (1) File the required bond for the benefit of the trust estate in the same manner provided for conservators of the estate as set forth in Section 2320. This bond may not be waived, but the court may, in its discretion, permit the filing of a bond in an amount less than would otherwise be required under Section 2320. (2) Comply with the requirements for registration and filing of annual statements pursuant to Article 4 (commencing with Section 2340) of Chapter 4 of Part 4 of Division 4. (3) File with the court inventories and appraisals of the trust estate and present its accounts of the trust estate in the manner provided for conservators of the estate set forth in Chapter 7 (commencing with Section 2600) of Part 4 of Division 4. (4) Be reimbursed for expenses and compensated as trustee in the manner provided for conservators of the estate as described in Chapter 8 (commencing with Section 2640) of Part 4 of Division 4. However, compensation as trustee appointed under this section shall be allowed only for services actually rendered. (5) Be represented by counsel in all proceedings before the court. Any fee allowed for an attorney for the nonprofit charitable corporation shall be for services actually rendered. (h) The trustee appointed by the court under this section may be removed by the court, or may resign in accordance with Chapter 9 (commencing with Section 2650) of Part 4 of Division 4. If the nonprofit charitable corporation resigns or is removed by the court, the settlor may appoint another person as successor trustee, or another nonprofit charitable corporation as trustee under this section. (i) The trustee appointed by the court under this section is bound by the trust instrument created by the settlor, and shall be subject to the duties and responsibilities of a trustee as provided in this code.


Article 2. Cotrustees

Ca Codes (prob:15620-15622) Probate Code Section 15620-15622



15620. Unless otherwise provided in the trust instrument, a power vested in two or more trustees may only be exercised by their unanimous action.

15621. Unless otherwise provided in the trust instrument, if a vacancy occurs in the office of a cotrustee, the remaining cotrustee or cotrustees may act for the trust as if they are the only trustees.


15622. Unless otherwise provided in the trust instrument, if a cotrustee is unavailable to perform the duties of the cotrustee because of absence, illness, or other temporary incapacity, the remaining cotrustee or cotrustees may act for the trust, as if they are the only trustees, where necessary to accomplish the purposes of the trust or to avoid irreparable injury to the trust property.


Article 3. Resignation And Removal Of Trustees

Ca Codes (prob:15640-15645) Probate Code Section 15640-15645



15640. A trustee who has accepted the trust may resign only by one of the following methods: (a) As provided in the trust instrument. (b) In the case of a revocable trust, with the consent of the person holding the power to revoke the trust. (c) In the case of a trust that is not revocable, with the consent of all adult beneficiaries who are receiving or are entitled to receive income under the trust or to receive a distribution of principal if the trust were terminated at the time consent is sought. If a beneficiary has a conservator, the conservator may consent to the trustee's resignation on behalf of the conservatee without obtaining court approval. Without limiting the power of the beneficiary to consent to the trustee's resignation, if the beneficiary has designated an attorney in fact who has the power under the power of attorney to consent to the trustee's resignation, the attorney in fact may consent to the resignation. (d) Pursuant to a court order obtained on petition by the trustee under Section 17200. The court shall accept the trustee's resignation and may make any orders necessary for the preservation of the trust property, including the appointment of a receiver or a temporary trustee.


15641. The liability for acts or omissions of a resigning trustee or of the sureties on the trustee's bond, if any, is not released or affected in any manner by the trustee's resignation.


15642. (a) A trustee may be removed in accordance with the trust instrument, by the court on its own motion, or on petition of a settlor, cotrustee, or beneficiary under Section 17200. (b) The grounds for removal of a trustee by the court include the following: (1) Where the trustee has committed a breach of the trust. (2) Where the trustee is insolvent or otherwise unfit to administer the trust. (3) Where hostility or lack of cooperation among cotrustees impairs the administration of the trust. (4) Where the trustee fails or declines to act. (5) Where the trustee's compensation is excessive under the circumstances. (6) Where the sole trustee is a person described in subdivision (a) of Section 21350 or subdivision (a) of Section 21380, whether or not the person is the transferee of a donative transfer by the transferor, unless, based upon any evidence of the intent of the settlor and all other facts and circumstances, which shall be made known to the court, the court finds that it is consistent with the settlor's intent that the trustee continue to serve and that this intent was not the product of fraud or undue influence. Any waiver by the settlor of this provision is against public policy and shall be void. This paragraph shall not apply to instruments that became irrevocable on or before January 1, 1994. This paragraph shall not apply if any of the following conditions are met: (A) The settlor is related by blood or marriage to, or is a cohabitant with, any one or more of the trustees, the person who drafted or transcribed the instrument, or the person who caused the instrument to be transcribed. (B) The instrument is reviewed by an independent attorney who (1) counsels the settlor about the nature of his or her intended trustee designation and (2) signs and delivers to the settlor and the designated trustee a certificate in substantially the following form: "CERTIFICATE OF INDEPENDENT REVIEW I, _______________________________, have reviewed (attorney's name) ____________________and have counseled my client, (name of instrument) __________, fully and privately on the nature and (name of client) legal effect of the designation as trustee of ___ (name of trustee) contained in that instrument. I am so disassociated from the interest of the person named as trustee as to be in a position to advise my client impartially and confidentially as to the consequences of the designation. On the basis of this counsel, I conclude that the designation of a person who would otherwise be subject to removal under paragraph (6) of subdivision (b) of Section 15642 of the Probate Code is clearly the settlor's intent and that intent is not the product of fraud or undue influence. ____________________________ ___________________" (Name of Attorney) (Date) This independent review and certification may occur either before or after the instrument has been executed, and if it occurs after the date of execution, the named trustee shall not be subject to removal under this paragraph. Any attorney whose written engagement signed by the client is expressly limited to the preparation of a certificate under this subdivision, including the prior counseling, shall not be considered to otherwise represent the client. (C) After full disclosure of the relationships of the persons involved, the instrument is approved pursuant to an order under Article 10 (commencing with Section 2580) of Chapter 6 of Part 4 of Division 4. (7) If, as determined under Part 17 (commencing with Section 810) of Division 2, the trustee is substantially unable to manage the trust's financial resources or is otherwise substantially unable to execute properly the duties of the office. When the trustee holds the power to revoke the trust, substantial inability to manage the trust' s financial resources or otherwise execute properly the duties of the office may not be proved solely by isolated incidents of negligence or improvidence. (8) If the trustee is substantially unable to resist fraud or undue influence. When the trustee holds the power to revoke the trust, substantial inability to resist fraud or undue influence may not be proved solely by isolated incidents of negligence or improvidence. (9) For other good cause. (c) If, pursuant to paragraph (6) of subdivision (b), the court finds that the designation of the trustee was not consistent with the intent of the settlor or was the product of fraud or undue influence, the person being removed as trustee shall bear all costs of the proceeding, including reasonable attorney's fees. (d) If the court finds that the petition for removal of the trustee was filed in bad faith and that removal would be contrary to the settlor's intent, the court may order that the person or persons seeking the removal of the trustee bear all or any part of the costs of the proceeding, including reasonable attorney's fees. (e) If it appears to the court that trust property or the interests of a beneficiary may suffer loss or injury pending a decision on a petition for removal of a trustee and any appellate review, the court may, on its own motion or on petition of a cotrustee or beneficiary, compel the trustee whose removal is sought to surrender trust property to a cotrustee or to a receiver or temporary trustee. The court may also suspend the powers of the trustee to the extent the court deems necessary. (f) For purposes of this section, the term "related by blood or marriage" shall include persons within the seventh degree.


15643. There is a vacancy in the office of trustee in any of the following circumstances: (a) The person named as trustee rejects the trust. (b) The person named as trustee cannot be identified or does not exist. (c) The trustee resigns or is removed. (d) The trustee dies. (e) A conservator or guardian of the person or estate of an individual trustee is appointed. (f) The trustee is the subject of an order for relief in bankruptcy. (g) A trust company's charter is revoked or powers are suspended, if the revocation or suspension is to be in effect for a period of 30 days or more. (h) A receiver is appointed for a trust company if the appointment is not vacated within a period of 30 days.


15644. When a vacancy has occurred in the office of trustee, the former trustee who holds property of the trust shall deliver the trust property to the successor trustee or a person appointed by the court to receive the property and remains responsible for the trust property until it is delivered. A trustee who has resigned or is removed has the powers reasonably necessary under the circumstances to preserve the trust property until it is delivered to the successor trustee and to perform actions necessary to complete the resigning or removed trustee's administration of the trust.


15645. If the trustee of a trust that is not revocable has refused to transfer administration of the trust to a successor trust company on request of the beneficiaries described in subdivision (c) of Section 15640 and the court in subsequent proceedings under Section 17200 makes an order removing the existing trustee and appointing a trust company as successor trustee, the court may, in its discretion, award costs and reasonable attorney's fees incurred by the petitioner in the proceeding to be paid by the trustee or from the trust as ordered by the court.


Article 4. Appointment Of Trustees

Ca Codes (prob:15660-15660.5) Probate Code Section 15660-15660.5



15660. (a) If the trust has no trustee or if the trust instrument requires a vacancy in the office of a cotrustee to be filled, the vacancy shall be filled as provided in this section. (b) If the trust instrument provides a practical method of appointing a trustee or names the person to fill the vacancy, the vacancy shall be filled as provided in the trust instrument. (c) If the vacancy in the office of trustee is not filled as provided in subdivision (b), the vacancy may be filled by a trust company that has agreed to accept the trust on agreement of all adult beneficiaries who are receiving or are entitled to receive income under the trust or to receive a distribution of principal if the trust were terminated at the time the agreement is made. If a beneficiary has a conservator, the conservator may agree to the successor trustee on behalf of the conservatee without obtaining court approval. Without limiting the power of the beneficiary to agree to the successor trustee, if the beneficiary has designated an attorney in fact who has the power under the power of attorney to agree to the successor trustee, the attorney in fact may agree to the successor trustee. (d) If the vacancy in the office of trustee is not filled as provided in subdivision (b) or (c), on petition of any interested person or any person named as trustee in the trust instrument, the court may, in its discretion, appoint a trustee to fill the vacancy. If the trust provides for more than one trustee, the court may, in its discretion, appoint the original number or any lesser number of trustees. In selecting a trustee, the court shall give consideration to any nomination by the beneficiaries who are 14 years of age or older.

15660.5. (a) The court may appoint as trustee of a trust the public guardian or public administrator of the county in which the matter is pending subject to the following requirements: (1) Neither the public guardian nor the public administrator shall be appointed as trustee unless the court finds, after reasonable inquiry, that no other qualified person is willing to act as trustee or the public guardian, public administrator, or his or her representative consents. (2) The public administrator shall not be appointed as trustee unless either of the following is true: (A) At the time of the appointment and pursuant to the terms of the trust, the entire trust is then to be distributed outright. For purposes of this paragraph, a trust that is "then to be distributed outright" does not include a trust pursuant to which payments to, or on behalf of, a beneficiary or beneficiaries are to be made from the trust on an ongoing basis for more than six months after the date of distribution. (B) The public administrator consents. (3) Neither the public guardian nor the public administrator shall be appointed as a cotrustee unless the public guardian, public administrator, or his or her representative consents. (4) Neither the public guardian nor the public administrator shall be appointed as general trustee without a hearing and notice to the public guardian or public administrator, or his or her representative, and other interested persons as provided in Section 17203. (5) Neither the public guardian nor the public administrator shall be appointed as temporary trustee without receiving notice of hearing as provided in Section 1220. The court shall not waive this notice of hearing, but may shorten the time for notice upon a finding of good cause. (b) (1) If the public guardian or the public administrator consents to the appointment as trustee under this section, he or she shall submit a written certification of the consent to the court no later than two court days after the noticed hearing date described in paragraph (4) or (5) of subdivision (a). The public administrator shall not be appointed as trustee under subparagraph (A) of paragraph (2) of subdivision (a) if, after receiving notice as required by this section, the public administrator files a written certification with the court that the public administrator is unable to provide the level of services needed to properly fulfill the obligations of a trustee of the trust. (2) If the public administrator has been appointed as trustee without notice as required in paragraph (4) or (5) of subdivision (a), and the public administrator files a written certification with the court that he or she is unable to provide the level of services needed to properly fulfill the obligations of a trustee of the trust, this shall be good cause for the public administrator to be relieved as trustee. (c) The order of appointment shall provide for an annual bond fee as described in Section 15688.


Article 5. Compensation And Indemnification Of Trustees

Ca Codes (prob:15680-15688) Probate Code Section 15680-15688



15680. (a) Subject to subdivision (b), and except as provided in Section 15688, if the trust instrument provides for the trustee's compensation, the trustee is entitled to be compensated in accordance with the trust instrument. (b) Upon proper showing, the court may fix or allow greater or lesser compensation than could be allowed under the terms of the trust in any of the following circumstances: (1) Where the duties of the trustee are substantially different from those contemplated when the trust was created. (2) Where the compensation in accordance with the terms of the trust would be inequitable or unreasonably low or high. (3) In extraordinary circumstances calling for equitable relief. (c) An order fixing or allowing greater or lesser compensation under subdivision (b) applies only prospectively to actions taken in administration of the trust after the order is made.


15681. If the trust instrument does not specify the trustee's compensation, the trustee is entitled to reasonable compensation under the circumstances.

15682. The court may fix an amount of periodic compensation under Sections 15680 and 15681 to continue for as long as the court determines is proper.

15683. Unless the trust instrument otherwise provides or the trustees otherwise agree, if the trust has two or more trustees, the compensation shall be apportioned among the cotrustees according to the services rendered by them.

15684. A trustee is entitled to the repayment out of the trust property for the following: (a) Expenditures that were properly incurred in the administration of the trust. (b) To the extent that they benefited the trust, expenditures that were not properly incurred in the administration of the trust.


15685. The trustee has an equitable lien on the trust property as against the beneficiary in the amount of advances, with any interest, made for the protection of the trust, and for expenses, losses, and liabilities sustained in the administration of the trust or because of ownership or control of any trust property.


15686. (a) As used in this section, "trustee's fee" includes, but is not limited to, the trustee's periodic base fee, rate of percentage compensation, minimum fee, hourly rate, and transaction charge, but does not include fees for extraordinary services. (b) A trustee may not charge an increased trustee's fee for administration of a particular trust unless the trustee first gives at least 60 days' written notice of that increased fee to all of the following persons: (1) Each beneficiary who is entitled to an account under Section 16062. (2) Each beneficiary who was given the last preceding account. (3) Each beneficiary who has made a written request to the trustee for notice of an increased trustee's fee and has given an address for receiving notice by mail. (c) If a beneficiary files a petition under Section 17200 for review of the increased trustee's fee or for removal of the trustee and serves a copy of the petition on the trustee before the expiration of the 60-day period, the increased trustee's fee does not take effect as to that trust until otherwise ordered by the court or the petition is dismissed.


15687. (a) Notwithstanding any provision of a trust to the contrary, a trustee who is an attorney may receive only (1) the trustee's compensation provided in the trust or otherwise provided in this article or (2) compensation for legal services performed for the trustee, unless the trustee obtains approval for the right to dual compensation as provided in subdivision (d). (b) No parent, child, sibling, or spouse of a person who is a trustee, and no law partnership or corporation whose partner, shareholder, or employee is serving as a trustee shall receive any compensation for legal services performed for the trustee unless the trustee waives trustee compensation or unless the trustee obtains approval for the right to dual compensation as provided in subdivision (d). (c) This section shall not apply if the trustee is related by blood or marriage to, or is a cohabitant with, the settlor. (d) After full disclosure of the nature of the compensation and relationship of the trustee to all persons receiving compensation under this section, the trustee may obtain approval for dual compensation by either of the following: (1) An order pursuant to paragraph (21) of subdivision (b) of Section 17200. (2) Giving 30 days' advance written notice to the persons entitled to notice under Section 17203. Within that 30-day period, any person entitled to notice may object to the proposed action by written notice to the trustee or by filing a petition pursuant to paragraph (21) of subdivision (b) of Section 17200. If the trustee receives this objection during that 30-day period and if the trustee wishes dual compensation, the trustee shall file a petition for approval pursuant to paragraph (21) of subdivision (b) of Section 17200. (e) Any waiver of the requirements of this section is against public policy and shall be void. (f) This section applies to services rendered on or after January 1, 1994.


15688. Notwithstanding any other provision of this article and the terms of the trust, a public guardian or public administrator who is appointed as a trustee of a trust pursuant to Section 15660.5 shall be paid from the trust property for all of the following: (a) Reasonable expenses incurred in the administration of the trust. (b) Compensation for services of the public guardian or public administrator and the attorney of the public guardian or public administrator, as follows: (1) If the public guardian or public administrator is appointed as trustee of a trust that provides for the outright distribution of the entire trust estate, compensation for the public guardian or public administrator, and any attorney for the public guardian or public administrator, shall be calculated as that provided to a personal representative and attorney pursuant to Part 7 (commencing with Section 10800) of Division 7, based on the fair market value of the assets as of the date of the appointment, provided that the minimum amount of compensation for the public guardian or the public administrator shall be one thousand dollars ($1,000). Additionally, the minimum amount of compensation for the attorney for the public guardian or the public administrator, if any, shall be one thousand dollars ($1,000). (2) For a trust other than that described in paragraph (1), the public guardian or public administrator shall be compensated as provided in Section 15680. Compensation shall be consistent with compensation allowed for professional fiduciaries or corporate fiduciaries providing comparable services. (3) Except as provided in paragraph (1), reasonable compensation for the attorney for the public guardian or public administrator. (c) An annual bond fee in the amount of twenty-five dollars ($25) plus one-fourth of 1 percent of the amount of the trust assets greater than ten thousand dollars ($10,000). The amount charged shall be deposited in the county treasury.


Chapter 2. Beneficiaries

Ca Codes (prob:15800-15805) Probate Code Section 15800-15805



15800. 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 is competent: (a) The person holding the power to revoke, and not the beneficiary, has the rights afforded beneficiaries under this division. (b) The duties of the trustee are owed to the person holding the power to revoke.

15801. (a) In any case where the consent of a beneficiary may be given or is required to be given before an action may be taken, during the time that a trust is revocable and the person holding the power to revoke the trust is competent, the person holding the power to revoke, and not the beneficiary, has the power to consent or withhold consent. (b) This section does not apply where the joint consent of the settlor and all beneficiaries is required by statute.


15802. Notwithstanding any other statute, during the time that a trust is revocable and the person holding the power to revoke the trust is competent, a notice that is to be given to a beneficiary shall be given to the person holding the power to revoke and not to the beneficiary.


15803. The holder of a presently exercisable general power of appointment or power to withdraw property from the trust has the rights of a person holding the power to revoke the trust that are provided by Sections 15800 to 15802, inclusive, to the extent of the holder's power over the trust property.


15804. (a) Subject to subdivisions (b) and (c), it is sufficient compliance with a requirement in this division that notice be given to a beneficiary, or to a person interested in the trust, if notice is given as follows: (1) Where an interest has been limited on any future contingency to persons who will compose a certain class upon the happening of a certain event without further limitation, notice shall be given to the persons in being who would constitute the class if the event had happened immediately before the commencement of the proceeding or if there is no proceeding, if the event had happened immediately before notice is given. (2) Where an interest has been limited to a living person and the same interest, or a share therein, has been further limited upon the happening of a future event to the surviving spouse or to persons who are or may be the distributees, heirs, issue, or other kindred of the living person, notice shall be given to the living person. (3) Where an interest has been limited upon the happening of any future event to a person, or a class of persons, or both, and the interest, or a share of the interest, has been further limited upon the happening of an additional future event to another person, or a class of persons, or both, notice shall be given to the person or persons in being who would take the interest upon the happening of the first of these events. (b) If a conflict of interest involving the subject matter of the trust proceeding exists between a person to whom notice is required to be given and a person to whom notice is not otherwise required to be given under subdivision (a), notice shall also be given to persons not otherwise entitled to notice under subdivision (a) with respect to whom the conflict of interest exists. (c) Nothing in this section affects any of the following: (1) Requirements for notice to a person who has requested special notice, a person who has filed notice of appearance, or a particular person or entity required by statute to be given notice. (2) Availability of a guardian ad litem pursuant to Section 1003. (d) As used in this section, "notice" includes other papers.


15805. Notwithstanding any other provision of law, the Attorney General is subject to the limitations on the rights of beneficiaries of revocable trusts provided by Sections 15800 to 15802, inclusive.


Part 4. Trust Administration

Chapter 1. Duties Of Trustees

Article 1. Trustee's Duties In General

Ca Codes (prob:16000-16015) Probate Code Section 16000-16015



16000. On acceptance of the trust, the trustee has a duty to administer the trust according to the trust instrument and, except to the extent the trust instrument provides otherwise, according to this division.

16001. (a) Except as provided in subdivision (b), the trustee of a revocable trust shall follow any written direction acceptable to the trustee given from time to time (1) by the person then having the power to revoke the trust or the part thereof with respect to which the direction is given or (2) by the person to whom the settlor delegates the right to direct the trustee. (b) If a written direction given under subdivision (a) would have the effect of modifying the trust, the trustee has no duty to follow the direction unless it complies with the requirements for modifying the trust.


16002. (a) The trustee has a duty to administer the trust solely in the interest of the beneficiaries. (b) It is not a violation of the duty provided in subdivision (a) for a trustee who administers two trusts to sell, exchange, or participate in the sale or exchange of trust property between the trusts, if both of the following requirements are met: (1) The sale or exchange is fair and reasonable with respect to the beneficiaries of both trusts. (2) The trustee gives to the beneficiaries of both trusts notice of all material facts related to the sale or exchange that the trustee knows or should know.


16003. If a trust has two or more beneficiaries, the trustee has a duty to deal impartially with them and shall act impartially in investing and managing the trust property, taking into account any differing interests of the beneficiaries.


16004. (a) The trustee has a duty not to use or deal with trust property for the trustee's own profit or for any other purpose unconnected with the trust, nor to take part in any transaction in which the trustee has an interest adverse to the beneficiary. (b) The trustee may not enforce any claim against the trust property that the trustee purchased after or in contemplation of appointment as trustee, but the court may allow the trustee to be reimbursed from trust property the amount that the trustee paid in good faith for the claim. (c) A transaction between the trustee and a beneficiary which occurs during the existence of the trust or while the trustee's influence with the beneficiary remains and by which the trustee obtains an advantage from the beneficiary is presumed to be a violation of the trustee's fiduciary duties. This presumption is a presumption affecting the burden of proof. This subdivision does not apply to the provisions of an agreement between a trustee and a beneficiary relating to the hiring or compensation of the trustee.


16004.5. (a) A trustee may not require a beneficiary to relieve the trustee of liability as a condition for making a distribution or payment to, or for the benefit of, the beneficiary, if the distribution or payment is required by the trust instrument. (b) This section may not be construed as affecting the trustee's right to: (1) Maintain a reserve for reasonably anticipated expenses, including, but not limited to, taxes, debts, trustee and accounting fees, and costs and expenses of administration. (2) Seek a voluntary release or discharge of a trustee's liability from the beneficiary. (3) Require indemnification against a claim by a person or entity, other than a beneficiary referred to in subdivision (a), which may reasonably arise as a result of the distribution. (4) Withhold any portion of an otherwise required distribution that is reasonably in dispute. (5) Seek court or beneficiary approval of an accounting of trust activities.


16005. The trustee of one trust has a duty not to knowingly become a trustee of another trust adverse in its nature to the interest of the beneficiary of the first trust, and a duty to eliminate the conflict or resign as trustee when the conflict is discovered.


16006. The trustee has a duty to take reasonable steps under the circumstances to take and keep control of and to preserve the trust property.

16007. The trustee has a duty to make the trust property productive under the circumstances and in furtherance of the purposes of the trust.

16009. The trustee has a duty to do the following: (a) To keep the trust property separate from other property not subject to the trust. (b) To see that the trust property is designated as property of the trust.

16010. The trustee has a duty to take reasonable steps to enforce claims that are part of the trust property.


16011. The trustee has a duty to take reasonable steps to defend actions that may result in a loss to the trust.


16012. (a) The trustee has a duty not to delegate to others the performance of acts that the trustee can reasonably be required personally to perform and may not transfer the office of trustee to another person nor delegate the entire administration of the trust to a cotrustee or other person. (b) In a case where a trustee has properly delegated a matter to an agent, cotrustee, or other person, the trustee has a duty to exercise general supervision over the person performing the delegated matter. (c) This section does not apply to investment and management functions under Section 16052.


16013. If a trust has more than one trustee, each trustee has a duty to do the following: (a) To participate in the administration of the trust. (b) To take reasonable steps to prevent a cotrustee from committing a breach of trust or to compel a cotrustee to redress a breach of trust.

16014. (a) The trustee has a duty to apply the full extent of the trustee's skills. (b) If the settlor, in selecting the trustee, has relied on the trustee's representation of having special skills, the trustee is held to the standard of the skills represented.


16015. The provision of services for compensation by a regulated financial institution or its affiliates in the ordinary course of business either to a trust of which it also acts as trustee or to a person dealing with the trust is not a violation of the duty provided in Section 16002 or 16004. For the purposes of this section, "affiliate" means a corporation that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with another domestic or foreign corporation.


Article 2. Trustee's Standard Of Care

Ca Codes (prob:16040-16042) Probate Code Section 16040-16042



16040. (a) The trustee shall administer the trust with reasonable care, skill, and caution under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined from the trust instrument. (b) The settlor may expand or restrict the standard provided in subdivision (a) by express provisions in the trust instrument. A trustee is not liable to a beneficiary for the trustee's good faith reliance on these express provisions. (c) This section does not apply to investment and management functions governed by the Uniform Prudent Investor Act, Article 2.5 (commencing with Section 16045).


16041. A trustee's standard of care and performance in administering the trust is not affected by whether or not the trustee receives any compensation.

16042. (a) Notwithstanding the requirements of this article, Article 2.5 (commencing with Section 16045), and the terms of the trust, all trust funds that come within the custody of the public guardian who is appointed as trustee of the trust pursuant to Section 15660.5 may be deposited or invested in the same manner, and would be subject to the same terms and conditions, as a deposit or investment by the public administrator of funds in the estate of a decedent pursuant to Article 3 (commencing with Section 7640) of Chapter 4 of Part 1 of Division 7. (b) Upon the deposit or investment of trust property pursuant to subdivision (a), the public guardian shall be deemed to have met the standard of care specified in this article and Article 2.5 (commencing with Section 16045) with respect to this trust property.


Article 2.5. Uniform Prudent Investor Act

Ca Codes (prob:16045-16054) Probate Code Section 16045-16054



16045. This article, together with subdivision (a) of Section 16002 and Section 16003, constitutes the prudent investor rule and may be cited as the Uniform Prudent Investor Act.


16046. (a) Except as provided in subdivision (b), a trustee who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule. (b) The settlor may expand or restrict the prudent investor rule by express provisions in the trust instrument. A trustee is not liable to a beneficiary for the trustee's good faith reliance on these express provisions.


16047. (a) A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution. (b) A trustee's investment and management decisions respecting individual assets and courses of action must be evaluated not in isolation, but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust. (c) Among circumstances that are appropriate to consider in investing and managing trust assets are the following, to the extent relevant to the trust or its beneficiaries: (1) General economic conditions. (2) The possible effect of inflation or deflation. (3) The expected tax consequences of investment decisions or strategies. (4) The role that each investment or course of action plays within the overall trust portfolio. (5) The expected total return from income and the appreciation of capital. (6) Other resources of the beneficiaries known to the trustee as determined from information provided by the beneficiaries. (7) Needs for liquidity, regularity of income, and preservation or appreciation of capital. (8) An asset's special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries. (d) A trustee shall make a reasonable effort to ascertain facts relevant to the investment and management of trust assets. (e) A trustee may invest in any kind of property or type of investment or engage in any course of action or investment strategy consistent with the standards of this chapter.


16048. In making and implementing investment decisions, the trustee has a duty to diversify the investments of the trust unless, under the circumstances, it is prudent not to do so.


16049. Within a reasonable time after accepting a trusteeship or receiving trust assets, a trustee shall review the trust assets and make and implement decisions concerning the retention and disposition of assets, in order to bring the trust portfolio into compliance with the purposes, terms, distribution requirements, and other circumstances of the trust, and with the requirements of this chapter.


16050. In investing and managing trust assets, a trustee may only incur costs that are appropriate and reasonable in relation to the assets, overall investment strategy, purposes, and other circumstances of the trust.

16051. Compliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of a trustee's decision or action and not by hindsight.


16052. (a) A trustee may delegate investment and management functions as prudent under the circumstances. The trustee shall exercise prudence in the following: (1) Selecting an agent. (2) Establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust. (3) Periodically reviewing the agent's overall performance and compliance with the terms of the delegation. (b) In performing a delegated function, an agent has a duty to exercise reasonable care to comply with the terms of the delegation. (c) Except as otherwise provided in Section 16401, a trustee who complies with the requirements of subdivision (a) is not liable to the beneficiaries or to the trust for the decisions or actions of the agent to whom the function was delegated. (d) By accepting the delegation of a trust function from the trustee of a trust that is subject to the law of this state, an agent submits to the jurisdiction of the courts of this state.


16053. The following terms or comparable language in the provisions of a trust, unless otherwise limited or modified, authorizes any investment or strategy permitted under this chapter: "investments permissible by law for investment of trust funds," "legal investments," "authorized investments," "using the judgment and care under the circumstances then prevailing that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital," "prudent man rule," "prudent trustee rule," "prudent person rule," and "prudent investor rule."


16054. This article applies to trusts existing on and created after its effective date. As applied to trusts existing on its effective date, this article governs only decisions or actions occurring after that date.


Article 3. Trustee's Duty To Report Information And Account To Beneficiaries

Ca Codes (prob:16060-16069) Probate Code Section 16060-16069



16060. The trustee has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration.


16060.5. As used in this article, "terms of the trust" means the written trust instrument of an irrevocable trust or those provisions of a written trust instrument in effect at the settlor's death that describe or affect that portion of a trust that has become irrevocable at the death of the settlor. In addition, "terms of the trust" includes, but is not limited to, signatures, amendments, disclaimers, and any directions or instructions to the trustee that affect the disposition of the trust. "Terms of the trust" does not include documents which were intended to affect disposition only while the trust was revocable. If a trust has been completely restated, "terms of the trust" does not include trust instruments or amendments which are superseded by the last restatement before the settlor's death, but it does include amendments executed after the restatement. "Terms of the trust" also includes any document irrevocably exercising a power of appointment over the trust or over any portion of the trust which has become irrevocable.


16060.7. On the request of a beneficiary, the trustee shall provide the terms of the trust to the beneficiary unless the trustee is not required to provide the terms of the trust to the beneficiary in accordance with Section 16069.

16061. Except as provided in Section 16069, on reasonable request by a beneficiary, the trustee shall report to the beneficiary by providing requested information to the beneficiary relating to the administration of the trust relevant to the beneficiary's interest.


16061.5. (a) A trustee shall provide a true and complete copy of the terms of the irrevocable trust, or irrevocable portion of the trust, to each of the following: (1) Any beneficiary of the trust who requests it, and to any heir of a deceased settlor who requests it, when a revocable trust or any portion of a revocable trust becomes irrevocable because of the death of one or more of the settlors of the trust, when a power of appointment is effective or lapses upon the death of a settlor under the circumstances described in paragraph (3) of subdivision (a) of Section 16061.7, or because, by the express terms of the trust, the trust becomes irrevocable within one year of the death of a settlor because of a contingency related to the death of one or more of the settlors of the trust. (2) Any beneficiary of the trust who requests it, whenever there is a change of trustee of an irrevocable trust. (3) If the trust is a charitable trust subject to the supervision of the Attorney General, to the Attorney General, if requested, when a revocable trust or any portion of a revocable trust becomes irrevocable because of the death of one or more of the settlors of the trust, when a power of appointment is effective or lapses upon the death of a settlor under the circumstances described in paragraph (3) of subdivision (a) of Section 16061.7, or because, by the express terms of the trust, the trust becomes irrevocable within one year of the death of a settlor because of a contingency related to the death of one or more of the settlors of the trust, and whenever there is a change of trustee of an irrevocable trust. (b) The trustee shall, for purposes of this section, rely upon any final judicial determination of heirship. However, the trustee shall have discretion to make a good faith determination by any reasonable means of the heirs of a deceased settlor in the absence of a final judicial determination of heirship known to the trustee.


16061.7. (a) A trustee shall serve a notification by the trustee as described in this section in the following events: (1) When a revocable trust or any portion thereof becomes irrevocable because of the death of one or more of the settlors of the trust, or because, by the express terms of the trust, the trust becomes irrevocable within one year of the death of a settlor because of a contingency related to the death of one or more of the settlors of the trust. (2) Whenever there is a change of trustee of an irrevocable trust. (3) Whenever a power of appointment retained by a settlor is effective or lapses upon death of the settlor with respect to an inter vivos trust which was, or was purported to be, irrevocable upon its creation. This paragraph shall not apply to a charitable remainder trust. For purposes of this paragraph, "charitable remainder trust" means a charitable remainder annuity trust or charitable remainder unitrust as defined in Section 664(d) of the Internal Revenue Code. (4) The duty to serve the notification by the trustee pursuant to this subdivision is the duty of the continuing or successor trustee, and any one cotrustee may serve the notification. (b) The notification by the trustee required by subdivision (a) shall be served on each of the following: (1) Each beneficiary of the irrevocable trust or irrevocable portion of the trust, subject to the limitations of Section 15804. (2) Each heir of the deceased settlor, if the event that requires notification is the death of a settlor or irrevocability within one year of the death of the settlor of the trust by the express terms of the trust because of a contingency related to the death of a settlor. (3) If the trust is a charitable trust subject to the supervision of the Attorney General, to the Attorney General. (c) A trustee shall, for purposes of this section, rely upon any final judicial determination of heirship, known to the trustee, but the trustee shall have discretion to make a good faith determination by any reasonable means of the heirs of a deceased settlor in the absence of a final judicial determination of heirship known to the trustee. (d) The trustee need not provide a copy of the notification by trustee to any beneficiary or heir (1) known to the trustee but who cannot be located by the trustee after reasonable diligence or (2) unknown to the trustee. (e) The notification by trustee shall be served by mail to the last known address, pursuant to Section 1215, or by personal delivery. (f) The notification by trustee shall be served not later than 60 days following the occurrence of the event requiring service of the notification by trustee, or 60 days after the trustee became aware of the existence of a person entitled to receive notification by trustee, if that person was not known to the trustee on the occurrence of the event requiring service of the notification. If there is a vacancy in the office of the trustee on the date of the occurrence of the event requiring service of the notification by trustee, or if that event causes a vacancy, then the 60-day period for service of the notification by trustee commences on the date the new trustee commences to serve as trustee. (g) The notification by trustee shall contain the following information: (1) The identity of the settlor or settlors of the trust and the date of execution of the trust instrument. (2) The name, mailing address and telephone number of each trustee of the trust. (3) The address of the physical location where the principal place of administration of the trust is located, pursuant to Section 17002. (4) Any additional information that may be expressly required by the terms of the trust instrument. (5) A notification that the recipient is entitled, upon reasonable request to the trustee, to receive from the trustee a true and complete copy of the terms of the trust. (h) If the notification by the trustee is served because a revocable trust or any portion of it has become irrevocable because of the death of one or more settlors of the trust, or because, by the express terms of the trust, the trust becomes irrevocable within one year of the death of a settlor because of a contingency related to the death of one or more of the settlors of the trust, the notification by the trustee shall also include a warning, set out in a separate paragraph in not less than 10-point boldface type, or a reasonable equivalent thereof, that states as follows: "You may not bring an action to contest the trust more than 120 days from the date this notification by the trustee is served upon you or 60 days from the date on which a copy of the terms of the trust is mailed or personally delivered to you during that 120-day period, whichever is later." (i) Any waiver by a settlor of the requirement of serving the notification by trustee required by this section is against public policy and shall be void. (j) A trustee may serve a notification by trustee in the form required by this section on any person in addition to those on whom the notification by trustee is required to be served. A trustee is not liable to any person for serving or for not serving the notice on any person in addition to those on whom the notice is required to be served. A trustee is not required to serve a notification by trustee if the event that otherwise requires service of the notification by trustee occurs before January 1, 1998.


16061.8. No person upon whom the notification by the trustee is served pursuant to this chapter, whether the notice is served on him or her within or after the time period set forth in subdivision (f) of Section 16061.7, may bring an action to contest the trust more than 120 days from the date the notification by the trustee is served upon him or her, or 60 days from the day on which a copy of the terms of the trust is mailed or personally delivered to him or her during that 120-day period, whichever is later.


16061.9. (a) A trustee who fails to serve the notification by trustee as required by Section 16061.7 on a beneficiary shall be responsible for all damages, attorney's fees, and costs caused by the failure unless the trustee makes a reasonably diligent effort to comply with that section. (b) A trustee who fails to serve the notification by trustee as required by Section 16061.7 on an heir who is not a beneficiary and whose identity is known to the trustee shall be responsible for all damages caused to the heir by the failure unless the trustee shows that the trustee made a reasonably diligent effort to comply with that section. For purposes of this subdivision, "reasonably diligent effort" means that the trustee has sent notice by first-class mail to the heir at the heir's last mailing address actually known to the trustee. (c) A trustee, in exercising discretion with respect to the timing and nature of distributions of trust assets, may consider the fact that the period in which a beneficiary or heir could bring an action to contest the trust has not expired.


16062. (a) Except as otherwise provided in this section and in Section 16064, the trustee shall account at least annually, at the termination of the trust, and upon a change of trustee, to each beneficiary to whom income or principal is required or authorized in the trustee's discretion to be currently distributed. (b) A trustee of a living trust created by an instrument executed before July 1, 1987, is not subject to the duty to account provided by subdivision (a). (c) A trustee of a trust created by a will executed before July 1, 1987, is not subject to the duty to account provided by subdivision (a), except that if the trust is removed from continuing court jurisdiction pursuant to Article 2 (commencing with Section 17350) of Chapter 4 of Part 5, the duty to account provided by subdivision (a) applies to the trustee. (d) Except as provided in Section 16064, the duty of a trustee to account pursuant to former Section 1120.1a of the Probate Code (as repealed by Chapter 820 of the Statutes of 1986), under a trust created by a will executed before July 1, 1977, which has been removed from continuing court jurisdiction pursuant to former Section 1120.1a, continues to apply after July 1, 1987. The duty to account under former Section 1120.1a may be satisfied by furnishing an account that satisfies the requirements of Section 16063. (e) Any limitation or waiver in a trust instrument of the obligation to account is against public policy and shall be void as to any sole trustee who is a disqualified person as defined in Section 21350.5 or who is described in subdivision (a) of Section 21380 and is not described in Section 21382.


16063. (a) An account furnished pursuant to Section 16062 shall contain the following information: (1) A statement of receipts and disbursements of principal and income that have occurred during the last complete fiscal year of the trust or since the last account. (2) A statement of the assets and liabilities of the trust as of the end of the last complete fiscal year of the trust or as of the end of the period covered by the account. (3) The trustee's compensation for the last complete fiscal year of the trust or since the last account. (4) The agents hired by the trustee, their relationship to the trustee, if any, and their compensation, for the last complete fiscal year of the trust or since the last account. (5) A statement that the recipient of the account may petition the court pursuant to Section 17200 to obtain a court review of the account and of the acts of the trustee. (6) A statement that claims against the trustee for breach of trust may not be made after the expiration of three years from the date the beneficiary receives an account or report disclosing facts giving rise to the claim. (b) All accounts filed to be approved by a court shall be presented in the manner provided in Chapter 4 (commencing with Section 1060) of Part 1 of Division 3.


16064. The trustee is not required to account to a beneficiary as described in subdivision (a) of Section 16062, in any of the following circumstances: (a) To the extent the trust instrument waives the account, except that no waiver described in subdivision (e) of Section 16062 shall be valid or enforceable. Regardless of a waiver of accounting in the trust instrument, upon a showing that it is reasonably likely that a material breach of the trust has occurred, the court may compel the trustee to account. (b) As to a beneficiary who has waived in writing the right to an account. A waiver of rights under this subdivision may be withdrawn in writing at any time as to accounts for transactions occurring after the date of the written withdrawal. Regardless of a waiver of accounting by a beneficiary, upon a showing that is reasonably likely that a material breach of the trust has occurred, the court may compel the trustee to account. (c) In any of the circumstances set forth in Section 16069.


16068. Any waiver by a settlor of the obligation of the trustee of either of the following is against public policy and shall be void: (a) To provide the terms of the trust to the beneficiary as required by Sections 16060.7 and 16061.5. (b) To provide requested information to the beneficiary as required by Section 16061.


16069. 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: (a) In the case of a beneficiary of a revocable trust, as provided in Section 15800, for the period when the trust may be revoked. (b) If the beneficiary and the trustee are the same person.


Article 4. Duties With Regard To Discretionary Powers

Ca Codes (prob:16080-16082) Probate Code Section 16080-16082



16080. Except as provided in Section 16081, a discretionary power conferred upon a trustee is not left to the trustee's arbitrary discretion, but shall be exercised reasonably.


16081. (a) Subject to the additional requirements of subdivisions (b), (c), and (d), if a trust instrument confers "absolute," "sole," or "uncontrolled" discretion on a trustee, the trustee shall act in accordance with fiduciary principles and shall not act in bad faith or in disregard of the purposes of the trust. (b) Notwithstanding the use of terms like "absolute," "sole," or "uncontrolled" by a settlor or a testator, a person who is a beneficiary of a trust that permits the person, either individually or as trustee or cotrustee, to make discretionary distributions of income or principal to or for the benefit of himself or herself pursuant to a standard, shall exercise that power reasonably and in accordance with the standard. (c) Unless a settlor or a testator clearly indicates that a broader power is intended by express reference to this subdivision, a person who is a beneficiary of a trust that permits the person, as trustee or cotrustee, to make discretionary distributions of income or principal to or for the benefit of himself or herself may exercise that power in his or her favor only for his or her health, education, support, or maintenance within the meaning of Sections 2041 and 2514 of the Internal Revenue Code. Notwithstanding the foregoing and the provisions of Section 15620, if a power to make discretionary distributions of income or principal is conferred upon two or more trustees, the power may be exercised by any trustee who is not a current permissible beneficiary of that power ; and provided further that if there is no trustee who is not a current permissible beneficiary of that power, any party in interest may apply to a court of competent jurisdiction to appoint a trustee who is not a current permissible beneficiary of that power, and the power may be exercised by the trustee appointed by the court. (d) Subdivision (c) does not apply to either of the following: (1) Any power held by the settlor of a revocable or amendable trust. (2) Any power held by a settlor's spouse or a testator's spouse who is the trustee of a trust for which a marital deduction, as defined in Section 21520, has been allowed. (e) Subdivision (c) applies to any of the following: (1) Any trust executed on or after January 1, 1997. (2) Any testamentary trust created under a will executed on or after January 1, 1997. (3) Any irrevocable trust created under a document executed before January 1, 1997, or any revocable trust executed before that date if the settlor was incapacitated as of that date, unless all parties in interest elect affirmatively not to be subject to the application of subdivision (c) through a written instrument delivered to the trustee. That election shall be made on or before the latest of January 1, 1998, three years after the date on which the trust became irrevocable, or, in the case of a revocable trust where the settlor was incapacitated, three years after the date on which the settlor became incapacitated. (f) Notwithstanding the foregoing, the provisions of subdivision (c) neither create a new cause of action nor impair an existing cause of action that, in either case, relates to any power limited by subdivision (c) that was exercised before January 1, 1997. (g) For purposes of this section, the term "party in interest" means any of the following persons: (1) If the trust is revocable and the settlor is incapacitated, the settlor's legal representative under applicable law, or the settlor's attorney-in-fact under a durable power of attorney that is sufficient to grant the authority required under subdivision (c) or (e), as applicable. (2) If the trust is irrevocable, each trustee, each beneficiary then entitled or authorized to receive income distributions from the trust, or each remainder beneficiary who would be entitled to receive notice of a trust proceeding under Section 15804. Any beneficiary who lacks legal capacity may be represented by the beneficiary's legal representative, attorney-in-fact under a durable power of attorney that is sufficient to grant the authority required under subdivision (c) or (e), as applicable, or in the absence of a legal representative or attorney-in-fact, a guardian ad litem appointed for that purpose.


16082. Except as otherwise specifically provided in the trust instrument, a person who holds a power to appoint or distribute income or principal to or for the benefit of others, either as an individual or as trustee, may not use the power to discharge the legal obligations of the person holding the power.


Article 5. Duties Of Trustees Of Private Foundations, Charitable Trusts, And Split-interest Trusts

Ca Codes (prob:16100-16105) Probate Code Section 16100-16105



16100. As used in this article, the following definitions shall control: (a) "Charitable trust" means a charitable trust as described in Section 4947(a)(1) of the Internal Revenue Code. (b) "Private foundation" means a private foundation as defined in Section 509 of the Internal Revenue Code. (c) "Split-interest trust" means a split-interest trust as described in Section 4947(a)(2) of the Internal Revenue Code.


16101. During any period when a trust is deemed to be a charitable trust or a private foundation, the trustee shall distribute its income for each taxable year (and principal if necessary) at a time and in a manner that will not subject the property of the trust to tax under Section 4942 of the Internal Revenue Code.


16102. During any period when a trust is deemed to be a charitable trust, a private foundation, or a split-interest trust, the trustee shall not do any of the following: (a) Engage in any act of self-dealing as defined in Section 4941 (d) of the Internal Revenue Code. (b) Retain any excess business holdings as defined in Section 4943 (c) of the Internal Revenue Code. (c) Make any investments in such manner as to subject the property of the trust to tax under Section 4944 of the Internal Revenue Code. (d) Make any taxable expenditure as defined in Section 4945(d) of the Internal Revenue Code.


16103. With respect to split-interest trusts: (a) Subdivisions (b) and (c) of Section 16102 do not apply to any trust described in Section 4947(b)(3) of the Internal Revenue Code. (b) Section 16102 does not apply with respect to any of the following: (1) Any amounts payable under the terms of such trust to income beneficiaries, unless a deduction was allowed under Section 170(f)(2) (B), 2055(e)(2)(B), or 2522(c)(2)(B) of the Internal Revenue Code. (2) Any amounts in trust other than amounts for which a deduction was allowed under Section 170, 545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 of the Internal Revenue Code, if the amounts are segregated, as that term is defined in Section 4947(a)(3) of the Internal Revenue Code, from amounts for which no deduction was allowable. (3) Any amounts irrevocably transferred in trust before May 27, 1969.

16104. The provisions of Sections 16101, 16102, and 16103 shall be deemed to be contained in the instrument creating every trust to which this article applies. Any provision of the instrument inconsistent with or contrary to this article is without effect.


16105. (a) A proceeding contemplated by Section 101(l)(3) of the federal Tax Reform Act of 1969 (Public Law 91-172) may be commenced pursuant to Section 17200 by the organization involved. All specifically named beneficiaries of the organization and the Attorney General shall be parties to the proceedings. Notwithstanding Section 17000, this provision is not exclusive and does not limit any jurisdiction that otherwise exists. (b) If an instrument creating a trust affected by this section has been recorded, a notice of pendency of judicial proceedings under this section shall be recorded in a similar manner within 10 days from the commencement of the proceedings. A duly certified copy of any final judgment or decree in the proceedings shall be similarly recorded.


Chapter 2. Powers Of Trustees

Article 1. General Provisions

Ca Codes (prob:16200-16203) Probate Code Section 16200-16203



16200. A trustee has the following powers without the need to obtain court authorization: (a) The powers conferred by the trust instrument. (b) Except as limited in the trust instrument, the powers conferred by statute. (c) Except as limited in the trust instrument, the power to perform any act that a trustee would perform for the purposes of the trust under the standard of care provided in Section 16040 or 16047.


16201. This chapter does not affect the power of a court to relieve a trustee from restrictions on the exercise of powers under the trust instrument.

16202. The grant of a power to a trustee, whether by the trust instrument, by statute, or by the court, does not in itself require or permit the exercise of the power. The exercise of a power by a trustee is subject to the trustee's fiduciary duties.


16203. An instrument that incorporates the powers provided in former Section 1120.2 (repealed by Chapter 820 of the Statutes of 1986) shall be deemed to refer to the powers provided in Article 2 (commencing with Section 16220). For this purpose, the trustee's powers under former Section 1120.2 are not diminished and the trustee is not required to obtain court approval for exercise of a power for which court approval was not required by former law.


Article 2. Specific Powers Of Trustees

Ca Codes (prob:16220-16249) Probate Code Section 16220-16249



16220. The trustee has the power to collect, hold, and retain trust property received from a settlor or any other person until, in the judgment of the trustee, disposition of the property should be made. The property may be retained even though it includes property in which the trustee is personally interested.


16221. The trustee has the power to accept additions to the property of the trust from a settlor or any other person.


16222. (a) Subject to subdivision (b), the trustee has the power to continue or participate in the operation of any business or other enterprise that is part of the trust property and may effect incorporation, dissolution, or other change in the form of the organization of the business or enterprise. (b) Except as provided in subdivision (c), the trustee may continue the operation of a business or other enterprise only as authorized by the trust instrument or by the court. For the purpose of this subdivision, the lease of four or fewer residential units is not considered to be the operation of a business or other enterprise. (c) The trustee may continue the operation of a business or other enterprise for a reasonable time pending a court hearing on the matter or pending a sale of the business or other enterprise. (d) The limitation provided in subdivision (b) does not affect any power to continue or participate in the operation of a business or other enterprise that the trustee has under a trust created by an instrument executed before July 1, 1987.


16224. (a) In the absence of an express provision to the contrary in a trust instrument, where the instrument directs or permits investment in obligations of the United States government, the trustee has the power to invest in those obligations directly or in the form of an interest in a money market mutual fund registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.) or an investment vehicle authorized for the collective investment of trust funds pursuant to Section 9.18 of Part 9 of Title 12 of the Code of Federal Regulations, the portfolios of which are limited to United States government obligations maturing not later than five years from the date of investment or reinvestment and to repurchase agreements fully collateralized by United States government obligations. (b) This section applies only to trusts created on or after January 1, 1985.


16225. (a) The trustee has the power to deposit trust funds at reasonable interest in any of the following accounts: (1) An insured account in a financial institution. (2) To the extent that the account is collateralized, an account in a bank, an account in an insured savings and loan association, or an account in an insured credit union. (b) A trustee may deposit trust funds pursuant to subdivision (a) in a financial institution operated by, or that is an affiliate of, the trustee. For the purpose of this subdivision, "affiliate" means a corporation that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with another domestic or foreign corporation. (c) This section does not limit the power of a trustee in a proper case to deposit trust funds in an account described in subdivision (a) that is subject to notice or other conditions respecting withdrawal prescribed by law or governmental regulation. (d) The court may authorize the deposit of trust funds in an account described in subdivision (a) in an amount greater than the maximum insured or collateralized amount. (e) Nothing in this section prevents the trustee from holding an amount of trust property reasonably necessary for the orderly administration of the trust in the form of cash or in a checking account without interest.


16226. The trustee has the power to acquire or dispose of property, for cash or on credit, at public or private sale, or by exchange.


16227. The trustee has the power to manage, control, divide, develop, improve, exchange, partition, change the character of, or abandon trust property or any interest therein.


16228. The trustee has the power to encumber, mortgage, or pledge trust property for a term within or extending beyond the term of the trust in connection with the exercise of any power vested in the trustee.

16229. The trustee has the power to do any of the following: (a) Make ordinary or extraordinary repairs, alterations, or improvements in buildings or other trust property. (b) Demolish any improvements. (c) Raze existing or erect new party walls or buildings.


16230. The trustee has the power to do any of the following: (a) Subdivide or develop land. (b) Dedicate land to public use. (c) Make or obtain the vacation of plats and adjust boundaries. (d) Adjust differences in valuation on exchange or partition by giving or receiving consideration. (e) Dedicate easements to public use without consideration.


16231. The trustee has the power to enter into a lease for any purpose as lessor or lessee with or without the option to purchase or renew and for a term within or extending beyond the term of the trust.

16232. The trustee has the power to enter into a lease or arrangement for exploration and removal of gas, oil, or other minerals or geothermal energy, and to enter into a community oil lease or a pooling or unitization agreement, and for a term within or extending beyond the term of the trust.


16233. The trustee has the power to grant an option involving disposition of trust property or to take an option for the acquisition of any property, and an option may be granted or taken that is exercisable beyond the term of the trust.


16234. With respect to any shares of stock of a domestic or foreign corporation, any membership in a nonprofit corporation, or any other property, a trustee has the power to do any of the following: (a) Vote in person, and give proxies to exercise, any voting rights with respect to the shares, memberships, or property. (b) Waive notice of a meeting or give consent to the holding of a meeting. (c) Authorize, ratify, approve, or confirm any action that could be taken by shareholders, members, or property owners.


16235. The trustee has the power to pay calls, assessments, and any other sums chargeable or accruing against or on account of securities.

16236. The trustee has the power to sell or exercise stock subscription or conversion rights.


16237. The trustee has the power to consent, directly or through a committee or other agent, to the reorganization, consolidation, merger, dissolution, or liquidation of a corporation or other business enterprise, and to participate in voting trusts, pooling arrangements, and foreclosures, and in connection therewith, to deposit securities with and transfer title and delegate discretion to any protective or other committee as the trustee may deem advisable.


16238. The trustee has the power to hold a security in the name of a nominee or in other form without disclosure of the trust so that title to the security may pass by delivery.


16239. The trustee has the power to deposit securities in a securities depository, as defined in Section 30004 of the Financial Code, which is licensed under Section 30200 of the Financial Code or is exempt from licensing by Section 30005 or 30006 of the Financial Code. The securities may be held by the securities depository in the manner authorized by Section 775 of the Financial Code.


16240. The trustee has the power to insure the property of the trust against damage or loss and to insure the trustee against liability with respect to third persons.


16241. The trustee has the power to borrow money for any trust purpose to be repaid from trust property. The lender may include, but is not limited to, a bank holding company, affiliate, or subsidiary of the trustee.

16242. The trustee has the power to do any of the following: (a) Pay or contest any claim. (b) Settle a claim by or against the trust by compromise, arbitration, or otherwise. (c) Release, in whole or in part, any claim belonging to the trust.


16243. The trustee has the power to pay taxes, assessments, reasonable compensation of the trustee and of employees and agents of the trust, and other expenses incurred in the collection, care, administration, and protection of the trust.


16244. The trustee has the following powers: (a) To make loans out of trust property to the beneficiary on terms and conditions that the trustee determines are fair and reasonable under the circumstances. (b) To guarantee loans to the beneficiary by encumbrances on trust property.

16245. The trustee has the power to pay any sum of principal or income distributable to a beneficiary, without regard to whether the beneficiary is under a legal disability, by paying the sum to the beneficiary or by paying the sum to another person for the use or benefit of the beneficiary. Any sum distributable under this section to a custodian under the California Uniform Transfers to Minors Act (Part 9 (commencing with Section 3900)) shall be subject to Section 3906.

16246. The trustee has the power to effect distribution of property and money in divided or undivided interests and to adjust resulting differences in valuation. A distribution in kind may be made pro rata or non pro rata, and may be made pursuant to any written agreement providing for a non pro rata division of the aggregate value of the community property assets or quasi-community property assets, or both.


16247. The trustee has the power to hire persons, including accountants, attorneys, auditors, investment advisers, appraisers (including probate referees appointed pursuant to Section 400), or other agents, even if they are associated or affiliated with the trustee, to advise or assist the trustee in the performance of administrative duties.


16248. The trustee has the power to execute and deliver all instruments which are needed to accomplish or facilitate the exercise of the powers vested in the trustee.


16249. The trustee has the power to prosecute or defend actions, claims, or proceedings for the protection of trust property and of the trustee in the performance of the trustee's duties.


Chapter 3. Uniform Principal And Income Act

Article 1. Short Title And Definitions

Ca Codes (prob:16320-16328) Probate Code Section 16320-16328



16320. This chapter may be cited as the Uniform Principal and Income Act.

16321. The definitions in this article govern the construction of this chapter.


16322. "Accounting period" means a calendar year unless another 12-month period is selected by a fiduciary. The term includes a portion of a calendar year or other 12-month period that begins when an income interest begins or ends when an income interest ends.


16323. "Fiduciary" means a personal representative or a trustee.


16324. "Income" means money or property that a fiduciary receives as current return from a principal asset. The term includes a portion of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 5.1 (commencing with Section 16350), 5.2 (commencing with Section 16355), or 5.3 (commencing with Section 16360).


16325. "Income beneficiary" means a person to whom net income of a trust is or may be payable.


16326. "Income interest" means the right of an income beneficiary to receive all or part of net income, whether the trust requires it to be distributed or authorizes it to be distributed in the trustee's discretion.

16327. "Mandatory income interest" means the right of an income beneficiary to receive net income that the trust requires the fiduciary to distribute.

16328. "Net income" means the total receipts allocated to income during an accounting period minus the disbursements made from income during the accounting period, plus or minus transfers under this chapter to or from income during the accounting period. During any period in which the trust is being administered as a unitrust, either pursuant to the powers conferred by Sections 16336.4 to 16336.6, inclusive, or pursuant to the terms of the governing instrument, "net income" means the unitrust amount, if the unitrust amount is no less than 3 percent and no more than 5 percent of the fair market value of the trust assets, whether determined annually or averaged on a multiple year basis.


Article 2. General Provisions And Fiduciary Duties

Ca Codes (prob:16335-16339) Probate Code Section 16335-16339



16335. (a) In allocating receipts and disbursements to or between principal and income, and with respect to any other matter within the scope of this chapter, a fiduciary: (1) Shall administer a trust or decedent's estate in accordance with the trust or the will, even if there is a different provision in this chapter. (2) May administer a trust or decedent's estate by the exercise of a discretionary power of administration given to the fiduciary by the trust or the will, even if the exercise of the power produces a result different from a result required or permitted by this chapter, and no inference that the fiduciary has improperly exercised the discretion arises from the fact that the fiduciary has made an allocation contrary to a provision of this chapter. (3) Shall administer a trust or decedent's estate in accordance with this chapter if the trust or the will does not contain a different provision or does not give the fiduciary a discretionary power of administration. (4) Shall add a receipt or charge a disbursement to principal to the extent that the trust or the will and this chapter do not provide a rule for allocating the receipt or disbursement to or between principal and income. (b) In exercising a discretionary power of administration regarding a matter within the scope of this chapter, whether granted by a trust, a will, or this chapter, including the trustee's power to adjust under subdivision (a) of Section 16336, and the trustee's power to convert into a unitrust or reconvert or change the unitrust payout percentage pursuant to Sections 16336.4 to 16336.6, inclusive, the fiduciary shall administer the trust or decedent's estate impartially, except to the extent that the trust or the will expresses an intention that the fiduciary shall or may favor one or more of the beneficiaries. The exercise of discretion in accordance with this chapter is presumed to be fair and reasonable to all beneficiaries.


16336. (a) Subject to subdivision (b), a trustee may make an adjustment between principal and income to the extent the trustee considers necessary if all of the following conditions are satisfied: (1) The trustee invests and manages trust assets under the prudent investor rule. (2) The trust describes the amount that shall or may be distributed to a beneficiary by referring to the trust's income. (3) The trustee determines, after applying the rules in subdivision (a) of Section 16335, and considering any power the trustee may have under the trust to invade principal or accumulate income, that the trustee is unable to comply with subdivision (b) of Section 16335. (b) A trustee may not make an adjustment between principal and income in any of the following circumstances: (1) Where it would diminish the income interest in a trust (A) that requires all of the income to be paid at least annually to a spouse and (B) for which, if the trustee did not have the power to make the adjustment, an estate tax or gift tax marital deduction would be allowed, in whole or in part. (2) Where it would reduce the actuarial value of the income interest in a trust to which a person transfers property with the intent to qualify for a gift tax exclusion. (3) Where it would change the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets. (4) Where it would be made from any amount that is permanently set aside for charitable purposes under a will or trust, unless both income and principal are so set aside. (5) Where possessing or exercising the power to make an adjustment would cause an individual to be treated as the owner of all or part of the trust for income tax purposes, and the individual would not be treated as the owner if the trustee did not possess the power to make an adjustment. (6) Where possessing or exercising the power to make an adjustment would cause all or part of the trust assets to be included for estate tax purposes in the estate of an individual who has the power to remove a trustee or appoint a trustee, or both, and the assets would not be included in the estate of the individual if the trustee did not possess the power to make an adjustment. (7) Where the trustee is a beneficiary of the trust. (8) During any period in which the trust is being administered as a unitrust pursuant to the trustee's exercise of the power to convert provided in Section 16336.4 or 16336.5, or pursuant to the terms of the governing instrument. (c) Notwithstanding Section 15620, if paragraph (5), (6), or (7) of subdivision (b) applies to a trustee and there is more than one trustee, a cotrustee to whom the provision does not apply may make the adjustment unless the exercise of the power by the remaining trustee or trustees is not permitted by the trust. (d) A trustee may release the entire power conferred by subdivision (a) or may release only the power to adjust from income to principal or the power to adjust from principal to income in either of the following circumstances: (1) If the trustee is uncertain about whether possessing or exercising the power will cause a result described in paragraphs (1) to (6), inclusive, of subdivision (b). (2) If the trustee determines that possessing or exercising the power will or may deprive the trust of a tax benefit or impose a tax burden not described in subdivision (b). (e) A release under subdivision (d) may be permanent or for a specified period, including a period measured by the life of an individual. (f) A trust that limits the power of a trustee to make an adjustment between principal and income does not affect the application of this section unless it is clear from the trust that it is intended to deny the trustee the power of adjustment provided by subdivision (a). (g) In deciding whether and to what extent to exercise the power to make adjustments under this section, the trustee may consider, but is not limited to, any of the following: (1) The nature, purpose, and expected duration of the trust. (2) The intent of the settlor. (3) The identity and circumstances of the beneficiaries. (4) The needs for liquidity, regularity of income, and preservation and appreciation of capital. (5) The assets held in the trust; the extent to which they consist of financial assets, interests in closely held enterprises, tangible and intangible personal property, or real property; the extent to which an asset is used by a beneficiary; and whether an asset was purchased by the trustee or received from the settlor. (6) The net amount allocated to income under other statutes and the increase or decrease in the value of the principal assets, which the trustee may estimate as to assets for which market values are not readily available. (7) Whether and to what extent the trust gives the trustee the power to invade principal or accumulate income or prohibit the trustee from invading principal or accumulating income, and the extent to which the trustee has exercised a power from time to time to invade principal or accumulate income. (8) The actual and anticipated effect of economic conditions on principal and income and effects of inflation and deflation. (9) The anticipated tax consequences of an adjustment. (h) Nothing in this section or in this chapter is intended to create or imply a duty to make an adjustment, and a trustee is not liable for not considering whether to make an adjustment or for choosing not to make an adjustment.


16336.4. (a) Unless expressly prohibited by the governing instrument, a trustee may convert a trust into a unitrust, as described in this section. A trust that limits the power of the trustee to make an adjustment between principal and income or modify the trust does not affect the application of this section unless it is clear from the governing instrument that it is intended to deny the trustee the power to convert into a unitrust. (b) The trustee may convert a trust into a unitrust without a court order if all of the following apply: (1) The conditions set forth in subdivision (a) of Section 16336 are satisfied. (2) The unitrust proposed by the trustee conforms to the provisions of paragraphs (1) to (8), inclusive, of subdivision (e). (3) The trustee gives written notice of the trustee's intention to convert the trust into a unitrust and furnishes the information required by subdivision (c). The notice shall comply with the requirements of Chapter 5 (commencing with Section 16500), including notice to a beneficiary who is a minor and to the minor's guardian, if any. (4) No beneficiary objects to the proposed action in a writing delivered to the trustee within the period prescribed by subdivision (d) of Section 16502 or a longer period as is specified in the notice described in subdivision (c). (c) The notice described in paragraph (3) of subdivision (b) shall include a copy of Sections 16336.4 to 16336.7, inclusive, and all of the following additional information: (1) A statement that the trust shall be administered in accordance with the provisions of subdivision (e) and the effective date of the conversion. (2) A description of the method to be used for determining the fair market value of trust assets. (3) The amount actually distributed to the income beneficiary during the previous accounting year of the trust. (4) The amount that would have been distributed to the income beneficiary during the previous accounting year of the trust had the trustee's proposed changes been in effect during that entire year. (5) The discretionary decisions the trustee proposes to make as of the conversion date pursuant to subdivision (f). (d) In deciding whether to exercise the power conferred by this section, a trustee may consider, among other things, the factors set forth in subdivision (g) of Section 16336. (e) Except to the extent that the court orders otherwise or the parties agree otherwise pursuant to Section 16336.5 after a trust is converted to a unitrust, all of the following shall apply: (1) The trustee shall make regular distributions in accordance with the governing instrument construed in accordance with the provisions of this section. (2) The term "income" in the governing instrument shall mean an annual distribution, the unitrust amount, equal to 4 percent, which is the payout percentage, of the net fair market value of the trust's assets, whether those assets would be considered income or principal under other provisions of this chapter, averaged over the lesser of the following: (A) The three preceding years. (B) The period during which the trust has been in existence. (3) During each accounting year of the trust following its conversion into a unitrust, the trustee shall, as early in the year as is practicable, furnish each income beneficiary with a statement describing the computation of the unitrust amount for that accounting year. (4) The trustee shall determine the net fair market value of each asset held in the trust no less often than annually. However, the following property shall not be included in determining the unitrust amount: (A) Any residential property or any tangible personal property that, as of the first business day of the current accounting year, one or more current beneficiaries of the trust have or have had the right to occupy, or have or have had the right to possess or control, other than in his or her capacity as trustee of the trust, which property shall be administered according to other provisions of this chapter as though no conversion to a unitrust had occurred. (B) Any asset specifically devised to a beneficiary to the extent necessary, in the trustee's reasonable judgment, to avoid a material risk of exhausting other trust assets prior to termination of the trust. All net income generated by a specifically devised asset excluded from the unitrust computation pursuant to this subdivision shall be accumulated or distributed by the trustee according to the rules otherwise applicable to that net income pursuant to other provisions of this chapter. (C) Any asset while held in a testator's estate or a terminating trust. (5) The unitrust amount, as otherwise computed pursuant to this subdivision, shall be reduced proportionately for any material distribution made to accomplish a partial termination of the trust required by the governing instrument or made as a result of the exercise of a power of appointment or withdrawal, other than distributions of the unitrust amount, and shall be increased proportionately for the receipt of any material addition to the trust, other than a receipt that represents a return on investment, during the period considered in paragraph (2) in computing the unitrust amount. For the purpose of this paragraph, a distribution or an addition shall be "material" if the net value of the distribution or addition, when combined with all prior distributions made or additions received during the same accounting year, exceeds 10 percent of the value of the assets used to compute the unitrust amount as of the most recent prior valuation date. The trustee may, in the reasonable exercise of his or her discretion, adjust the unitrust amount pursuant to this subdivision even if the distributions or additions are not sufficient to meet the definition of materiality set forth in the preceding sentence. (6) In the case of a short year in which a beneficiary's right to payments commences or ceases, the trustee shall prorate the unitrust amount on a daily basis. (7) Unless otherwise provided by the governing instrument or determined by the trustee, the unitrust amount shall be considered paid in the following order from the following sources: (A) From the net taxable income, other than capital gains, determined as if the trust were other than a unitrust. (B) From net realized short-term capital gains. (C) From net realized long-term capital gains. (D) From tax-exempt and other income. (E) From principal of the trust. (8) Expenses that would be deducted from income if the trust were not a unitrust may not be deducted from the unitrust amount. (f) The trustee shall determine, in the trustee's discretion, all of the following matters relating to administration of a unitrust created pursuant to this section: (1) The effective date of a conversion to a unitrust. (2) The frequency of payments in satisfaction of the unitrust amount. (3) Whether to value the trust's assets annually or more frequently. (4) What valuation dates to use. (5) How to value nonliquid assets. (6) The characterization of the unitrust payout for income tax reporting purposes. However, the trustee's characterization shall be consistent. (7) Any other matters that the trustee deems appropriate for the proper functioning of the unitrust. (g) A conversion into a unitrust does not affect a provision in the governing instrument directing or authorizing the trustee to distribute principal or authorizing the exercise of a power of appointment over or withdrawal of all or a portion of the principal. (h) A trustee may not convert a trust into a unitrust in any of the following circumstances: (1) If payment of the unitrust amount would change the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets. (2) If the unitrust distribution would be made from any amount that is permanently set aside for charitable purposes under the governing instrument and for which a federal estate or gift tax deduction has been taken, unless both income and principal are set aside. (3) If possessing or exercising the power to convert would cause an individual to be treated as the owner of all or part of the trust for federal income tax purposes, and the individual would not be treated as the owner if the trustee did not possess the power to convert. (4) If possessing or exercising the power to convert would cause all or part of the trust assets to be subject to federal estate or gift tax with respect to an individual, and the assets would not be subject to federal estate or gift tax with respect to the individual if the trustee did not possess the power to convert. (5) If the conversion would result in the disallowance of a federal estate tax or gift tax marital deduction that would be allowed if the trustee did not have the power to convert. (i) If paragraph (3) or (4) of subdivision (h) applies to a trustee and there is more than one trustee, a cotrustee to whom the provision does not apply may convert the trust unless the exercise of the power by the remaining trustee or trustees is prohibited by the governing instrument. If paragraph (3) or (4) of subdivision (h) applies to all of the trustees, the court may order the conversion as provided in subdivision (b) of Section 16336.5. (j) (1) A trustee may release the power conferred by this section to convert to a unitrust if either of the following circumstances exist: (A) The trustee is uncertain about whether possessing or experiencing the power will cause a result described in paragraph (3), (4), or (5) of subdivision (h). (B) The trustee determines that possessing or exercising the power will or may deprive the trust of a tax benefit or impose a tax burden not described in subdivision (h). (2) A release pursuant to paragraph (1) may be permanent or for a specified period, including a period measured by the life of an individual.

16336.5. (a) The trustee may convert a trust into a unitrust upon terms other than those set forth in subdivision (e) of Section 16336.4, without court order, if all of the following apply: (1) The conditions set forth in subdivision (a) of Section 16336 are satisfied. (2) The trustee gives written notice of the trustee's intention to convert the trust into a unitrust and furnishes the information required by subdivision (c) of Section 16336.4. The notice shall comply with the requirements of Chapter 5 (commencing with Section 16500), including notice to a beneficiary who is a minor and to the minor's guardian, if any. (3) The payout percentage to be adopted is at least 3 percent and no greater than 5 percent. (4) All beneficiaries entitled to notice under Section 16501 consent in writing to the proposed action after having been furnished with the notice described in subdivision (c) of Section 16336.4. (b) The court may order the conversion of a trust into a unitrust as provided in this subdivision. (1) (A) The trustee may petition the court to approve the conversion to a unitrust for any one of the following reasons: (i) A beneficiary timely objects to a proposed conversion to a unitrust. (ii) The trustee proposes to make the conversion upon terms other than those described in subdivision (e) of Section 16336.4. (iii) Paragraph (3) or (4) of subdivision (h) of Section 16336.4 applies to all currently acting trustees. (iv) If the trustee determines, in its discretion, that a petition is advisable. (B) In no event, however, may the court authorize conversion to a unitrust with a payout percentage of less than 3 percent or greater than 5 percent of the fair market value of the trust assets. (2) A beneficiary may petition the court to order the conversion. (3) The court shall approve the conversion proposed by the trustee or direct the conversion requested by the beneficiary if the conditions set forth in subdivision (a) of Section 16336 are satisfied and the court concludes that conversion of the trust on the terms proposed will enable the trustee to better comply with the provisions of subdivision (b) of Section 16335. (4) In deciding whether to approve a proposed conversion or direct a requested conversion, the court may consider, among other factors, those described in subdivision (g) of Section 16336.


16336.6. Unless expressly prohibited by the governing instrument, a trustee may reconvert the trust from a unitrust or change the payout percentage of a unitrust. (a) The trustee may make the reconversion or change in payout percentage without a court order if all of the following conditions are satisfied: (1) At least three years have elapsed since the most recent conversion to a unitrust. (2) The trustee determines that reconversion or change in payout percentage would enable the trustee to better comply with the provisions of subdivision (b) of Section 16335. (3) One of the following notice requirements is satisfied: (A) In the case of a proposed reconversion, the trustee gives written notice of the trustee's intention to convert that complies with the requirements of Chapter 5 (commencing with Section 16500) and no beneficiary objects to the proposed action in a writing delivered to the trustee within the period prescribed by subdivision (d) of Section 16502. The trustee's notice shall include the information described in subdivision (3) and (4) of subdivision (c) of Section 16336.4. (B) In the case of a proposed change in payout percentage, the trustee gives written notice stating the new payout percentage that the trustee proposes to adopt, which notice shall comply with the requirements of Chapter 5 (commencing with Section 16500), and no beneficiary objects to the proposed action in a writing delivered to the trustee within the period prescribed by subdivision (d) of Section 16502. (b) The trustee may make the reconversion or change in payout percentage at any time pursuant to court order provided that: (1) the court determines that reconversion or change in payout percentage will enable the trustee to better comply with the provisions of subdivision (b) of Section 16335, and (2) in the case of a change in payout percentage, the new payout percentage is at least 3 percent and no greater than 5 percent. The court may enter an order pursuant to this subdivision upon the petition of the trustee or any beneficiary.

16336.7. (a) Sections 16336.4 to 16336.6, inclusive, shall not impose any duty on the trustee to convert or reconvert a trust or to consider a conversion or reconversion. (b) Subdivision (b) of Section 16503 applies to all actions pursuant to Sections 16336.4 to 16336.6, inclusive, for which notice of proposed action is given in compliance with Chapter 5 (commencing with Section 16500), including notice to a beneficiary who is a minor and to the minor's guardian, if any.


16337. A trustee may give a notice of proposed action regarding a matter governed by this chapter as provided in Chapter 5 (commencing with Section 16500). For the purpose of this section, a proposed action includes a course of action and a decision not to take action.


16338. In a proceeding with respect to a trustee's exercise or nonexercise of the power to make an adjustment under Section 16336, the sole remedy is to direct, deny, or revise an adjustment between principal and income. In a proceeding with respect to a trustee's exercise or nonexercise of a power conferred by Sections 16336.4 to 16336.6, inclusive, the sole remedy is to obtain an order directing the trustee to convert the trust to a unitrust, to reconvert from a unitrust, to change the distribution percentage, or to order any administrative procedures the court determines to be necessary or helpful for the proper functioning of the trust.


16339. This chapter applies to every trust or decedent's estate existing on or after January 1, 2000, except as otherwise expressly provided in the trust or will or in this chapter.


Article 3. Decedent's Estate Or Terminating Income Interest 16340-16341

Ca Codes (prob:16340-16341) Probate Code Section 16340-16341



16340. After the decedent's death, in the case of a decedent's estate, or after an income interest in a trust ends, the following rules apply: (a) If property is specifically given to a beneficiary, by will or trust, the fiduciary of the estate or of the terminating income interest shall distribute the net income and principal receipts to the beneficiary who is to receive the property, subject to the following rules: (1) The net income and principal receipts from the specifically given property are determined by including all of the amounts the fiduciary receives or pays with respect to the property, whether the amounts accrued or became due before, on, or after the decedent's death or an income interest in a trust ends, and by making a reasonable provision for amounts the fiduciary believes the estate or terminating income interest may become obligated to pay after the property is distributed. (2) The fiduciary may not reduce income and principal receipts from the specifically given property on account of a payment described in Section 16370 or 16371, to the extent that the will, the trust, or Section 12002 requires payment from other property or to the extent that the fiduciary recovers the payment from a third person. (3) A specific gift distributable under a trust shall carry with it the same benefits and burdens as a specific devise under a will, as set forth in Chapter 8 (commencing with Section 12000) of Part 10 of Division 7. (b) A general pecuniary gift, an annuity, or a gift of maintenance distributable under a trust carries with it income and bears interest in the same manner as a general pecuniary devise, an annuity, or a gift of maintenance under a will, as set forth in Chapter 8 (commencing with Section 12000) of Part 10 of Division 7. The fiduciary shall distribute to a beneficiary who receives a pecuniary amount, whether outright or in trust, the interest or any other amount provided by the will, the trust, this subdivision, or Chapter 8 (commencing with Section 12000) of Part 10 of Division 7, from the remaining net income determined under subdivision (c) or from principal to the extent that net income is insufficient. (c) The fiduciary shall determine the remaining net income of the decedent's estate or terminating income interest as provided in this chapter and by doing the following: (1) Including in net income all income from property used to discharge liabilities. (2) Paying from income or principal, in the fiduciary's discretion, fees of attorneys, accountants, and fiduciaries, court costs and other expenses of administration, and interest on death taxes, except that the fiduciary may pay these expenses from income of property passing to a trust for which the fiduciary claims an estate tax marital or charitable deduction only to the extent that the payment of these expenses from income will not cause the reduction or loss of the deduction. (3) Paying from principal all other disbursements made or incurred in connection with the settlement of a decedent's estate or the winding up of a terminating income interest, including debts, funeral expenses, disposition of remains, family allowances, and death taxes and related penalties that are apportioned to the estate or terminating income interest by the will, the trust, or Division 10 (commencing with Section 20100). (d) After distributions required by subdivision (b), the fiduciary shall distribute the remaining net income determined under subdivision (c) in the manner provided in Section 16341 to all other beneficiaries. (e) For purposes of this section, a reference in Chapter 8 (commencing with Section 12000) of Part 10 of Division 7 to the date of the testator's death means the date of the settlor's death or of the occurrence of some other event on which the distributee's right to receive the gift depends. (f) If a trustee has distributed a specific gift or a general pecuniary gift before January 1, 2007, the trustee may allocate income and principal as set forth in this chapter or in any other manner permissible under the law in effect at the time of the distribution. If the trustee distributes a specific gift or a general pecuniary gift after December 31, 2006, then the trustee shall allocate income and principal as provided in this chapter.


16341. (a) Each beneficiary described in subdivision (d) of Section 16340 is entitled to receive a portion of the net income equal to the beneficiary's fractional interest in undistributed principal assets, using values as of the distribution dates and without reducing the values by any unpaid principal obligations. (b) If a fiduciary does not distribute all of the collected but undistributed net income to each beneficiary as of a distribution date, the fiduciary shall maintain appropriate records showing the interest of each beneficiary in that net income. (c) The distribution date for purposes of this section may be the date as of which the fiduciary calculates the value of the assets if that date is reasonably near the date on which assets are actually distributed.


Article 4. Apportionment At Beginning And End Of Income Interest

Ca Codes (prob:16345-16347) Probate Code Section 16345-16347



16345. (a) An income beneficiary is entitled to net income from the date on which the income interest begins. An income interest begins on the date specified in the trust or, if no date is specified, on the date an asset becomes subject to a trust or successive income interest. (b) An asset becomes subject to a trust at the following times: (1) In the case of an asset that is transferred to a trust during the transferor's life, on the date it is transferred to the trust. (2) In the case of an asset that becomes subject to a trust by reason of a will, even if there is an intervening period of administration of the testator's estate, on the date of the testator' s death. (3) In the case of an asset that is transferred to a fiduciary by a third party because of the individual's death, on the date of the individual's death. (c) An asset becomes subject to a successive income interest on the day after the preceding income interest ends, as determined under subdivision (d), even if there is an intervening period of administration to wind up the preceding income interest. (d) An income interest ends on the day before an income beneficiary dies, or another terminating event occurs, or on the last day of a period during which there is no beneficiary to whom a trustee may distribute income.


16346. (a) A trustee shall allocate an income receipt or disbursement other than one to which subdivision (a) of Section 16340 applies to principal if its due date occurs before a decedent dies in the case of an estate or before an income interest begins in the case of a trust or successive income interest. (b) A trustee shall allocate an income receipt or disbursement to income if its due date occurs on or after the date on which a decedent dies or an income interest begins and it is a periodic due date. An income receipt or disbursement shall be treated as accruing from day to day if its due date is not periodic or it has no due date. The portion of the receipt or disbursement accruing before the date on which a decedent dies or an income interest begins shall be allocated to principal and the balance shall be allocated to income. (c) An item of income or an obligation is due on the date the payer is required to make a payment. If a payment date is not stated, there is no due date for the purposes of this chapter. Distributions to shareholders or other owners from an entity to which Section 16350 applies are deemed to be due on the date fixed by the entity for determining who is entitled to receive the distribution or, if no date is fixed, on the declaration date for the distribution. A due date is periodic for receipts or disbursements that must be paid at regular intervals under a lease or an obligation to pay interest or if an entity customarily makes distributions at regular intervals.


16347. (a) For the purposes of this section, "undistributed income" means net income received before the date on which an income interest ends. The term does not include an item of income or expense that is due or accrued or net income that has been added or is required to be added to principal by the trust. (b) Except as provided in subdivision (c), on the date when a mandatory income interest ends, the trustee shall pay to a mandatory income beneficiary who survives that date, or to the estate of a deceased mandatory income beneficiary whose death causes the interest to end, the beneficiary's share of the undistributed income that is not disposed of under the trust. (c) If immediately before the income interest ends, the beneficiary under subdivision (b) has an unqualified power to revoke more than 5 percent of the trust, the undistributed income from the portion of the trust that may be revoked shall be added to principal. (d) When a trustee's obligation to pay a fixed annuity or a fixed fraction of the value of the trust's assets ends, the trustee shall prorate the final payment.


Article 5.1. Allocation Of Receipts During Administration Of Trust: Receipts From Entities

Ca Codes (prob:16350-16352) Probate Code Section 16350-16352



16350. (a) For the purposes of this section, "entity" means a corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund, or any other organization in which a trustee has an interest other than a trust or decedent's estate to which Section 16351 applies, a business or activity to which Section 16352 applies, or an asset-backed security to which Section 16367 applies. (b) Except as otherwise provided in this section, a trustee shall allocate to income money received from an entity. (c) A trustee shall allocate to principal the following receipts from an entity: (1) Property other than money. (2) Money received in one distribution or a series of related distributions in exchange for part or all of a trust's interest in the entity. (3) Money received in total or partial liquidation of the entity. (4) Money received from an entity that is a regulated investment company or a real estate investment trust if the money distributed is a capital gain dividend for federal income tax purposes. (d) For purposes of paragraph (3) of subdivision (c): (1) Money is received in partial liquidation (A) to the extent that the entity, at or near the time of a distribution, indicates that it is a distribution in partial liquidation, or (B) if the total amount of money and property received by all owners, collectively, in a distribution or series of related distributions is greater than 20 percent of the entity's gross assets, as shown by the entity's yearend financial statements immediately preceding the initial receipt. If that receipt is allocated between December 2, 2004, and the operative date of the act adding this sentence, a trustee shall not be liable for allocating the receipt to income if the amount received by the trustee, when considered together with the amount received by all owners, collectively, exceeds 20 percent of the entity's gross assets, but the amount received by the trustee does not exceed 20 percent of the entity's gross assets. (2) Money is not received in partial liquidation, nor may it be taken into account under clause (B) of paragraph (1), to the extent that it does not exceed the amount of income tax that a trustee or beneficiary is required to pay on taxable income of the entity that distributes the money. (e) A trustee may rely on a statement made by an entity about the source or character of a distribution if the statement is made at or near the time of distribution by the entity's board of directors or other person or group of persons authorized to exercise powers to pay money or transfer property comparable to those of a corporation's board of directors.

16351. A trustee shall allocate to income an amount received as a distribution of income from a trust or a decedent's estate (other than an interest in an investment entity) in which the trust has an interest other than a purchased interest, and shall allocate to principal an amount received as a distribution of principal from the trust or estate.


16352. (a) If a trustee who conducts a business or other activity determines that it is in the best interest of all the beneficiaries to account separately for the business or other activity instead of accounting for it as part of the trust's general accounting records, the trustee may maintain separate accounting records for its transactions, whether or not its assets are segregated from other trust assets. (b) A trustee who accounts separately for a business or other activity may determine the extent to which its net cash receipts must be retained for working capital, the acquisition or replacement of fixed assets, and its other reasonably foreseeable needs, and the extent to which the remaining net cash receipts are accounted for as principal or income in the trust's general accounting records. If a trustee sells assets of the business or other activity, other than in the ordinary course of the business or other activity, the trustee shall account for the net amount received as principal in the trust's general accounting records to the extent the trustee determines that the amount received is no longer required in the conduct of the business or other activity. (c) Businesses and other activities for which a trustee may maintain separate accounting records include the following: (1) Retail, manufacturing, service, and other traditional business activities. (2) Farming. (3) Raising and selling livestock and other animals. (4) Managing rental properties. (5) Extracting minerals and other natural resources. (6) Timber operations. (7) Activities to which Section 16366 applies.


Article 5.2. Allocation Of Receipts During Administration Of Trust: Receipts Not Normally Apportioned

Ca Codes (prob:16355-16358) Probate Code Section 16355-16358



16355. A trustee shall allocate to principal: (a) To the extent not allocated to income under this chapter, assets received from a transferor during the transferor's lifetime, a decedent's estate, a trust with a terminating income interest, or a payer under a contract naming the trust or its trustee as beneficiary. (b) Subject to any contrary rules in this article and in Articles 5.1 (commencing with Section 16350) and 5.3 (commencing with Section 16360), money or other property received from the sale, exchange, liquidation, or change in form of a principal asset, including realized profit. (c) Amounts recovered from third parties to reimburse the trust because of disbursements described in paragraph (7) of subdivision (a) of Section 16371 or for other reasons to the extent not based on the loss of income. (d) Proceeds of property taken by eminent domain, but a separate award made for the loss of income with respect to an accounting period during which a current income beneficiary had a mandatory income interest is income. (e) Net income received in an accounting period during which there is no beneficiary to whom a trustee may or must distribute income. (f) Other receipts allocated to principal as provided in Article 5.3 (commencing with Section 16360).


16356. Unless the trustee accounts for receipts from rental property pursuant to Section 16352, the trustee shall allocate to income an amount received as rent of real or personal property, including an amount received for cancellation or renewal of a lease. An amount received as a refundable deposit, including a security deposit or a deposit that is to be applied as rent for future periods, shall be added to principal and held subject to the terms of the lease, and is not available for distribution to a beneficiary until the trustee's contractual obligations have been satisfied with respect to that amount.

16357. (a) An amount received as interest, whether determined at a fixed, variable, or floating rate, on an obligation to pay money to the trustee, including an amount received as consideration for prepaying principal, shall be allocated to income without any provision for amortization of premium. (b) An amount received from the sale, redemption, or other disposition of an obligation to pay money to the trustee more than one year after it is purchased or acquired by the trustee, including an obligation whose purchase price, or its value when it is otherwise acquired, is less than its value at maturity, shall be allocated to principal. If the obligation matures within one year after it is purchased or acquired by the trustee, an amount received in excess of its purchase price, or its value when it is otherwise acquired, shall be allocated to income. (c) This section does not apply to an obligation to which Section 16361, 16362, 16363, 16364, 16366, or 16367 applies.


16358. (a) Except as otherwise provided in subdivision (b), a trustee shall allocate to principal the proceeds of a life insurance policy or other contract in which the trust or its trustee is named as beneficiary, including a contract that insures the trust or its trustee against loss for damage to, destruction of, or loss of title to a trust asset. The trustee shall allocate dividends on an insurance policy to income if the premiums on the policy are paid from income, and to principal if the premiums are paid from principal. (b) A trustee shall allocate to income proceeds of a contract that insures the trustee against loss of occupancy or other use by an income beneficiary, loss of income, or, subject to Section 16352, loss of profits from a business. (c) This section does not apply to a contract to which Section 16361 applies.


Article 5.3. Allocation Of Receipts During Administration Of Trust: Receipts Normally Apportioned

Ca Codes (prob:16360-16367) Probate Code Section 16360-16367



16360. (a) If a trustee determines that an allocation between principal and income required by Section 16361, 16362, 16363, 16364, or 16367 is insubstantial, the trustee may allocate the entire amount to principal unless one of the circumstances described in subdivision (b) of Section 16336 applies to the allocation. This power may be exercised by a cotrustee in the circumstances described in subdivision (c) of Section 16336 and may be released for the reasons and in the manner provided in subdivisions (d) and (e) of Section 16336. (b) An allocation is presumed to be insubstantial in either of the following cases: (1) Where the amount of the allocation would increase or decrease net income in an accounting period, as determined before the allocation, by less than 10 percent. (2) Where the value of the asset producing the receipt for which the allocation would be made is less than 10 percent of the total value of the trust's assets at the beginning of the accounting period. (c) Nothing in this section imposes a duty on the trustee to make an allocation under this section, and the trustee is not liable for failure to make an allocation under this section.


16361. (a) For purposes of this section, the following terms have the following meanings: (1) "Payment" means a payment that a trustee may receive over a fixed number of years or during the life of an individual because of services rendered or property transferred to the payer in exchange for future payments. The term also includes a payment made in money or property from the payer's general assets or from a separate fund created by the payer. For purposes of subdivisions (d), (e), (f), and (g), "payment" also includes any payment from a separate fund, regardless of the reason for the payment. (2) "Separate fund" includes a private or commercial annuity, an individual retirement account, and a pension, profit-sharing, stock bonus, or stock ownership plan. (b) To the extent that any portion of the payment is characterized by the payer as interest, a dividend, or a payment made in lieu of interest or a dividend, a trustee shall allocate that portion of the payment to income. The trustee shall allocate to principal the balance of the payment. (c) If no part of a payment is characterized as interest, a dividend, or an equivalent payment, and all or part of the payment is required to be made, a trustee shall allocate to income 10 percent of the part that is required to be made during the accounting period and the balance to principal. If no part of a payment is required to be made or the payment received is the entire amount to which the trustee is entitled, the trustee shall allocate the entire payment to principal. For purposes of this subdivision, a payment is not "required to be made" to the extent that it is made because the trustee exercises a right of withdrawal. (d) Subdivisions (f) and (g) shall apply, except as provided in subdivision (e), and subdivisions (b) and (c) shall not apply, in determining the allocation of a payment made from a separate fund to either of the following: (1) A trust to which an election to qualify for a marital deduction is made under Section 2056(b)(7) of the Internal Revenue Code. (2) A trust that qualifies for the marital deduction under Section 2056(b)(5) of the Internal Revenue Code. (e) Subdivisions (d), (f), and (g) shall not apply if the series of payments would, without the application of subdivision (d), qualify for the marital deduction under Section 2056(b)(7)(C) of the Internal Revenue Code. (f) If the separate fund payer provides documentation reflecting the internal income of the separate fund to the trustee, the trustee shall allocate the internal income of each separate fund for the accounting period as if the separate fund were a trust subject to this act. Upon request of the surviving spouse, the trustee shall require that the person administering the separate fund distribute this internal income to the trust. The trustee shall allocate a payment from the separate fund to income to the extent of the internal income of the separate fund and distribute that amount to the surviving spouse. The trustee shall allocate the balance to principal. Upon request of the surviving spouse, the trustee shall allocate principal to income to the extent the internal income of the separate fund exceeds payments made from the separate fund to the trust during the accounting period. (g) If the separate fund payer does not provide documentation reflecting the internal income of the separate fund to the trustee, but the trustee can determine the value of the separate fund, the internal income of the separate fund is deemed to equal 4 percent of the fund's value, according to the most recent statement of value preceding the beginning of the accounting period. If the separate fund payer does not provide documentation reflecting the internal income of the separate fund to the trustee and the trustee cannot determine the value of the separate fund, the internal income of the fund is deemed to equal the product of the interest rate and the present value of the expected future payments, as determined under Section 7520 of the Internal Revenue Code for the month preceding the accounting period for which the computation is made. (h) This section does not apply to a payment to which Section 16362 applies.

16361.1. Section 16361, as amended by the act adding this section, applies to a trust described in subdivision (d) of Section 16361, on and after the following dates: (a) If the trust is not funded as of January 1, 2010, the date of the decedent's death. (b) If the trust is initially funded in the calendar year beginning January 1, 2010, the date of the decedent's death. (c) If the trust is not described in subdivision (a) or (b), on January 1, 2010.

16362. (a) In this section, "liquidating asset" means an asset whose value will diminish or terminate because the asset is expected to produce receipts for a period of limited duration. The term includes a leasehold, patent, copyright, royalty right, and right to receive payments under an arrangement that does not provide for the payment of interest on the unpaid balance. The term does not include a payment subject to Section 16361, resources subject to Section 16363, timber subject to Section 16364, an activity subject to Section 16366, an asset subject to Section 16367, or any asset for which the trustee establishes a reserve for depreciation under Section 16372. (b) A trustee shall allocate to income 10 percent of the receipts from a liquidating asset and the balance to principal.


16363. (a) To the extent that a trustee accounts for receipts from an interest in minerals, water, or other natural resources pursuant to this section, the trustee shall allocate them as follows: (1) If received as a nominal bonus, nominal delay rental, or nominal annual rent on a lease, a receipt shall be allocated to income. (2) If received from a production payment, a receipt shall be allocated to income if and to the extent that the agreement creating the production payment provides a factor for interest or its equivalent. The balance shall be allocated to principal. (3) If an amount received as a royalty, shut-in-well payment, take-or-pay payment, bonus, or delay rental is more than nominal, 90 percent shall be allocated to principal and the balance to income. (4) If an amount is received from a working interest or any other interest in mineral or other natural resources not described in paragraph (1), (2), or (3), 90 percent of the net amount received shall be allocated to principal and the balance to income. (b) An amount received on account of an interest in water that is renewable shall be allocated to income. If the water is not renewable, 90 percent of the amount shall be allocated to principal and the balance to income. (c) This chapter applies whether or not a decedent or donor was extracting minerals, water, or other natural resources before the interest became subject to the trust. (d) If a trust owned an interest in minerals, water, or other natural resources on January 1, 2000, the trustee may at all times allocate receipts from the interest as provided in this chapter or in the manner reasonably used by the trustee prior to that date. Receipts from an interest in minerals, water, or other natural resources acquired after January 1, 2000, shall be allocated by the trustee as provided in this chapter. If the interest was owned by the trust on January 1, 2000, a trustee that allocated receipts from the interest between January 1, 2000, and December 31, 2006, as provided in this chapter shall not have a duty to review that allocation and shall not have liability arising from the allocation. Nothing in this section is intended to create or imply a duty to allocate in a manner used by the trustee prior to January 1, 2000, and a trustee is not liable for not considering whether to make such an allocation or for choosing not to make such an allocation.


16364. (a) To the extent that a trustee accounts for receipts from the sale of timber and related products pursuant to this section, the trustee shall allocate the net receipts as follows: (1) To income to the extent that the amount of timber removed from the land does not exceed the rate of growth of the timber during the accounting periods in which a beneficiary has a mandatory income interest. (2) To principal to the extent that the amount of timber removed from the land exceeds the rate of growth of the timber or the net receipts are from the sale of standing timber. (3) To or between income and principal if the net receipts are from the lease of timberland or from a contract to cut timber from land owned by a trust, by determining the amount of timber removed from the land under the lease or contract and applying the rules in paragraphs (1) and (2). (4) To principal to the extent that advance payments, bonuses, and other payments are not allocated pursuant to paragraph (1), (2), or (3). (b) In determining net receipts to be allocated under subdivision (a), a trustee shall deduct and transfer to principal a reasonable amount for depletion. (c) This chapter applies whether or not a decedent or transferor was harvesting timber from the property before it became subject to the trust. (d) If a trust owned an interest in timberland on January 1, 2000, the trustee may at all times allocate net receipts from the sale of timber and related products as provided in this chapter or in the manner reasonably used by the trustee prior to that date. Net receipts from an interest in timberland acquired after January 1, 2000, shall be allocated by the trustee as provided in this chapter. If the interest was owned by the trust on January 1, 2000, a trustee that allocated net receipts from the interest between January 1, 2000, and December 31, 2006, as provided in this chapter shall not have a duty to review that allocation and shall not have liability arising from the allocation. Nothing in this section is intended to create or imply a duty to allocate in a manner used by the trustee prior to January 1, 2000, and a trustee is not liable for not considering whether to make such an allocation or for choosing not to make such an allocation.


16365. (a) If a marital deduction is allowed for all or part of a trust whose assets consist substantially of property that does not provide the spouse with sufficient income from or use of the trust assets, and if the amounts that the trustee transfers from principal to income under Section 16336 and distributes to the spouse from principal pursuant to the terms of the trust are insufficient to provide the spouse with the beneficial enjoyment required to obtain the marital deduction, the spouse may require the trustee to make property productive of income or convert it into productive property or exercise the power under subdivision (a) of Section 16336 within a reasonable time. The trustee may decide which action or combination of actions to take. (b) In cases not governed by subdivision (a), proceeds from the sale or other disposition of a trust asset are principal without regard to the amount of income the asset produces during any accounting period.


16366. (a) In this section, "derivative" means a contract or financial instrument or a combination of contracts and financial instruments that gives a trust the right or obligation to participate in some or all changes in the price of a tangible or intangible asset or group of assets, or changes in a rate, an index of prices or rates, or other market indicator for an asset or a group of assets. (b) To the extent that a trustee does not account under Section 16352 for transactions in derivatives, the trustee shall allocate to principal receipts from and disbursements made in connection with those transactions. (c) If a trustee grants an option to buy property from the trust, whether or not the trust owns the property when the option is granted, grants an option that permits another person to sell property to the trust, or acquires an option to buy property for the trust or an option to sell an asset owned by the trust, and the trustee or other owner of the asset is required to deliver the asset if the option is exercised, an amount received for granting the option shall be allocated to principal. An amount paid to acquire the option shall be paid from principal. A gain or loss realized upon the exercise of an option, including an option granted to a settlor of the trust for services rendered, shall be allocated to principal.


16367. (a) In this section, "asset-backed security" means an asset whose value is based upon the right it gives the owner to receive distributions from the proceeds of financial assets that provide collateral for the security. The term includes an asset that gives the owner the right to receive from the collateral financial assets only the interest or other current return or only the proceeds other than interest or current return. The term does not include an asset to which Section 16350 or 16361 applies. (b) If a trust receives a payment from interest or other current return and from other proceeds of the collateral financial assets, the trustee shall allocate to income the portion of the payment which the payer identifies as being from interest or other current return and shall allocate the balance of the payment to principal. (c) If a trust receives one or more payments in exchange for the trust's entire interest in an asset-backed security in one accounting period, the trustee shall allocate the payments to principal. If a payment is one of a series of payments that will result in the liquidation of the trust's interest in the security over more than one accounting period, the trustee shall allocate 10 percent of the payment to income and the balance to principal.


Article 6. Allocation Of Disbursements During Administration Of Trust

Ca Codes (prob:16370-16375) Probate Code Section 16370-16375



16370. A trustee shall make the following disbursements from income to the extent that they are not disbursements to which paragraph (2) or (3) of subdivision (c) of Section 16340 applies: (a) Except as otherwise ordered by the court, one-half of the regular compensation of the trustee and of any person providing investment advisory or custodial services to the trustee. (b) Except as otherwise ordered by the court, one-half of all expenses for accountings, judicial proceedings, or other matters that involve both the income and remainder interests. (c) All of the other ordinary expenses incurred in connection with the administration, management, or preservation of trust property and the distribution of income, including interest, ordinary repairs, regularly recurring taxes assessed against principal, and expenses of a proceeding or other matter that concerns primarily the income interest. (d) All recurring premiums on insurance covering the loss of a principal asset or the loss of income from or use of the asset.


16371. (a) A trustee shall make the following disbursements from principal: (1) Except as otherwise ordered by the court, the remaining one-half of the disbursements described in subdivisions (a) and (b) of Section 16370. (2) Except as otherwise ordered by the court, all of the trustee's compensation calculated on principal as a fee for acceptance, distribution, or termination, and disbursements made to prepare property for sale. (3) Payments on the principal of a trust debt. (4) Expenses of a proceeding that concerns primarily principal, including a proceeding to construe the trust or to protect the trust or its property. (5) Premiums paid on a policy of insurance not described in subdivision (d) of Section 16370 of which the trust is the owner and beneficiary. (6) Estate, inheritance, and other transfer taxes, including penalties, apportioned to the trust. (7) Disbursements related to environmental matters, including reclamation, assessing environmental conditions, remedying and removing environmental contamination, monitoring remedial activities and the release of substances, preventing future releases of substances, collecting amounts from persons liable or potentially liable for the costs of those activities, penalties imposed under environmental laws or regulations and other payments made to comply with those laws or regulations, statutory or common law claims by third parties, and defending claims based on environmental matters. (b) If a principal asset is encumbered with an obligation that requires income from that asset to be paid directly to the creditor, the trustee shall transfer from principal to income an amount equal to the income paid to the creditor in reduction of the principal balance of the obligation.


16372. (a) For purposes of this section, "depreciation" means a reduction in value due to wear, tear, decay, corrosion, or gradual obsolescence of a fixed asset having a useful life of more than one year. (b) A trustee may transfer from income to principal a reasonable amount of the net cash receipts from a principal asset that is subject to depreciation, under generally accepted accounting principles, but may not transfer any amount for depreciation under this section in any of the following circumstances: (1) As to the portion of real property used or available for use by a beneficiary as a residence or of tangible personal property held or made available for the personal use or enjoyment of a beneficiary. (2) During the administration of a decedent's estate. (3) If the trustee is accounting under Section 16352 for the business or activity in which the asset is used. (c) An amount transferred from income to principal need not be held as a separate fund.


16373. (a) If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements. (b) Principal disbursements to which subdivision (a) applies include the following, but only to the extent that the trustee has not been and does not expect to be reimbursed by a third party: (1) An amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs. (2) A capital improvement to a principal asset, whether in the form of changes to an existing asset or the construction of a new asset, including special assessments. (3) Disbursements made to prepare property for rental, including tenant allowances, leasehold improvements, and broker's commissions. (4) Periodic payments on an obligation secured by a principal asset to the extent that the amount transferred from income to principal for depreciation is less than the periodic payments. (5) Disbursements described in paragraph (7) of subdivision (a) of Section 16371. (c) If the asset whose ownership gives rise to the disbursements becomes subject to a successive income interest after an income interest ends, a trustee may continue to transfer amounts from income to principal as provided in subdivision (a).


16374. (a) A tax required to be paid by a trustee based on receipts allocated to income shall be paid from income. (b) A tax required to be paid by a trustee based on receipts allocated to principal shall be paid from principal, even if the tax is called an income tax by the taxing authority. (c) A tax required to be paid by a trustee on the trust's share of an entity's taxable income shall be paid as follows: (1) From income to the extent that receipts from the entity are allocated only to income. (2) From principal to the extent that receipts from the entity are allocated only to principal. (3) Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal. (4) From principal to the extent that the tax exceeds the total receipts from the entity. (d) After applying subdivisions (a), (b), and (c), the trustee shall adjust income or principal receipts to the extent that the trust's taxes are reduced because the trust receives a deduction for payments made to a beneficiary.


16374.5. Unless otherwise provided by the governing instrument, determined by the trustee, or ordered by the court, distributions to beneficiaries shall be considered paid in the following order from the following sources: (a) From net taxable income other than capital gains. (b) From net realized short-term capital gains. (c) From net realized long-term capitalized gains. (d) From tax-exempt and other income. (e) From principal of the trust.


16375. (a) A fiduciary may make adjustments between principal and income to offset the shifting of economic interests or tax benefits between income beneficiaries and remainder beneficiaries that arise from any of the following: (1) Elections and decisions, other than those described in subdivision (b), that the fiduciary makes from time to time regarding tax matters. (2) An income tax or any other tax that is imposed upon the fiduciary or a beneficiary as a result of a transaction involving or a distribution from the estate or trust. (3) The ownership by a decedent's estate or trust of an interest in an entity whose taxable income, whether or not distributed, is includable in the taxable income of the estate, trust, or a beneficiary. (b) If the amount of an estate tax marital deduction or charitable contribution deduction is reduced because a fiduciary deducts an amount paid from principal for income tax purposes instead of deducting it for estate tax purposes, and as a result estate taxes paid from principal are increased and income taxes paid by a decedent' s estate, trust, or beneficiary are decreased, each estate, trust, or beneficiary that benefits from the decrease in income tax shall reimburse the principal from which the increase in estate tax is paid. The total reimbursement must equal the increase in the estate tax to the extent that the principal used to pay the increase would have qualified for a marital deduction or charitable contribution deduction but for the payment. The proportionate share of the reimbursement for each estate, trust, or beneficiary whose income taxes are reduced must be the same as its proportionate share of the total decrease in income tax. An estate or trust shall reimburse principal from income.


Chapter 4. Liability Of Trustees To Beneficiaries

Article 1. Liability For Breach Of Trust

Ca Codes (prob:16400-16403) Probate Code Section 16400-16403



16400. A violation by the trustee of any duty that the trustee owes the beneficiary is a breach of trust.


16401. (a) Except as provided in subdivision (b), the trustee is not liable to the beneficiary for the acts or omissions of an agent. (b) Under any of the circumstances described in this subdivision, the trustee is liable to the beneficiary for an act or omission of an agent employed by the trustee in the administration of the trust that would be a breach of the trust if committed by the trustee: (1) Where the trustee directs the act of the agent. (2) Where the trustee delegates to the agent the authority to perform an act that the trustee is under a duty not to delegate. (3) Where the trustee does not use reasonable prudence in the selection of the agent or the retention of the agent selected by the trustee. (4) Where the trustee does not periodically review the agent's overall performance and compliance with the terms of the delegation. (5) Where the trustee conceals the act of the agent. (6) Where the trustee neglects to take reasonable steps to compel the agent to redress the wrong in a case where the trustee knows of the agent's acts or omissions. (c) The liability of a trustee for acts or omissions of agents that occurred before July 1, 1987, is governed by prior law and not by this section.


16402. (a) Except as provided in subdivision (b), a trustee is not liable to the beneficiary for a breach of trust committed by a cotrustee. (b) A trustee is liable to the beneficiary for a breach committed by a cotrustee under any of the following circumstances: (1) Where the trustee participates in a breach of trust committed by the cotrustee. (2) Where the trustee improperly delegates the administration of the trust to the cotrustee. (3) Where the trustee approves, knowingly acquiesces in, or conceals a breach of trust committed by the cotrustee. (4) Where the trustee negligently enables the cotrustee to commit a breach of trust. (5) Where the trustee neglects to take reasonable steps to compel the cotrustee to redress a breach of trust in a case where the trustee knows or has information from which the trustee reasonably should have known of the breach. (c) The liability of a trustee for acts or omissions of a cotrustee that occurred before July 1, 1987, is governed by prior law and not by this section.


16403. (a) Except as provided in subdivision (b), a successor trustee is not liable to the beneficiary for a breach of trust committed by a predecessor trustee. (b) A successor trustee is liable to the beneficiary for breach of trust involving acts or omissions of a predecessor trustee in any of the following circumstances: (1) Where the successor trustee knows or has information from which the successor trustee reasonably should have known of a situation constituting a breach of trust committed by the predecessor trustee and the successor trustee improperly permits it to continue. (2) Where the successor trustee neglects to take reasonable steps to compel the predecessor trustee to deliver the trust property to the successor trustee. (3) Where the successor trustee neglects to take reasonable steps to redress a breach of trust committed by the predecessor trustee in a case where the successor trustee knows or has information from which the successor trustee reasonably should have known of the predecessor trustee's breach. (c) The liability of a trustee for acts or omissions of a predecessor trustee that occurred before July 1, 1987, is governed by prior law and not by this section.


Article 2. Remedies For Breach Of Trust

Ca Codes (prob:16420-16421) Probate Code Section 16420-16421



16420. (a) If a trustee commits a breach of trust, or threatens to commit a breach of trust, a beneficiary or cotrustee of the trust may commence a proceeding for any of the following purposes that is appropriate: (1) To compel the trustee to perform the trustee's duties. (2) To enjoin the trustee from committing a breach of trust. (3) To compel the trustee to redress a breach of trust by payment of money or otherwise. (4) To appoint a receiver or temporary trustee to take possession of the trust property and administer the trust. (5) To remove the trustee. (6) Subject to Section 18100, to set aside acts of the trustee. (7) To reduce or deny compensation of the trustee. (8) Subject to Section 18100, to impose an equitable lien or a constructive trust on trust property. (9) Subject to Section 18100, to trace trust property that has been wrongfully disposed of and recover the property or its proceeds. (b) The provision of remedies for breach of trust in subdivision (a) does not prevent resort to any other appropriate remedy provided by statute or the common law.

16421. The remedies of a beneficiary against the trustee are exclusively in equity.


Article 3. Measure Of Liability For Breach Of Trust

Ca Codes (prob:16440-16442) Probate Code Section 16440-16442



16440. (a) If the trustee commits a breach of trust, the trustee is chargeable with any of the following that is appropriate under the circumstances: (1) Any loss or depreciation in value of the trust estate resulting from the breach of trust, with interest. (2) Any profit made by the trustee through the breach of trust, with interest. (3) Any profit that would have accrued to the trust estate if the loss of profit is the result of the breach of trust. (b) If the trustee has acted reasonably and in good faith under the circumstances as known to the trustee, the court, in its discretion, may excuse the trustee in whole or in part from liability under subdivision (a) if it would be equitable to do so.


16441. (a) If the trustee is liable for interest pursuant to Section 16440, the trustee is liable for the greater of the following amounts: (1) The amount of interest that accrues at the legal rate on judgments in effect during the period when the interest accrued. (2) The amount of interest actually received. (b) If the trustee has acted reasonably and in good faith under the circumstances as known to the trustee, the court, in its discretion, may excuse the trustee in whole or in part from liability under subdivision (a) if it would be equitable to do so.


16442. The provisions in this article for liability of a trustee for breach of trust do not prevent resort to any other remedy available under the statutory or common law.


Article 4. Limitations And Exculpation

Ca Codes (prob:16460-16465) Probate Code Section 16460-16465



16460. (a) Unless a claim is previously barred by adjudication, consent, limitation, or otherwise: (1) If a beneficiary has received an interim or final account in writing, or other written report, that adequately discloses the existence of a claim against the trustee for breach of trust, the claim is barred as to that beneficiary unless a proceeding to assert the claim is commenced within three years after receipt of the account or report. An account or report adequately discloses existence of a claim if it provides sufficient information so that the beneficiary knows of the claim or reasonably should have inquired into the existence of the claim. (2) If an interim or final account in writing or other written report does not adequately disclose the existence of a claim against the trustee for breach of trust or if a beneficiary does not receive any written account or report, the claim is barred as to that beneficiary unless a proceeding to assert the claim is commenced within three years after the beneficiary discovered, or reasonably should have discovered, the subject of the claim. (b) For the purpose of subdivision (a), a beneficiary is deemed to have received an account or report, as follows: (1) In the case of an adult who is reasonably capable of understanding the account or report, if it is received by the adult personally. (2) In the case of an adult who is not reasonably capable of understanding the account or report, if it is received by the person' s legal representative, including a guardian ad litem or other person appointed for this purpose. (3) In the case of a minor, if it is received by the minor's guardian or, if the minor does not have a guardian, if it is received by the minor's parent so long as the parent does not have a conflict of interest. (c) A written account or report under this section may, but need not, satisfy the requirements of Section 16061 or 16063 or any other provision.

16461. (a) Except as provided in subdivision (b), (c), or (d), the trustee can be relieved of liability for breach of trust by provisions in the trust instrument. (b) A provision in the trust instrument is not effective to relieve the trustee of liability (1) for breach of trust committed intentionally, with gross negligence, in bad faith, or with reckless indifference to the interest of the beneficiary, or (2) for any profit that the trustee derives from a breach of trust. (c) Subject to subdivision (b), a provision in a trust instrument that releases the trustee from liability if a beneficiary fails to object to an item in an interim or final account or other written report within a specified time period is effective only if all of the following conditions are met: (1) The account or report sets forth the item. (2) The period specified in the trust instrument for the beneficiary to object is not less than 180 days, or the trustee elects to follow the procedure provided in subdivision (d). (3) Written notice in 12-point boldface type is provided to a beneficiary with the account or report in the following form: NOTICE TO BENEFICIARIES YOU HAVE �insert "180 days" or the period specified in the trust instrument, whichever is longer) FROM YOUR RECEIPT OF THIS ACCOUNT OR REPORT TO MAKE AN OBJECTION TO ANY ITEM SET FORTH IN THIS ACCOUNT OR REPORT. ANY OBJECTION YOU MAKE MUST BE IN WRITING; IT MUST BE DELIVERED TO THE TRUSTEE WITHIN THE PERIOD STATED ABOVE; AND IT MUST STATE YOUR OBJECTION. YOUR FAILURE TO DELIVER A WRITTEN OBJECTION TO THE TRUSTEE WITHIN THE PERIOD STATED ABOVE WILL PERMANENTLY PREVENT YOU FROM LATER ASSERTING THIS OBJECTION AGAINST THE TRUSTEE. IF YOU DO MAKE AN OBJECTION TO THE TRUSTEE, THE THREE-YEAR PERIOD PROVIDED IN SECTION 16460 OF THE PROBATE CODE FOR COMMENCEMENT OF LITIGATION WILL APPLY TO CLAIMS BASED ON YOUR OBJECTION AND WILL BEGIN TO RUN ON THE DATE THAT YOU RECEIVE THIS ACCOUNT OR REPORT. (d) A provision in a trust instrument that provides for a period less than 180 days to object to an item in an account or report shall be ineffective to release the trustee from liability. A trustee of a trust created by an instrument with an ineffective period may elect to be governed by the provisions of subdivision (c) by complying with the requirements of subdivision (c), except that "180 days" shall be substituted in the notice form for the ineffective period. (e) Subject to subdivision (b), a beneficiary who fails to object in writing to an account or report that complies with the requirements of subdivision (c) within the specified, valid period shall be barred from asserting any claim against the trustee regarding an item that is adequately disclosed in the account or report. An item is adequately disclosed if the disclosure regarding the item meets the requirements of paragraph (1) of subdivision (a) of Section 16460. (f) Except as provided in subdivision (a) of Section 16460, the trustee may not be released from liability as to any claim based on a written objection made by a beneficiary if the objection is delivered to the trustee within the specified, effective period. If a beneficiary has filed a written objection to an account or report that complies with the requirements of subdivision (c) within the specified, valid period that concerns an item that affects any other beneficiary of the trust, any affected beneficiary may join in the objection anytime within the specified, valid period or while the resolution of the objection is pending, whichever is later. This section is not intended to establish a class of beneficiaries for actions on an account and report or provide that the action of one beneficiary is for the benefit of all beneficiaries. This section does not create a duty for any trustee to notify beneficiaries of objections or resolution of objections. (g) Provided that a beneficiary has filed a written objection to an account or report that complies with the requirements of subdivision (c) within the specified, valid period, a supplemental written objection may be delivered in the same manner as the objection not later than 180 days after the receipt of the account or report or no later than the period specified in the trust instrument, whichever is longer. (h) Compliance with subdivision (c) excuses compliance with paragraph (6) of subdivision (a) of Section 16063 for the account or report to which that notice relates. (i) Subject to subdivision (b), if proper notice has been given and a beneficiary has not made a timely objection, the trustee is not liable for any other claims adequately disclosed by any item in the account or report. (j) Subdivisions (c) to (i), inclusive, apply to all accounts and reports submitted after the effective date of the act adding these subdivisions.

16462. (a) Notwithstanding Section 16461, a trustee of a revocable trust is not liable to a beneficiary for any act performed or omitted pursuant to written directions from the person holding the power to revoke, including a person to whom the power to direct the trustee is delegated. (b) Subdivision (a) applies to a trust that is revocable in part with respect to the interest of the beneficiary in that part of the trust property.


16463. (a) Except as provided in subdivisions (b) and (c), a beneficiary may not hold the trustee liable for an act or omission of the trustee as a breach of trust if the beneficiary consented to the act or omission before or at the time of the act or omission. (b) The consent of the beneficiary does not preclude the beneficiary from holding the trustee liable for a breach of trust in any of the following circumstances: (1) Where the beneficiary was under an incapacity at the time of the consent or of the act or omission. (2) Where the beneficiary at the time consent was given did not know of his or her rights and of the material facts (A) that the trustee knew or should have known and (B) that the trustee did not reasonably believe that the beneficiary knew. (3) Where the consent of the beneficiary was induced by improper conduct of the trustee. (c) Where the trustee has an interest in the transaction adverse to the interest of the beneficiary, the consent of the beneficiary does not preclude the beneficiary from holding the trustee liable for a breach of trust under any of the circumstances described in subdivision (b) or where the transaction to which the beneficiary consented was not fair and reasonable to the beneficiary.


16464. (a) Except as provided in subdivision (b), a beneficiary may be precluded from holding the trustee liable for a breach of trust by the beneficiary's release or contract effective to discharge the trustee's liability to the beneficiary for that breach. (b) A release or contract is not effective to discharge the trustee's liability for a breach of trust in any of the following circumstances: (1) Where the beneficiary was under an incapacity at the time of making the release or contract. (2) Where the beneficiary did not know of his or her rights and of the material facts (A) that the trustee knew or reasonably should have known and (B) that the trustee did not reasonably believe that the beneficiary knew. (3) Where the release or contract of the beneficiary was induced by improper conduct of the trustee. (4) Where the transaction involved a bargain with the trustee that was not fair and reasonable.


16465. (a) Except as provided in subdivision (b), if the trustee, in breach of trust, enters into a transaction that the beneficiary may at his or her option reject or affirm, and the beneficiary affirms the transaction, the beneficiary shall not thereafter reject it and hold the trustee liable for any loss occurring after the trustee entered into the transaction. (b) The affirmance of a transaction by the beneficiary does not preclude the beneficiary from holding a trustee liable for a breach of trust if, at the time of the affirmance, any of the following circumstances existed: (1) The beneficiary was under an incapacity. (2) The beneficiary did not know of his or her rights and of the material facts (A) that the trustee knew or reasonably should have known and (B) that the trustee did not reasonably believe that the beneficiary knew. (3) The affirmance was induced by improper conduct of the trustee. (4) The transaction involved a bargain with the trustee that was not fair and reasonable.


Chapter 5. Notice Of Proposed Action By Trustee

Ca Codes (prob:16500-16504) Probate Code Section 16500-16504



16500. Subject to subdivision (d) of Section 16501, a trustee may give a notice of proposed action regarding a matter governed by Chapter 2 (commencing with Section 16200) or Chapter 3 (commencing with Section 16320) as provided in this chapter. For the purpose of this chapter, a proposed action includes a course of action or a decision not to take action. This chapter does not preclude an application or assertion of any other rights or remedies available to an interested party as otherwise provided in this part regarding an action to be taken or not to be taken by the trustee.


16501. (a) The trustee who elects to provide notice pursuant to this chapter shall mail notice of the proposed action to each of the following: (1) A beneficiary who is receiving, or is entitled to receive, income under the trust, including a beneficiary who is entitled to receive income at the discretion of the trustee. (2) A beneficiary who would receive a distribution of principal if the trust were terminated at the time the notice is given. (b) Notice of proposed action is not required to be given to a person who consents in writing to the proposed action. The consent may be executed at any time before or after the proposed action is taken. (c) A trustee is not required to provide a copy of the notice of proposed action to a beneficiary who is known to the trustee but who cannot be located by the trustee after reasonable diligence or who is unknown to the trustee. (d) Notwithstanding any other provision of this chapter, the trustee may not use a notice of proposed action in any of the following actions: (1) Allowance of the trustee's compensation. (2) Allowance of compensation of the attorney for the trustee. (3) Settlement of accounts. (4) Preliminary and final distributions and discharge. (5) Sale of property of the trust to the trustee or to the attorney for the trustee. (6) Exchange of property of the trust for property of the trustee or for property of the attorney for the trustee. (7) Grant of an option to purchase property of the trust to the trustee or to the attorney for the trustee. (8) Allowance, payment, or compromise of a claim of the trustee, or the attorney for the trustee, against the trust. (9) Compromise or settlement of a claim, action, or proceeding by the trust against the trustee or against the attorney for the trust. (10) Extension, renewal, or modification of the terms of a debt or other obligation of the trustee, or the attorney for the trustee, owing to or in favor of the trust.

16502. The notice of proposed action shall state that it is given pursuant to this section and shall include all of the following: (a) The name and mailing address of the trustee. (b) The name and telephone number of a person who may be contacted for additional information. (c) A description of the action proposed to be taken and an explanation of the reasons for the action. (d) The time within which objections to the proposed action can be made, which shall be at least 45 days from the mailing of the notice of proposed action. (e) The date on or after which the proposed action may be taken or is effective.

16503. (a) A beneficiary may object to the proposed action by mailing a written objection to the trustee at the address stated in the notice of proposed action within the time period specified in the notice of proposed action. (b) A trustee is not liable to a beneficiary for an action regarding a matter governed by this part if the trustee does not receive a written objection to the proposed action from a beneficiary within the applicable period and the other requirements of this section are satisfied. If no beneficiary entitled to notice objects under this section, the trustee is not liable to any current or future beneficiary with respect to the proposed action. This subdivision does not apply to a person who is a minor or an incompetent adult at the time of receiving the notice of proposed action unless the notice is served on a guardian or conservator of the estate of the person. (c) If the trustee receives a written objection within the applicable period, either the trustee or a beneficiary may petition the court to have the proposed action taken as proposed, taken with modifications, or denied. In the proceeding, a beneficiary objecting to the proposed action has the burden of proving that the trustee's proposed action should not be taken. A beneficiary who has not objected is not estopped from opposing the proposed action in the proceeding. (d) If the trustee decides not to implement the proposed action, the trustee shall notify the beneficiaries of the decision not to take the action and the reasons for the decision, and the trustee's decision not to implement the proposed action does not itself give rise to liability to any current or future beneficiary. A beneficiary may petition the court to have the action taken, and has the burden of proving that it should be taken.


16504. This chapter does not require a trustee to use these procedures prior to taking any action.


Part 5. Judicial Proceedings Concerning Trusts

Chapter 1. Jurisdiction And Venue

Ca Codes (prob:17000-17006) Probate Code Section 17000-17006



17000. (a) The superior court having jurisdiction over the trust pursuant to this part has exclusive jurisdiction of proceedings concerning the internal affairs of trusts. (b) The superior court having jurisdiction over the trust pursuant to this part has concurrent jurisdiction of the following: (1) Actions and proceedings to determine the existence of trusts. (2) Actions and proceedings by or against creditors or debtors of trusts. (3) Other actions and proceedings involving trustees and third persons.

17001. In proceedings commenced pursuant to this division, the court is a court of general jurisdiction and has all the powers of the superior court.

17002. (a) The principal place of administration of the trust is the usual place where the day-to-day activity of the trust is carried on by the trustee or its representative who is primarily responsible for the administration of the trust. (b) If the principal place of administration of the trust cannot be determined under subdivision (a), it shall be determined as follows: (1) If the trust has a single trustee, the principal place of administration of the trust is the trustee's residence or usual place of business. (2) If the trust has more than one trustee, the principal place of administration of the trust is the residence or usual place of business of any of the cotrustees as agreed upon by them or, if not, the residence or usual place of business of any of the cotrustees.


17003. Subject to Section 17004: (a) By accepting the trusteeship of a trust having its principal place of administration in this state the trustee submits personally to the jurisdiction of the court under this division. (b) To the extent of their interests in the trust, all beneficiaries of a trust having its principal place of administration in this state are subject to the jurisdiction of the court under this division.


17004. The court may exercise jurisdiction in proceedings under this division on any basis permitted by Section 410.10 of the Code of Civil Procedure.

17005. (a) The proper county for commencement of a proceeding pursuant to this division is either of the following: (1) In the case of a living trust, the county where the principal place of administration of the trust is located. (2) In the case of a testamentary trust, either the county where the decedent's estate is administered or where the principal place of administration of the trust is located. (b) If a living trust has no trustee, the proper county for commencement of a proceeding for appointing a trustee is the county where the trust property, or some portion of the trust property, is located. (c) Except as otherwise provided in subdivisions (a) and (b), the proper county for commencement of a proceeding pursuant to this division is determined by the rules applicable to civil actions generally.


17006. There is no right to a jury trial in proceedings under this division concerning the internal affairs of trusts.


Chapter 2. Notice

Ca Codes (prob:17100-17105) Probate Code Section 17100-17105



17100. Except as otherwise provided in this division, notice in proceedings commenced pursuant to this division, or notice otherwise required by this division, is governed by Part 2 (commencing with Section 1200) of Division 3.

17105. A petitioner or other person required to give notice may cause notice to be given to any person interested in the trust without the need for a court order.


Chapter 3. Proceedings Concerning Trusts

Ca Codes (prob:17200-17211) Probate Code Section 17200-17211



17200. (a) Except as provided in Section 15800, a trustee or beneficiary of a trust may petition the court under this chapter concerning the internal affairs of the trust or to determine the existence of the trust. (b) Proceedings concerning the internal affairs of a trust include, but are not limited to, proceedings for any of the following purposes: (1) Determining questions of construction of a trust instrument. (2) Determining the existence or nonexistence of any immunity, power, privilege, duty, or right. (3) Determining the validity of a trust provision. (4) Ascertaining beneficiaries and determining to whom property shall pass or be delivered upon final or partial termination of the trust, to the extent the determination is not made by the trust instrument. (5) Settling the accounts and passing upon the acts of the trustee, including the exercise of discretionary powers. (6) Instructing the trustee. (7) Compelling the trustee to do any of the following: (A) Provide a copy of the terms of the trust. (B) Provide information about the trust under Section 16061 if the trustee has failed to provide the requested information within 60 days after the beneficiary's reasonable written request, and the beneficiary has not received the requested information from the trustee within the six months preceding the request. (C) Account to the beneficiary, subject to the provisions of Section 16064, if the trustee has failed to submit a requested account within 60 days after written request of the beneficiary and no account has been made within six months preceding the request. (8) Granting powers to the trustee. (9) Fixing or allowing payment of the trustee's compensation or reviewing the reasonableness of the trustee's compensation. (10) Appointing or removing a trustee. (11) Accepting the resignation of a trustee. (12) Compelling redress of a breach of the trust by any available remedy. (13) Approving or directing the modification or termination of the trust. (14) Approving or directing the combination or division of trusts. (15) Amending or conforming the trust instrument in the manner required to qualify a decedent's estate for the charitable estate tax deduction under federal law, including the addition of mandatory governing instrument requirements for a charitable remainder trust as required by final regulations and rulings of the United States Internal Revenue Service. (16) Authorizing or directing transfer of a trust or trust property to or from another jurisdiction. (17) Directing transfer of a testamentary trust subject to continuing court jurisdiction from one county to another. (18) Approving removal of a testamentary trust from continuing court jurisdiction. (19) Reforming or excusing compliance with the governing instrument of an organization pursuant to Section 16105. (20) Determining the liability of the trust for any debts of a deceased settlor. However, nothing in this paragraph shall provide standing to bring an action concerning the internal affairs of the trust to a person whose only claim to the assets of the decedent is as a creditor. (21) Determining petitions filed pursuant to Section 15687 and reviewing the reasonableness of compensation for legal services authorized under that section. In determining the reasonableness of compensation under this paragraph, the court may consider, together with all other relevant circumstances, whether prior approval was obtained pursuant to Section 15687. (22) If a member of the State Bar of California has transferred the economic interest of his or her practice to a trustee and if the member is a deceased member under Section 9764, a petition may be brought to appoint a practice administrator. The procedures, including, but not limited to, notice requirements, that apply to the appointment of a practice administrator for a deceased member shall apply to the petition brought under this section. (23) If a member of the State Bar of California has transferred the economic interest of his or her practice to a trustee and if the member is a disabled member under Section 2468, a petition may be brought to appoint a practice administrator. The procedures, including, but not limited to, notice requirements, that apply to the appointment of a practice administrator for a disabled member shall apply to the petition brought under this section. (c) The court may, on its own motion, set and give notice of an order to show cause why a trustee who is a professional fiduciary, and who is required to be licensed under Chapter 6 (commencing with Section 6500) of Division 3 of the Business and Professions Code, should not be removed for failing to hold a valid, unexpired, unsuspended license.

17200.1. All proceedings concerning the transfer of property of the trust shall be conducted pursuant to the provisions of Part 19 (commencing with Section 850) of Division 2.


17201. A proceeding under this chapter is commenced by filing a petition stating facts showing that the petition is authorized under this chapter. The petition shall also state the grounds of the petition and the names and addresses of each person entitled to notice of the petition.


17202. The court may dismiss a petition if it appears that the proceeding is not reasonably necessary for the protection of the interests of the trustee or beneficiary.


17203. (a) At least 30 days before the time set for the hearing on the petition, the petitioner shall cause notice of hearing to be mailed to all of the following persons: (1) All trustees. (2) All beneficiaries, subject to Chapter 2 (commencing with Section 15800) of Part 3. (3) The Attorney General, if the petition relates to a charitable trust subject to the jurisdiction of the Attorney General. (b) At least 30 days before the time set for hearing on the petition, the petitioner shall cause notice of the hearing and a copy of the petition to be served in the manner provided in Chapter 4 (commencing with Section 413.10) of Title 5 of Part 2 of the Code of Civil Procedure on any person, other than a trustee or beneficiary, whose right, title, or interest would be affected by the petition and who does not receive notice pursuant to subdivision (a). The court may not shorten the time for giving notice under this subdivision. (c) If a person to whom notice otherwise would be given has been deceased for at least 40 days, and no personal representative has been appointed for the estate of that person, and the deceased person' s right, title, or interest has not passed to any other person pursuant to Division 8 (commencing with Section 13000) or otherwise, notice may instead be given to the following persons: (1) Each heir and devisee of the decedent, and all persons named as executors of the will of the decedent, so far as known to the petitioner. (2) Each person serving as guardian or conservator of the decedent at the time of the decedent's death, so far as known to the petitioner.


17204. (a) If proceedings involving a trust are pending, a beneficiary of the trust may, in person or by attorney, file with the court clerk where the proceedings are pending a written request stating that the beneficiary desires special notice of the filing of petitions in the proceeding relating to any or all of the purposes described in Section 17200 and giving an address for receiving notice by mail. A copy of the request shall be personally delivered or mailed to the trustee or the trustee's attorney. If personally delivered, the request is effective when it is delivered. If mailed, the request is effective when it is received. When the original of the request is filed with the court clerk, it shall be accompanied by a written admission or proof of service. A request for special notice may be modified or withdrawn in the same manner as provided for the making of the initial request. (b) (1) An interested person may request special notice in the same manner as a beneficiary under subdivision (a), for the purpose set forth in paragraph (9) of subdivision (b) of Section 17200. The request for special notice shall be accompanied by a verified statement of the person's interest. (2) For purposes set forth in paragraphs (2), (4) to (6), inclusive, (8), (12), (16), (20), and (21) of subdivision (b) of Section 17200, an interested person may petition the court for an order for special notice of proceedings involving a trust. The petition shall include a verified statement of the creditor's interest and may be served on the trustee or the trustee's attorney by personal delivery or in the manner required by Section 1215. The petition may be made by ex parte application. (3) For purposes of this subdivision, an "interested person" means only a creditor of a trust or, if the trust has become irrevocable upon the death of a trustor, a creditor of the trustor. (4) This section does not confer standing on an interested person if standing does not otherwise exist. (c) Except as provided in subdivision (d), after serving and filing a request and proof of service pursuant to subdivision (a) or paragraph (1) of subdivision (b), the beneficiary or the interested person is entitled to notice pursuant to Section 17203. If the petition of an interested person filed pursuant to paragraph (2) of subdivision (b) is granted by the court, the interested person is entitled to notice pursuant to Section 17203. (d) A request for special notice made by a beneficiary whose right to notice is restricted by Section 15802 is not effective.


17205. If a trustee or beneficiary has served and filed either a notice of appearance, in person or by counsel, directed to the petitioner or the petitioner's counsel in connection with a particular petition and proceeding or a written request for a copy of the petition, and has given an address to which notice or a copy of the petition may be mailed or delivered, the petitioner shall cause a copy of the petition to be mailed to that person within five days after service of the notice of appearance or receipt of the request.


17206. The court in its discretion may make any orders and take any other action necessary or proper to dispose of the matters presented by the petition, including appointment of a temporary trustee to administer the trust in whole or in part.


17209. The administration of trusts is intended to proceed expeditiously and free of judicial intervention, subject to the jurisdiction of the court.

17210. In a case involving a charitable trust subject to the jurisdiction of the Attorney General, the Attorney General may petition under this chapter.

17211. (a) If a beneficiary contests the trustee's account and the court determines that the contest was without reasonable cause and in bad faith, the court may award against the contestant the compensation and costs of the trustee and other expenses and costs of litigation, including attorney's fees, incurred to defend the account. The amount awarded shall be a charge against any interest of the beneficiary in the trust. The contestant shall be personally liable for any amount that remains unsatisfied. (b) If a beneficiary contests the trustee's account and the court determines that the trustee's opposition to the contest was without reasonable cause and in bad faith, the court may award the contestant the costs of the contestant and other expenses and costs of litigation, including attorney's fees, incurred to contest the account. The amount awarded shall be a charge against the compensation or other interest of the trustee in the trust. The trustee shall be personally liable and on the bond, if any, for any amount that remains unsatisfied.


Chapter 4. Testamentary Trusts Subject To Continuing Court Jurisdiction

Article 1. Administration Of Testamentary Trusts Subject To Continuing Court Jurisdiction

Ca Codes (prob:17300-17304) Probate Code Section 17300-17304



17300. This article applies only to the following: (a) A trust created by a will executed before July 1, 1977, and not incorporated by reference in a will on or after July 1, 1977. (b) A trust created by a will which provides that the trust is subject to the continuing jurisdiction of the superior court.


17301. If a trust described in Section 17300 continues after distribution of the decedent's estate, the court in which the decedent's estate was administered retains jurisdiction over the trust for any of the purposes specified in Section 17200.


17302. Except as otherwise provided in this article, proceedings relating to trusts under continuing court jurisdiction are governed by this part.

17303. This article does not apply to a trust described in Section 17300 that has been removed from continuing court jurisdiction.


17304. (a) At any time after final distribution of the decedent's estate, a trust described in Section 17300 may be transferred to a different county in this state as provided in this section. (b) The petition for transfer shall set forth all of the following: (1) The name of the county to which jurisdiction over the trust is sought to be transferred. (2) The names, ages, and places of residence of the trustees and all beneficiaries of the trust, so far as known to the petitioner. (3) A brief description of the character, condition, value, and location of property of the trust. (4) A brief statement of the reasons for transfer. (c) If, after hearing, it appears to the court that the transfer of jurisdiction to the county designated in the petition or to any other county in this state will be in the best interests of the estate, or that economical and convenient administration of the trust will be facilitated by the transfer, the court shall make an order transferring jurisdiction over the trust. Upon such order, the court clerk shall certify a copy of the order of transfer to the clerk of the court to which jurisdiction is transferred, together with copies of the instrument creating the trust, the decree of distribution, and any other documents or matters of record the court determines by order to be necessary to define the powers and duties of the trustee, or otherwise to be necessary in connection with further administration of the trust. (d) The court to which jurisdiction is transferred may from time to time require by order the filing of certified copies of additional papers or matters of record from the court in which the decedent's estate was administered as are required. (e) Upon the filing of a certified copy of the order of transfer, together with supporting documents, the court to which jurisdiction is transferred has the same jurisdiction over the trust as the court in which the decedent's estate was administered but for the transfer.



Article 2. Removal Of Trusts From Continuing Court Jurisdiction

Ca Codes (prob:17350-17354) Probate Code Section 17350-17354



17350. This article applies only to trusts created by will executed before July 1, 1977, and not incorporated by reference in a will on or after July 1, 1977.


17351. (a) If any of the trustees of a trust described in Section 17350 is a trust company, the trust shall be removed from continuing court jurisdiction as provided in this section. Within six months after the initial funding of the trust, the trustee shall give a notice of removal of the trust from continuing court jurisdiction to each beneficiary. Notice of removal shall be sent by registered or certified mail or by first-class mail, but notice sent by first-class mail is effective only if an acknowledgment of receipt of notice is signed by the beneficiary and returned to the trustee. (b) The notice of removal of the trust from continuing court jurisdiction shall contain the following: (1) A statement that as of January 1, 1983, the law was changed to remove the necessity for continuing court jurisdiction over the trust. (2) A statement that Section 17200 of the Probate Code gives any beneficiary the right to petition a court to determine important matters relating to the administration of the trust. (3) A copy of the text of Sections 17200 and 17201. (4) A statement that each income beneficiary, as defined in Section 16325, is entitled to an annual statement of the principal and income receipts and disbursements of the trust and that any other beneficiary is entitled to such information upon written request to the trustee. (5) The name and location of the court in the county in which it is appropriate to file a petition pursuant to Section 17200, the name and location of the court that had jurisdiction over the administration of the decedent's estate, and a statement that it is appropriate to file a petition pursuant to Section 17200 with either court. (c) The trustee shall file with the court that had jurisdiction over the administration of the decedent's estate proof of giving notice under this section within seven months after the initial funding of the trust.


17352. (a) If none of the trustees of a trust described in Section 17350 is a trust company, the trust may be removed from continuing court jurisdiction only with approval of the court. The trustee may petition for court approval at any time, and from time to time, in the trustee's discretion. (b) The petition for removal shall set forth the trust accounts in detail, report the trustee's acts, and show the condition of the trust estate. A copy of the trust instrument shall be attached to the petition. (c) At the hearing the court may receive testimony from any interested person and may grant or deny the petition, or may grant the petition on such conditions as the court in its discretion deems proper. (d) If the petition is granted, the trustee shall send the notice of removal of the trust provided in subdivision (b) of Section 17351 and file proof of service as required by subdivision (c) of Section 17351 within six months and seven months, respectively, from the date the petition is granted. A copy of the court order granting the petition shall be attached to the notice. (e) If the petition is not granted, the trust shall continue to be administered under Article 1 (commencing with Section 17300) as if the settlor had provided in the will that the court does not lose jurisdiction of the estate by final distribution.


17353. If a trust company is appointed as a successor trustee of a trust which, at the time of the appointment, is subject to continuing court jurisdiction because it was not removed pursuant to Section 17352, the successor trustee shall comply with Section 17351. For the purpose of complying with Section 17351, the date of appointment of the successor trustee shall be treated as the date of initial funding of the trust.


17354. After a trust is removed from continuing court jurisdiction pursuant to this article, neither a change in trustees nor any other event causes the trust to be subject to continuing court jurisdiction under Article 1 (commencing with Section 17300).


Chapter 5. Transfer Of Trust To Another Jurisdiction

Ca Codes (prob:17400-17405) Probate Code Section 17400-17405



17400. (a) This chapter applies to all of the following: (1) A trust that is subject to this division. (2) A trust subject to Chapter 8 (commencing with Section 6320) of Part 1 of Division 6. (3) Any other trust to which the provisions of this chapter are made applicable by statute or trust instrument. (b) This chapter does not prevent the transfer of the place of administration of a trust or of trust property to another jurisdiction by any other available means.


17401. (a) The court may make an order for the transfer of the place of administration of a trust or the transfer of some or all of the trust property to a jurisdiction outside this state as provided in this chapter. (b) Except as otherwise provided in this chapter, proceedings under this chapter are governed by this part.


17402. The petition for transfer shall set forth all of the following: (a) The names and places of residence of the following: (1) The trustee administering the trust in this state. (2) The trustee, including any domiciliary trustee, who will administer the trust or trust property in the other jurisdiction. (b) The names, ages, and places of residence of the living beneficiaries, as far as known to the petitioner. (c) Whether the trustee who will administer the trust in the other jurisdiction has agreed to accept the trust. If so, the acceptance or a copy shall be attached as an exhibit to the petition or otherwise filed with the court. (d) A general statement of the qualifications of the trustee who will administer the trust in the other jurisdiction and the amount of fiduciary bond, if any. If the trustee is an individual, the statement shall include the trustee's age. (e) A general statement of the nature and value of the property of any trust of the same settlor being administered in the other jurisdiction by the trustee who will administer the trust in the other jurisdiction. (f) The name of the court, if any, having jurisdiction of the trustee in the other jurisdiction or of its accounts or in which a proceeding may be had with respect to administration of the trust or the trustee's accounts. (g) A statement of the character, condition, location, and value of the trust property sought to be transferred. (h) Whether there is any pending civil action in this state against the trustee arising out of the administration of the trust sought to be transferred. (i) A statement of the reasons for the transfer.


17403. (a) At least 30 days before the time set for the hearing on the petition, the petitioner shall cause notice of the time and place of the hearing to be mailed to each of the persons named in the petition at their respective addresses as stated in the petition. (b) Any person interested in the trust, as trustee, beneficiary, or otherwise, may appear and file written grounds in opposition to the petition.


17404. The court may, in its discretion, grant the petition and order the trustee to transfer the trust property or to transfer the place of administration of the trust to the other jurisdiction if, after hearing, all of the following appear to the court: (a) The transfer of the trust property to a trustee in another jurisdiction, or the transfer of the place of administration of the trust to another jurisdiction, will promote the best interests of the trust and those interested in it, taking into account the interest in the economical and convenient administration of the trust. (b) The transfer will not violate the trust instrument. (c) Any new trustee to whom the trust property is to be transferred is qualified, willing, and able to administer the trust or trust property under the trust instrument.


17405. If a transfer is ordered under this chapter, the court may direct the manner of transfer and impose terms and conditions as may be just, including, but not limited to, a requirement for the substitution of a successor trustee in any pending litigation in this state. The delivery of property in accordance with the order of the court is a full discharge of the trustee in relation to all property embraced in the order.


Chapter 6. Transfer Of Trust From Another Jurisdiction

Ca Codes (prob:17450-17457) Probate Code Section 17450-17457



17450. (a) This chapter applies to a trust, or portion thereof, administered in a jurisdiction outside this state. (b) This chapter does not prevent the transfer of the place of administration of a trust or of trust property to this state by any other available means.


17451. (a) The court may make an order accepting the transfer of the place of administration of a trust from another jurisdiction to this state or the transfer of some or all of the trust property in another jurisdiction to a trustee in this state as provided in this chapter. (b) Except as otherwise provided in this chapter, proceedings under this chapter are governed by this part.


17452. (a) If the petition requests that a resident of this state be appointed trustee, the petition shall be filed in the court of the county where the proposed principal place of administration of the trust pursuant to Section 17002 is located. (b) If the petition requests that only a nonresident of this state be appointed trustee, the petition shall be filed in the court of the county where either (1) any beneficiary resides or (2) a substantial portion of the trust property to be transferred is located or will be located.


17453. The petition for transfer shall set forth all of the following: (a) The names and places of residence of the following: (1) The trustee administering the trust in the other jurisdiction. (2) The proposed trustee to whom administration of the trust or trust property will be transferred. (b) The names, ages, and places of residence of all living beneficiaries, as far as known to the petitioner. (c) Whether administration of the trust has been subject to supervision in a jurisdiction outside this state. If so, the petition shall state whether a petition or appropriate request for transfer of place of administration of the trust or trust property to this state has been filed, if necessary, with the court in the other jurisdiction, and the status of the petition or request. (d) Whether the trustee proposed to administer the trust in this state has agreed to accept the trust in this state. If the trustee has agreed, the acceptance shall be attached as an exhibit to the petition or otherwise filed with the court. (e) A general statement of the qualifications of the trustee proposed to administer the trust in this state and the amount of any bond to be requested. If the trustee is an individual, the statement shall include the trustee's age. (f) A copy of the trust instrument or a statement of the terms of the trust instrument in effect at the time the petition is filed, including all amendments thereto. (g) A statement of the character, condition, location, and value of the trust property sought to be transferred. (h) A statement of the reasons for the transfer.


17454. (a) At least 30 days before the time set for the hearing on the petition, the petitioner shall cause notice of the time and place of the hearing to be mailed to each of the persons named in the petition at their respective addresses as stated in the petition. (b) Any person interested in the trust, as trustee, beneficiary, or otherwise, may appear and file written grounds in opposition to the petition.


17455. (a) The court may, in its discretion, grant the petition and issue an order accepting transfer of trust property or the place of administration of the trust to this state and appoint a trustee to administer the trust in this state, if, after hearing, all of the following appear to the court: (1) The transfer of the trust property to a trustee in this state, or the transfer of the place of administration of the trust to this state, will promote the best interests of the trust and those interested in it, taking into account the interest in the economical and convenient administration of the trust. (2) The transfer will not violate the trust instrument. (3) The trustee appointed by the court to administer the trust in this state, and to whom the trust property is to be transferred, is qualified, willing, and able to administer the trust or trust property under the trust instrument. (4) The proper court in the other jurisdiction has approved the transfer if approval is necessary under the law of the other jurisdiction. (b) If the court grants the petition under subdivision (a), the court shall require the trustee to give a bond, if necessary under the law of the other jurisdiction or of this state, and may require bond as provided in Section 15602.


17456. If appropriate to facilitate transfer of the trust property or the place of administration of a trust to this state, the court may issue a conditional order appointing a trustee to administer the trust in this state and indicating that transfer to this state will be accepted if transfer is approved by the proper court of the other jurisdiction.


17457. A trust transferred to this state pursuant to this chapter shall be administered in the same manner as a trust of that type created in this state. The validity of a trust and the construction of the beneficial provisions of a trust transferred to this state are not affected by this section.


Part 6. Rights Of Third Persons

Chapter 1. Liability Of Trustee To Third Persons

Ca Codes (prob:18000-18005) Probate Code Section 18000-18005



18000. (a) Unless otherwise provided in the contract or in this chapter, a trustee is not personally liable on a contract properly entered into in the trustee's fiduciary capacity in the course of administration of the trust unless the trustee fails to reveal the trustee's representative capacity or identify the trust in the contract. (b) The personal liability of a trustee on a contract entered into before July 1, 1987, is governed by prior law and not by this section.

18001. A trustee is personally liable for obligations arising from ownership or control of trust property only if the trustee is personally at fault.

18002. A trustee is personally liable for torts committed in the course of administration of the trust only if the trustee is personally at fault.

18003. (a) A cotrustee who does not join in exercising a power held by three or more cotrustees is not liable to third persons for the consequences of the exercise of the power. (b) A dissenting cotrustee who joins in an action at the direction of the majority cotrustees is not liable to third persons for the action if the dissenting cotrustee expresses the dissent in writing to any other cotrustee at or before the time the action is taken. (c) This section does not excuse a cotrustee from liability for failure to discharge the cotrustee's duties as a trustee.


18004. A claim based on a contract entered into by a trustee in the trustee's representative capacity, on an obligation arising from ownership or control of trust property, or on a tort committed in the course of administration of the trust may be asserted against the trust by proceeding against the trustee in the trustee's representative capacity, whether or not the trustee is personally liable on the claim.


18005. The question of liability as between the trust estate and the trustee personally may be determined in a proceeding under Section 17200.


Chapter 2. Protection Of Third Persons

Ca Codes (prob:18100-18108) Probate Code Section 18100-18108



18100. With respect to a third person dealing with a trustee or assisting a trustee in the conduct of a transaction, if the third person acts in good faith and for a valuable consideration and without actual knowledge that the trustee is exceeding the trustee's powers or improperly exercising them: (a) The third person is not bound to inquire whether the trustee has power to act or is properly exercising a power and may assume without inquiry the existence of a trust power and its proper exercise. (b) The third person is fully protected in dealing with or assisting the trustee just as if the trustee has and is properly exercising the power the trustee purports to exercise.


18100.5. (a) The trustee may present a certification of trust to any person in lieu of providing a copy of the trust instrument to establish the existence or terms of the trust. A certification of trust may be executed by the trustee voluntarily or at the request of the person with whom the trustee is dealing. (b) The certification of trust may confirm the following facts or contain the following information: (1) The existence of the trust and date of execution of the trust instrument. (2) The identity of the settlor or settlors and the currently acting trustee or trustees of the trust. (3) The powers of the trustee. (4) The revocability or irrevocability of the trust and the identity of any person holding any power to revoke the trust. (5) When there are multiple trustees, the signature authority of the trustees, indicating whether all, or less than all, of the currently acting trustees are required to sign in order to exercise various powers of the trustee. (6) The trust identification number, whether a social security number or an employer identification number. (7) The manner in which title to trust assets should be taken. (8) The legal description of any interest in real property held in the trust. (c) The certification shall contain a statement that the trust has not been revoked, modified, or amended in any manner which would cause the representations contained in the certification of trust to be incorrect and shall contain a statement that it is being signed by all of the currently acting trustees of the trust. The certification shall be in the form of an acknowledged declaration signed by all currently acting trustees of the trust. The certification signed by the currently acting trustee may be recorded in the office of the county recorder in the county where all or a portion of the real property is located. (d) The certification of trust may, but is not required to, include excerpts from the original trust documents, any amendments thereto, and any other documents evidencing or pertaining to the succession of successor trustees. The certification of trust shall not be required to contain the dispositive provisions of the trust which set forth the distribution of the trust estate. (e) A person whose interest is, or may be, affected by the certification of trust may require that the trustee offering or recording the certification of trust provide copies of those excerpts from the original trust documents, any amendments thereto, and any other documents which designate, evidence, or pertain to the succession of the trustee or confer upon the trustee the power to act in the pending transaction, or both. Nothing in this section is intended to require or imply an obligation to provide the dispositive provisions of the trust or the entire trust and amendments thereto. (f) A person who acts in reliance upon a certification of trust without actual knowledge that the representations contained therein are incorrect is not liable to any person for so acting. A person who does not have actual knowledge that the facts contained in the certification of trust are incorrect may assume without inquiry the existence of the facts contained in the certification of trust. Actual knowledge shall not be inferred solely from the fact that a copy of all or part of the trust instrument is held by the person relying upon the trust certification. Any transaction, and any lien created thereby, entered into by the trustee and a person acting in reliance upon a certification of trust shall be enforceable against the trust assets. However, if the person has actual knowledge that the trustee is acting outside the scope of the trust, then the transaction is not enforceable against the trust assets. Nothing contained herein shall limit the rights of the beneficiaries of the trust against the trustee. (g) A person's failure to demand a certification of trust does not affect the protection provided that person by Section 18100, and no inference as to whether that person has acted in good faith may be drawn from the failure to demand a certification of trust. Nothing in this section is intended to create an implication that a person is liable for acting in reliance upon a certification of trust under circumstances where the requirements of this section are not satisfied. (h) Except when requested by a beneficiary or in the context of litigation concerning a trust and subject to the provisions of subdivision (e), any person making a demand for the trust documents in addition to a certification of trust to prove facts set forth in the certification of trust acceptable to the third party shall be liable for damages, including attorney's fees, incurred as a result of the refusal to accept the certification of trust in lieu of the requested documents if the court determines that the person acted in bad faith in requesting the trust documents. (i) Any person may record a certification of trust that relates to an interest in real property in the office of the county recorder in any county in which all or a portion of the real property is located. The county recorder shall impose any fee prescribed by law for recording that document sufficient to cover all costs incurred by the county in recording the document. The recorded certification of trust shall be a public record of the real property involved. This subdivision does not create a requirement to record a certification of trust in conjunction with the recordation of a transfer of title of real property involving a trust.

18101. A third person who acts in good faith is not bound to ensure the proper application of trust property paid or delivered to the trustee.

18102. If a third person acting in good faith and for a valuable consideration enters into a transaction with a former trustee without knowledge that the person is no longer a trustee, the third person is fully protected just as if the former trustee were still a trustee.


18103. If an express trust relating to real property is not contained or declared in the grant to the trustee, or in an instrument signed by the trustee and recorded in the same office with the grant to the trustee, the grant shall be deemed absolute in favor of a person dealing with the trustee in good faith and for a valuable consideration.


18104. (a) If an interest in or lien or encumbrance on real property is conveyed, created, or affected by an instrument in favor of a person in trust but no beneficiary is indicated in the instrument, it is presumed that the person holds the interest, lien, or encumbrance absolutely and free of the trust. This is a presumption affecting the burden of proof. In an action or proceeding involving the interest, lien, or encumbrance instituted against the person, the person shall be deemed the only necessary representative of the undisclosed beneficiary and of the original grantor or settlor and anyone claiming under them. A judgment is binding upon and conclusive against these persons as to all matters finally adjudicated in the judgment. (b) An instrument executed by the person holding an interest, lien, or encumbrance described in subdivision (a), whether purporting to be the act of that person in his or her own right or in the capacity of a trustee, is presumed to affect the interest, lien, or encumbrance according to the tenor of the instrument. This is a presumption affecting the burden of proof. Upon the recording of the instrument in the county where the land affected by the instrument is located, the presumption is conclusive in favor of a person acting in good faith and for valuable consideration.


18105. If title to an interest in real property is affected by a change of trustee, the successor trustee may execute and record in the county in which the property is located an affidavit of change of trustee. The county recorder shall impose any fee prescribed by law for recording that document in an amount sufficient to cover all costs incurred by the county in recording the document. The affidavit shall include the legal description of the real property, the name of the former trustee or trustees and the name of the successor trustee or trustees. The affidavit may also, but is not required to, include excerpts from the original trust documents, any amendments thereto, and any other documents evidencing or pertaining to the succession of the successor trustee or trustees.


18106. (a) A document establishing the fact of change of trustee recorded pursuant to this chapter is subject to all statutory requirements for recorded documents. (b) The county recorder shall index a document establishing the fact of change of a trustee recorded pursuant to this section in the index of grantors and grantees. The index entry shall be for the grantor, and for the purpose of this index, the person who has been succeeded as trustee shall be deemed to be the grantor. The county recorder shall impose any fee prescribed by law for indexing that document in an amount sufficient to cover all costs incurred by the county in indexing the document.


18107. A document establishing the change of a trustee recorded pursuant to this chapter is prima facie evidence of the change of trustee insofar as the document identifies an interest in real property located in the county, title to which is affected by the change of trustee. The presumption established by this section is a presumption affecting the burden of producing evidence.


18108. Any person whose interest is, or may be, affected by the recordation of an affidavit of change of trustee pursuant to this chapter may require that the successor trustee provide copies of those excerpts from the original trust documents, any amendments thereto, and any other documents which evidence or pertain to the succession of the successor trustee or trustees. Nothing in this section is intended to require or imply an obligation to provide the dispositive provisions of the trust or the entire trust and any amendments thereto.


Chapter 3. Rights Of Creditors Of Settlor

Ca Codes (prob:18200-18201) Probate Code Section 18200-18201



18200. If the settlor retains the power to revoke the trust in whole or in part, the trust property is subject to the claims of creditors of the settlor to the extent of the power of revocation during the lifetime of the settlor.

18201. Any settlor whose trust property is subject to the claims of creditors pursuant to Section 18200 shall be entitled to all exemptions as provided in Chapter 4 (commencing with Section 703.010) of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure.


Part 7. Uniform Prudent Management Of Institutional Funds Act 18501-18510

Ca Codes (prob:18501-18510) Probate Code Section 18501-18510



18501. This part may be cited as the Uniform Prudent Management of Institutional Funds Act.


18502. As used in this part, the following terms shall have the following meanings: (a) "Charitable purpose" means the relief of poverty, the advancement of education or religion, the promotion of health, the promotion of a governmental purpose, or any other purpose the achievement of which is beneficial to the community. (b) "Endowment fund" means an institutional fund or part thereof that, under the terms of a gift instrument, is not wholly expendable by the institution on a current basis. The term does not include assets that an institution designates as an endowment fund for its own use. (c) "Gift instrument" means a record or records, including an institutional solicitation, under which property is granted to, transferred to, or held by an institution as an institutional fund. (d) "Institution" means any of the following: (1) A person, other than an individual, organized and operated exclusively for charitable purposes. (2) A government or governmental subdivision, agency, or instrumentality, to the extent that it holds funds exclusively for a charitable purpose. (3) A trust that had both charitable and noncharitable interests, after all noncharitable interests have terminated. (e) "Institutional fund" means a fund held by an institution exclusively for charitable purposes. The term does not include any of the following: (1) Program-related assets. (2) A fund held for an institution by a trustee that is not an institution. (3) A fund in which a beneficiary that is not an institution has an interest, other than an interest that could arise upon violation or failure of the purposes of the fund. (f) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. (g) "Program-related asset" means an asset held by an institution primarily to accomplish a charitable purpose of the institution and not primarily for investment. (h) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.


18503. (a) Subject to the intent of a donor expressed in a gift instrument, an institution, in managing and investing an institutional fund, shall consider the charitable purposes of the institution and the purposes of the institutional fund. (b) In addition to complying with the duty of loyalty imposed by law other than this part, each person responsible for managing and investing an institutional fund shall manage and invest the fund in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances. (c) In managing and investing an institutional fund, an institution is subject to both of the following: (1) It may incur only costs that are appropriate and reasonable in relation to the assets, the purposes of the institution, and the skills available to the institution. (2) It shall make a reasonable effort to verify facts relevant to the management and investment of the fund. (d) An institution may pool two or more institutional funds for purposes of management and investment. (e) Except as otherwise provided by a gift instrument, the following rules apply: (1) In managing and investing an institutional fund, all of the following factors, if relevant, must be considered: (A) General economic conditions. (B) The possible effect of inflation or deflation. (C) The expected tax consequences, if any, of investment decisions or strategies. (D) The role that each investment or course of action plays within the overall investment portfolio of the fund. (E) The expected total return from income and the appreciation of investments. (F) Other resources of the institution. (G) The needs of the institution and the fund to make distributions and to preserve capital. (H) An asset's special relationship or special value, if any, to the charitable purposes of the institution. (2) Management and investment decisions about an individual asset must be made not in isolation but rather in the context of the institutional fund's portfolio of investments as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the fund and to the institution. (3) Except as otherwise provided by law other than this part, an institution may invest in any kind of property or type of investment consistent with this section. (4) An institution shall diversify the investments of an institutional fund unless the institution reasonably determines that, because of special circumstances, the purposes of the fund are better served without diversification. (5) Within a reasonable time after receiving property, an institution shall make and carry out decisions concerning the retention or disposition of the property or to rebalance a portfolio, in order to bring the institutional fund into compliance with the purposes, terms, and distribution requirements of the institution as necessary to meet other circumstances of the institution and the requirements of this part. (6) A person that has special skills or expertise, or is selected in reliance upon the person's representation that the person has special skills or expertise, has a duty to use those skills or that expertise in managing and investing institutional funds. (f) Nothing in this section alters the duties and liabilities of a director of a nonprofit public benefit corporation under Section 5240 of the Corporations Code.


18504. (a) Subject to the intent of a donor expressed in the gift instrument, an institution may appropriate for expenditure or accumulate so much of an endowment fund as the institution determines is prudent for the uses, benefits, purposes, and duration for which the endowment fund is established. Unless stated otherwise in the gift instrument, the assets in an endowment fund are donor-restricted assets until appropriated for expenditure by the institution. In making a determination to appropriate or accumulate, the institution shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and shall consider, if relevant, all of the following factors: (1) The duration and preservation of the endowment fund. (2) The purposes of the institution and the endowment fund. (3) General economic conditions. (4) The possible effect of inflation or deflation. (5) The expected total return from income and the appreciation of investments. (6) Other resources of the institution. (7) The investment policy of the institution. (b) To limit the authority to appropriate for expenditure or accumulate under subdivision (a), a gift instrument must specifically state the limitation. (c) Terms in a gift instrument designating a gift as an endowment, or a direction or authorization in the gift instrument to use only "income," "interest," "dividends," or "rents, issues, or profits," or "to preserve the principal intact," or words of similar import have both of the following effects: (1) To create an endowment fund of permanent duration unless other language in the gift instrument limits the duration or purpose of the fund. (2) To not otherwise limit the authority to appropriate for expenditure or accumulate under subdivision (a). (d) The appropriation for expenditure in any year of an amount greater than 7 percent of the fair market value of an endowment fund, calculated on the basis of market values determined at least quarterly and averaged over a period of not less than three years immediately preceding the year in which the appropriation for expenditure is made, creates a rebuttable presumption of imprudence. For an endowment fund in existence for fewer than three years, the fair market value of the endowment fund shall be calculated for the period the endowment fund has been in existence. This subdivision does not do any of the following: (1) Apply to an appropriation for expenditure permitted under law other than this part or by the gift instrument. (2) Apply to a private or public postsecondary educational institution, or to a campus foundation established by and operated under the auspices of such an educational institution. (3) Create a presumption of prudence for an appropriation for expenditure of an amount less than or equal to 7 percent of the fair market value of the endowment fund.


18505. (a) Subject to any specific limitation set forth in a gift instrument or in law other than this part, an institution may delegate to an external agent the management and investment of an institutional fund to the extent that an institution could prudently delegate under the circumstances. An institution shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, in all of the following: (1) Selecting an agent. (2) Establishing the scope and terms of the delegation, consistent with the purposes of the institution and the institutional fund. (3) Periodically reviewing the agent's actions in order to monitor the agent's performance and compliance with the scope and terms of the delegation. (b) In performing a delegated function, an agent owes a duty to the institution to exercise reasonable care to comply with the scope and terms of the delegation. (c) An institution that complies with subdivision (a) is not liable for the decisions or actions of an agent to which the function was delegated except to the extent a trustee would be liable for those actions or decisions under Sections 16052 and 16401. (d) By accepting delegation of a management or investment function from an institution that is subject to the laws of this state, an agent submits to the jurisdiction of the courts of this state in all proceedings arising from or related to the delegation or the performance of the delegated function. (e) An institution may delegate management and investment functions to its committees, officers, or employees as authorized by law of this state other than this part.


18506. (a) If the donor consents in a record, an institution may release or modify, in whole or in part, a restriction contained in a gift instrument on the management, investment, or purpose of an institutional fund. A release or modification may not allow a fund to be used for a purpose other than a charitable purpose of the institution. (b) The court, upon application of an institution, may modify a restriction contained in a gift instrument regarding the management or investment of an institutional fund if the restriction has become impracticable or wasteful, if it impairs the management or investment of the fund, or if, because of circumstances not anticipated by the donor, a modification of a restriction will further the purposes of the fund. The institution shall notify the Attorney General of the application, and the Attorney General must be given an opportunity to be heard. To the extent practicable, any modification must be made in accordance with the donor's probable intention. (c) If a particular charitable purpose or a restriction contained in a gift instrument on the use of an institutional fund becomes unlawful, impracticable, impossible to achieve, or wasteful, the court, upon application of an institution, may modify the purpose of the fund or the restriction on the use of the fund in a manner consistent with the charitable purposes expressed in the gift instrument. The institution shall notify the Attorney General of the application, and the Attorney General must be given an opportunity to be heard. (d) If an institution determines that a restriction contained in a gift instrument on the management, investment, or purpose of an institutional fund is unlawful, impracticable, impossible to achieve, or wasteful, the institution, 60 days after notification to the Attorney General and to the donor at the donor's last known address in the records of the institution, may release or modify the restriction, in whole or part, if all of the following apply: (1) The institutional fund subject to the restriction has a total value of less than one hundred thousand dollars ($100,000). (2) More than 20 years have elapsed since the fund was established. (3) The institution uses the property in a manner consistent with the charitable purposes expressed in the gift instrument. An institution that releases or modifies a restriction under this subdivision may, if appropriate circumstances arise thereafter, use the property in accordance with the restriction notwithstanding its release or modification, and that use is deemed to satisfy the consistency requirement of this paragraph.


18507. Compliance with this part is determined in light of the facts and circumstances existing at the time a decision is made or action is taken, and not by hindsight.


18508. This part applies to institutional funds existing on or established after January 1, 2009. As applied to institutional funds existing on January 1, 2009, this part governs only decisions made or actions taken on or after that date.


18509. This part modifies, limits, and supersedes the Electronic Signatures in Global and National Commerce Act (15 U.S.C. Sec. 7001 et seq.), but does not modify, limit, or supersede Section 101 of that act (15 U.S.C. Sec. 7001(a)), or authorize electronic delivery of any of the notices described in Section 103 of that act (15 U.S.C. Sec. 7003(b)).


18510. In applying and construing this uniform act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.


Part 8. Payment Of Claims, Debts, And Expenses From Revocable Trust Of Deceased Settlor

Chapter 1. General Provisions

Ca Codes (prob:19000-19012) Probate Code Section 19000-19012



19000. As used in this part: (a) "Claim" means a demand for payment for any of the following, whether due, not due, accrued or not accrued, or contingent, and whether liquidated or unliquidated: (1) Liability of the deceased settlor, whether arising in contract, tort, or otherwise. (2) Liability for taxes incurred before the deceased settlor's death, whether assessed before or after the deceased settlor's death, other than property taxes and assessments secured by real property liens. (3) Liability for the funeral expenses of the deceased settlor. (b) "Claim" does not include a dispute regarding title to specific property alleged to be included in the trust estate. (c) "Creditor" means a person who may have a claim against the trust property. (d) "Trust" means a trust described in Section 18200, or, if a portion of a trust, that portion that remained subject to the power of revocation at the deceased settlor's death. (e) "Deceased settlor" means a deceased person who, at the time of his or her death, held the power to revoke the trust in whole or in part. (f) "Debts" means all claims, as defined in subdivision (a), all expenses of administration, and all other proper charges against the trust estate, including taxes.

19001. (a) Upon the death of a settlor, the property of the deceased settlor that was subject to the power of revocation at the time of the settlor's death is subject to the claims of creditors of the deceased settlor's estate and to the expenses of administration of the estate to the extent that the deceased settlor's estate is inadequate to satisfy those claims and expenses. (b) The deceased settlor, by appropriate direction in the trust instrument, may direct the priority of sources of payment of debts among subtrusts or other gifts established by the trust at the deceased settlor's death. Notwithstanding this subdivision, no direction by the settlor shall alter the priority of payment, from whatever source, of the matters set forth in Section 11420 which shall be applied to the trust as it applies to a probate estate.


19002. (a) Except as expressly provided, this part shall not be construed to affect the right of any creditor to recover from any revocable trust established by the deceased settlor. (b) Nothing in this part shall be construed as a construction or alteration of any claims procedure set forth under Part 4 (commencing with Section 9000) of Division 7.


19003. (a) At any time following the death of the settlor, and during the time that there has been no filing of a petition to administer the estate of the deceased settlor in this state of which the trustee has actual knowledge, the trustee may file with the court a proposed notice to creditors. Upon the court's assignment of a proceeding number to the proposed notice, the trustee shall publish and serve notice to creditors of the deceased settlor in the form and within the time prescribed in Chapters 3 (commencing with Section 19040) and 4 (commencing with Section 19050). That action shall constitute notice to creditors of the requirements of this part. (b) The filing shall be made with the superior court for the county in this state where the deceased settlor resided at the time of death, or if none, in any county in this state in which trust property was located at the time of the settlor's death, or if none, in the county in this state that was the principal place of administration of the trust at the time of the settlor's death. (c) Nothing in subdivision (a) affects a notice or request to a public entity required by Chapter 7 (commencing with Section 19200).


19004. If the trustee files, publishes, and serves notice as set forth in Section 19003, then: (a) All claims against the trust shall be filed in the manner and within the time provided in this part. (b) A claim that is not filed as provided in this part is barred from collection from trust assets. (c) The holder of a claim may not maintain an action on the claim against the trust unless the claim is first filed as provided in this part.

19005. The trustee may at any time pay, reject, or contest any claim against the deceased settlor or settle any claim by compromise, arbitration, or otherwise. The trustee may also file a petition in the manner set forth in Chapter 2 (commencing with Section 19020) to settle any claim.


19006. (a) If a trustee of a trust established by the deceased settlor files, publishes, and serves notice as provided in Section 19003 the protection from creditors afforded that trustee and trust shall also be afforded to any other trusts established by the deceased settlor and the trustees and beneficiaries of those trusts. (b) If the personal representative of the deceased settlor's estate has published notice under Section 8120 and given notice of administration of the estate of the deceased settlor under Chapter 2 (commencing with Section 9050) of Part 4 of Division 7, the protection from creditors afforded the personal representative of the deceased settlor's estate shall be afforded to the trustee and to the beneficiaries of the trust. (c) In the event that, following the filing and publication of the notice set forth in Section 19003, there shall be commenced any proceeding under which a notice pursuant to Section 8120 is required to be published, then the trustee shall have a right of collection against that estate to recover the amount of any debts paid from trust assets that would otherwise have been satisfied (whether by law or by direction in the deceased settlor's will or trust) by the property subject to probate proceedings.


19007. Nothing in this part shall determine the liability of any trust established by the deceased settlor as against any other trust established by that settlor, except to the extent that the trustee of the other trust shall file, publish, and serve the notice specified in Section 19003 and thereafter seek a determination of relative liability pursuant to Chapter 2 (commencing with Section 19020).


19008. If there is no proceeding to administer the estate of the deceased settlor, and if the trustee does not file a proposed notice to creditors pursuant to Section 19003 and does not publish notice to creditors pursuant to Chapter 3 (commencing with Section 19040), then the liability of the trust to any creditor of the deceased settlor shall be as otherwise provided by law.


19009. Nothing in this part shall be construed to permit or require disclosure of the existence of the trust or the contents of any of its provisions to any creditor or beneficiary except as that creditor or beneficiary may otherwise be entitled to that information.


19010. Nothing in this part imposes any duty on the trustee to initiate the notice proceeding set forth in Section 19003, and the trustee is not liable for failure to initiate the proceeding under this part.

19011. (a) The Judicial Council may prescribe the form and contents of the petition, notice, claim form, and allowance or rejection form to be used pursuant to this part. The allowance or rejection form may be part of the claim form. (b) Any claim form adopted by the Judicial Council shall inform the creditor that the claim must be filed with the court and a copy mailed or delivered to the trustee. The claim form shall include a proof of mailing or delivery of a copy of the claim to the trustee, which may be completed by the claimant.


19012. (a) This part applies to claims against any deceased settlor who dies on or after January 1, 1992. (b) The applicable law in effect before January 1, 1992, continues to apply to claims against any deceased settlor who dies before January 1, 1992.


Chapter 2. Petition For Approval And Settlement Of Claims Against Deceased Settlor

Ca Codes (prob:19020-19030) Probate Code Section 19020-19030



19020. At any time after the filing and first publication of notice pursuant to Chapter 3 (commencing with Section 19040), and after expiration of the time to file claims provided in that chapter, a trustee or beneficiary may petition the court under this chapter to approve either of the following: (a) Allowance, compromise, or settlement of any claims that have not been rejected by the trustee under the procedure provided in this part and for which trust property may be liable. (b) An allocation of any amounts due by reason of an action described in subdivision (a) to two or more trusts which may be liable for the claims.

19021. The petition shall be filed in that county as may be determined pursuant to Section 19003. In the event this action seeks approval of allocation to two or more trusts for which the notice proceeding in Section 19003 would prescribe superior courts for more than one county, the court located in the county so prescribed for the trustee initiating the proceeding under this chapter shall have jurisdiction.


19022. (a) A proceeding under this chapter is commenced by filing a verified petition stating facts showing that the petition is authorized under this chapter and the grounds of the petition. (b) The petition shall set forth a description of the trust and the names of creditors with respect to which action is requested and a description of each claim, together with the requested determination by the court with respect to the claims, provided, however, that this section does not require the filing of a copy of the trust or disclosure of the beneficial interests of the trust. That petition shall also set forth the beneficiaries of the trust, those claimants whose interest in the trust may be affected by the petition, and the trustees of any other trust to which an allocation of liability may be approved by the court pursuant to the petition. (c) The clerk shall set the matter for hearing.


19023. At least 30 days before the time set for the hearing on the petition, the petitioner shall cause notice of the time and place of the hearing and a copy of the petition to be served on each of the creditors whose interests in the estate may be affected by the petition in the manner provided in Chapter 4 (commencing with Section 413.10) of Title 5 of Part 2 of the Code of Civil Procedure.


19024. At least 30 days before the time set for the hearing on the petition, the petitioner shall cause notice of the time and place of the hearing, together with a copy of the petition, to be mailed to each of the following persons who is not a petitioner: (a) All trustees of the trust and of any other trusts to which an allocation of liability may be approved by the court pursuant to the petition. (b) All beneficiaries affected. (c) The personal representative of the deceased settlor's estate, if any is known to the trustee. (d) The Attorney General, if the petition relates to a charitable trust subject to the jurisdiction of the Attorney General, unless the Attorney General waives notice.

19025. (a) If any creditor, beneficiary, or trustee fails timely to file a written pleading upon notice, then the case is at issue, notwithstanding the failure. The case may proceed on the petition and written statements filed by the time of the hearing, and no further pleadings by other persons are necessary. The creditor, beneficiary, or trustee who failed timely to file a written pleading upon notice may not participate further in the proceeding for the determination requested, and that creditor, beneficiary, or trustee shall be bound by the decision in the proceeding. (b) The court's order, when final, shall be conclusive as to the liability of the trust property with respect to the claims at issue in the petition. In the event of a subsequent administration of the estate of the deceased settlor, that order shall be binding on the personal representative of the estate of the deceased settlor as well as all creditors and beneficiaries who had notice of the petition.


19026. The court may dismiss a petition if it appears that the proceeding is not reasonably necessary for the protection of the interests of the trustee or any beneficiary of the trust.


19027. (a) The court in its discretion may make any orders and take any other action necessary or proper to dispose of the matters presented by the petition. (b) If the court determines that the assets of the trust estate are insufficient to pay all debts, then the court shall order payment in the manner specified by Section 11420.


19029. The court may, on its own motion or on request of a trustee or other person interested in the trust, appoint a guardian ad litem in accordance with Section 1003.


19030. In a case involving a charitable trust subject to the jurisdiction of the Attorney General, the Attorney General may petition under this chapter.


Chapter 3. Publication Of Notice

Ca Codes (prob:19040-19041) Probate Code Section 19040-19041



19040. (a) Publication of notice pursuant to this section shall be for at least 15 days. Three publications in a newspaper published once a week or more often, with at least five days intervening between the first and last publication dates, not counting the first and last publication dates as part of the five-day period, are sufficient. Notice shall be published in a newspaper of general circulation in the city, county, or city and county in this state where the deceased settlor resided at the time of death, or if none, in the city, county, or city and county in this state wherein trust property was located at the time of the settlor's death, or if none, in the city, county, or city and county in this state wherein the principal place of administration of the trust was located at the time of the settlor's death. If there is no newspaper of general circulation published in the applicable city, county, or city and county, notice shall be published in a newspaper of general circulation published in this state nearest to the applicable city, county, or city and county seat, and which is circulated within the applicable city, county, or city and county. If there is no such newspaper, notice shall be given in written or printed form, posted at three of the most public places within the community. For purposes of this section, "city" means a charter city as defined in Section 34101 of the Government Code or a general law city as defined in Section 34102 of the Government Code. (b) The caption of the notice, the deceased settlor's name, and the name of the trustee shall be in at least 8-point type, the text of the notice shall be in at least 7-point type, and the notice shall state substantially as follows:

NOTICE TO CREDITORS OF _____________ # ____________ SUPERIOR COURT OF CALIFORNIA COUNTY OF _________ Notice is hereby given to the creditors and contingent creditors of the above-named decedent, that all persons having claims against the decedent are required to file them with the Superior Court, at _______, and mail a copy to _____, as trustee of the trust dated ____ wherein the decedent was the settlor, at _____, within the later of four months after ____ (the date of the first publication of notice to creditors) or, if notice is mailed or personally delivered to you, 60 days after the date this notice is mailed or personally delivered to you. A claim form may be obtained from the court clerk. For your protection, you are encouraged to file your claim by certified mail, with return receipt requested. (name and address of trustee or attorney) (c) An affidavit showing due publication of notice shall be filed with the clerk upon completion of the publication. The affidavit shall contain a copy of the notice, and state the date of its first publication.


19041. The Legislature finds and declares that to be most effective, notice to creditors should be published in compliance with the procedures specified in Section 19040. However, the Legislature recognizes the possibility that in unusual cases due to confusion over jurisdictional boundaries or oversights the notice may inadvertently be published in a newspaper which does not meet these requirements. Therefore, to prevent a minor error in publication from invalidating what would otherwise be a proper proceeding, the Legislature further finds and declares that notice published in a good faith attempt to comply with Section 19040 shall be sufficient to provide notice to creditors and establish jurisdiction if the court expressly finds that the notice was published in a newspaper of general circulation published within the city, county, or city and county and widely circulated within a true cross section of the community in which the deceased settlor resided or wherein the principal place of administration of the trust was located or the property was located in substantial compliance with Section 19040.


Chapter 4. Actual Notice To Creditors

Ca Codes (prob:19050-19054) Probate Code Section 19050-19054



19050. Except as provided in Section 19054, if the trustee has knowledge of a creditor of the deceased settlor, the trustee shall give notice to the creditor. The notice shall be given as provided in Section 1215. For the purpose of this section, a trustee has knowledge of a creditor of the deceased settlor if the trustee is aware that the creditor has demanded payment from the deceased settlor or the trust estate.


19051. The notice shall be given before expiration of the later of the following times: (a) Four months after the first publication of notice under Section 19040. (b) Thirty days after the trustee first has knowledge of the creditor.


19052. The notice shall be in substantially the following form: NOTICE TO CREDITORS OF _____________ # ____________ SUPERIOR COURT OF CALIFORNIA COUNTY OF _________ Notice is hereby given to the creditors and contingent creditors of the above-named decedent, that all persons having claims against the decedent are required to file them with the Superior Court, at _______, and mail or deliver a copy to ______, as trustee of the trust dated _____ wherein the decedent was the settlor, at _______, within the later of four months after _____ (the date of the first publication of notice to creditors) or, if notice is mailed or personally delivered to you, 60 days after the date this notice is mailed or personally delivered to you, or you must petition to file a late claim as provided in Section 19103 of the Probate Code. A claim form may be obtained from the court clerk. For your protection, you are encouraged to file your claim by certified mail, with return receipt requested. __________________________ (Date of mailing this notice if applicable) ___________________________ (name and address of trustee or attorney)


19053. (a) If the trustee believes that notice to a particular creditor is or may be required by this chapter and gives notice based on that belief, the trustee is not liable to any person for giving the notice, whether or not required by this chapter. (b) If the trustee fails to give notice required by this chapter, the trustee is not liable to any person for that failure, unless a creditor establishes all of the following: (1) The failure was in bad faith. (2) The creditor did not have actual knowledge of the proceedings under Chapter 1 (commencing with Section 19000) sooner than one year after publication of notice to creditors under Section 19040, and payment would have been made on the creditor's claim if the claim had been properly filed. (3) Within 16 months after the first publication of notice under Section 19040, the creditor did both of the following: (A) Filed a petition requesting that the court in which the proceedings under Chapter 1 (commencing with Section 19000) were initiated make an order determining the liability of the trustee under this subdivision. (B) At least 30 days before the hearing on the petition, caused notice of the hearing and a copy of the petition to be served on the trustee in the manner provided in Chapter 4 (commencing with Section 413.10) of Title 5 of Part 2 of the Code of Civil Procedure. (c) Nothing in this section affects the liability of the trust estate, if any, for the claim of a creditor, and the trustee is not liable to the extent the claim is paid out of the trust estate. (d) Nothing in this chapter imposes a duty on the trustee to make a search for creditors of the deceased settlor.


19054. Notwithstanding Section 19050, the trustee need not give notice to a creditor even though the trustee has knowledge of the creditor if either of the following conditions is satisfied: (a) The creditor has filed a claim as provided in this part. (b) The creditor has demanded payment and the trustee elects to treat the demand as a claim under Section 19154.


Chapter 5. Time For Filing Claims

Ca Codes (prob:19100-19104) Probate Code Section 19100-19104



19100. (a) A creditor shall file a claim before expiration of the later of the following times: (1) Four months after the first publication of notice to creditors under Section 19040. (2) Sixty days after the date actual notice is mailed or personally delivered to the creditor. This paragraph does not extend the time provided in Section 366.2 of the Code of Civil Procedure. (b) A reference in another statute to the time for filing a claim means the time provided in paragraph (1) of subdivision (a). (c) This section shall not be interpreted to extend or toll any other statute of limitations, including that provided by Section 366.2 of the Code of Civil Procedure.


19101. A vacancy in the office of the trustee that occurs before expiration of the time for filing a claim does not extend the time.


19102. A claim that is filed before expiration of the time for filing the claim is timely even if acted on by the trustee or the court after expiration of the time for filing claims.


19103. (a) Except as provided in subdivision (b), upon petition by a creditor or a trustee, the court may allow a claim to be filed after expiration of the time for filing a claim provided in Section 19100 if either of the following conditions are satisfied: (1) The trustee failed to send proper and timely notice to the creditor and the petition is filed within 60 days after the creditor has actual knowledge of the administration of the trust. (2) The creditor did not have knowledge of the facts giving rise to the existence of the claim more than 30 days prior to the time for filing a claim as provided in Section 19100, and the petition is filed within 60 days after the creditor has actual knowledge of both of the following: (A) The existence of the facts reasonably giving rise to the existence of the claim. (B) The administration of the trust. (b) Notwithstanding subdivision (a), the court shall not allow a claim to be filed under this section more than one year after the date of first publication of notice to creditors under Section 19040. Nothing in this subdivision authorizes allowance or approval of a claim barred by, or extends the time provided in, Section 366.2 of the Code of Civil Procedure. (c) The court may condition the claim on terms that are just and equitable. The court may deny the claimant's petition if a distribution to trust beneficiaries or payment to general creditors has been made and it appears the filing or establishment of the claim would cause or tend to cause unequal treatment among beneficiaries or creditors. (d) Regardless of whether the claim is later established in whole or in part, property distributed under the terms of the trust subsequent to an order settling claims under Chapter 2 (commencing with Section 19020) and payments otherwise properly made before a claim is filed under this section are not subject to the claim. Except to the extent provided in Chapter 12 (commencing with Section 19400) and subject to Section 19053, the trustee, distributee, or payee is not liable on account of the prior distribution or payment. This subdivision does not limit the liability of a person who receives a preliminary distribution of property to restore to the trust an amount sufficient for payment of the beneficiary's proper share of the claim, not exceeding the amount distributed.


19104. (a) Subject to subdivision (b), if a claim is filed within the time provided in this chapter, the creditor may later amend or revise the claim. The amendment or revision shall be filed in the same manner as the claim. (b) An amendment or revision may not be made to increase the amount of the claim after the time for filing a claim has expired. An amendment or revision to specify the amount of a claim that, at the time of filing, was not due, was contingent, or was not yet ascertainable, is not an increase in the amount of the claim within the meaning of this subdivision. An amendment or revision of a claim may not be made for any purpose after the earlier of the following times: (1) The time the court makes an order approving settlement of the claim against the deceased settlor under Chapter 2 (commencing with Section 19020). (2) One year after the date of the first publication of notice to creditors under Section 19040. Nothing in this paragraph authorizes allowance or approval of a claim barred by, or extends the time provided in, Section 366.2 of the Code of Civil Procedure.


Chapter 6. Filing Of Claims

Ca Codes (prob:19150-19154) Probate Code Section 19150-19154



19150. (a) A claim may be filed by the creditor or a person acting on behalf of the claimant. (b) A claim shall be filed with the court and a copy shall be mailed to the trustee. Failure to mail a copy to the trustee does not invalidate a properly filed claim, but any loss that results from the failure shall be borne by the creditor.


19151. (a) A claim shall be supported by the affidavit of the creditor or the person on behalf of the claimant stating: (1) The claim is a just claim. (2) If the claim is due, the facts supporting the claim, the amount of the claim, and that all payments on and offsets to the claim have been credited. (3) If the claim is not due or contingent, or the amount is not yet ascertainable, the facts supporting the claim. (4) If the affidavit is made by a person other than the creditor, the reason it is not made by the creditor. (b) The trustee may require satisfactory vouchers or proof to be produced to support the claim. An original voucher may be withdrawn after a copy is provided. If a copy is provided, the copy shall be attached to the claim.


19152. (a) If a claim is based on a written instrument, either the original or a copy of the original with all endorsements shall be attached to the claim. If a copy is attached, the original instrument shall be exhibited to the trustee on demand unless it is lost or destroyed, in which case the fact that it is lost or destroyed shall be stated in the claim. (b) If the claim or a part of the claim is secured by a mortgage, deed of trust, or other lien that is recorded in the office of the recorder of the county in which the property subject to the lien is located, it is sufficient to describe the mortgage, deed of trust, or lien and the recording reference for the instrument that created the mortgage, deed of trust, or other lien.


19153. The Judicial Council may adopt a claim form which shall inform the creditor that the claim must be filed with the court and a copy mailed or delivered to the trustee. Any such claim form shall include a proof of mailing or delivery of a copy of the claim to the trustee which may be completed by the creditor.


19154. (a) Notwithstanding any other provision of this part, if a creditor makes a written demand for payment within the time specified in Section 19100, the trustee may waive formal defects and elect to treat the demand as a claim that is filed and established under this part by paying the amount demanded. (b) Nothing in this section limits application of the doctrines of waiver, estoppel, laches, or detrimental reliance or any other equitable principle.


Chapter 7. Claims By Public Entities

Ca Codes (prob:19200-19205) Probate Code Section 19200-19205



19200. (a) Except as provided in this chapter, a claim by a public entity shall be filed within the time otherwise provided in this part. A claim not so filed is barred, including any lien imposed for the claim. (b) As used in this chapter, "public entity" has the meaning provided in Section 811.2 of the Government Code, and includes an officer authorized to act on behalf of the public entity.


19201. (a) Notwithstanding any other statute, if a claim of a public entity arises under a law, act, or code listed in subdivision (b): (1) The public entity may provide a form to be used for the written notice or request to the public entity required by this chapter. Where appropriate, the form may require the decedent's social security number, if known. (2) The claim is barred only after written notice or request to the public entity and expiration of the period provided in the applicable section. If no written notice or request is made, the claim is enforceable by the remedies, and is barred at the time, otherwise provided in the law, act, or code. (b) Law, Act, or Code Applicable Section Sales and Use Tax Law Section 6487.1 of (Part 1 (commencing the Revenue and with Section 6001) of Taxation Code Division 2 of the Revenue and Taxation Code) Bradley-Burns Uniform Section 6487.1 of Local Sales and Use Tax the Revenue and Law (Part 1.5 Taxation Code (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) Transactions and Use Section 6487.1 of Tax Law (Part 1.6 the Revenue and (commencing with Taxation Code Section 7251) of Division 2 of the Revenue and Taxation Code) Motor Vehicle Fuel Section 7675.1 of License Tax Law (Part 2 the Revenue and (commencing with Taxation Code Section 7301) of Division 2 of the Revenue and Taxation Code) Use Fuel Tax Law (Part Section 8782.1 of 3 (commencing with the Revenue and Section 8601) of Taxation Code Division 2 of the Revenue and Taxation Code) Administration of Section 19517 of Franchise and Income the Revenue and Tax Laws (Part 10.2 Taxation Code (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code) Cigarette Tax Law (Part Section 30207.1 of 13 (commencing with the Revenue and Section 30001) of Taxation Code Division 2 of the Revenue and Taxation Code) Alcoholic Beverage Tax Section 32272.1 of Law (Part 14 the Revenue and (commencing with Taxation Code Section 32001) of Division 2 of the Revenue and Taxation Code) Unemployment Insurance Section 1090 of Code the Unemployment Insurance Code State Hospitals for the Section 7277.1 of Mentally Disordered the Welfare and (Chapter 2 (commencing Institutions Code with Section 7200) of Division 7 of the Welfare and Institutions Code) Medi-Cal Act (Chapter 7 Section 9202 of (commencing with the Probate Code Section 14000) of Part 3 of Division 9 of the Welfare and Institutions Code) Waxman-Duffy Prepaid Section 9202 of Health Plan Act the Probate Code (Chapter 8 (commencing with Section 14200) of Part 3 of Division 9 of the Welfare and Institutions Code)


19202. (a) If the trustee knows or has reason to believe that the deceased settlor received health care under Chapter 7 (commencing with Section 14000) or Chapter 8 (commencing with Section 14200) of Part 3 of Division 9 of the Welfare and Institutions Code, or was the surviving spouse of a person who received that health care, the trustee shall give the State Director of Health Services notice of the death of the deceased settlor or surviving spouse in the manner provided in Section 215. (b) The director has four months after notice is given in which to file a claim.


19203. If property in the trust is distributed before expiration of the time allowed a public entity to file a claim, the public entity has a claim against the distributees to the full extent of the public entity's claim or each distributee's share of the distributed property, as set forth in Section 19402, whichever is less. The public entity's claim against distributees includes interest at a rate equal to that specified in Section 19521 of the Revenue and Taxation Code, from the date of distribution or the date of filing the claim by the public entity, whichever is later, plus other accruing costs as in the case of enforcement of a money judgment.


19204. Nothing in this chapter shall be construed to affect the order of priority of debts provided for under other provisions of law.

19205. This chapter does not apply to liability for the restitution of amounts illegally acquired through the means of a fraudulent, false, or incorrect representation, or a forged or unauthorized endorsement.


Chapter 8. Allowance And Rejection Of Claims

Ca Codes (prob:19250-19255) Probate Code Section 19250-19255



19250. When a claim is filed, the trustee shall allow or reject the claim in whole or in part.


19251. (a) Any allowance or rejection shall be in writing. The trustee shall file the allowance or rejection with the court clerk and give notice to the claimant, together with a copy of the allowance or rejection, as provided in Section 1215. (b) The allowance or rejection shall contain the following information: (1) The name of the claimant. (2) The date of the settlor's death. (3) The total amount of the claim. (4) The amount allowed or rejected by the trustee. (5) A statement that the claimant has 90 days from the time the notice of rejection is given, or 90 days after the claim becomes due, whichever is later, in which to bring an action on a claim rejected in whole or in part. (c) The Judicial Council shall prescribe an allowance or rejection form, which may be part of the claim form. Use of a form prescribed by the Judicial Council is deemed to satisfy the requirements. (d) This section does not apply to a demand the trustee elects to treat as a claim under Section 19154.


19252. The trustee shall have the power to pay any claim or portion of a claim and payment shall constitute allowance of the claim to the extent of the payment. The trustee shall have the power to compromise any claim or portion of a claim. If the trustee or the attorney for the trustee is a creditor of the deceased settlor, the trustee shall have the same powers regarding allowance, rejection, payment, or compromise set forth in this chapter.


19253. (a) A claim barred by the statute of limitations may not be allowed by the trustee. (b) The filing of a claim tolls the statute of limitations otherwise applicable to the claim until the trustee gives notice of allowance or rejection. (c) The allowance of a claim further tolls the statute of limitations as to the part of the claim allowed until the allowed portion of the claim is paid. (d) Notwithstanding the statute of limitations otherwise applicable to a claim, if an action on a rejected claim is not commenced or if the matter is not referred to a referee or to arbitration within the time prescribed in Section 19255, it is forever barred.


19254. If within 30 days after a claim is filed the trustee has refused or neglected to act on the claim, the refusal or neglect may, at the option of the claimant, be deemed equivalent to the giving of a notice of rejection on the 30th day.


19255. (a) A rejected claim is barred as to the part rejected unless the creditor brings an action on the claim or the matter is referred to a referee or to arbitration within the following times, excluding any time during which there is a vacancy in the office of the trustee: (1) If the claim is due at the time of giving the notice of rejection, 90 days after the notice is given. (2) If the claim is not due at the time of giving the notice of rejection, 90 days after the claim becomes due. (b) In addition to any other county in which an action on a rejected claim may be commenced, the action may be commenced in the county or city and county wherein the principal place of administration of the trust is located. (c) The creditor shall file a notice of the pendency of the action or the referral to a referee or to arbitration with the court clerk in the trust proceeding, together with proof of giving a copy of the notice to the trustee as provided in Section 1215. Personal service of a copy of the summons and complaint on the trustee is equivalent to the filing and giving of the notice. (d) Any property distributed by the trustee under the terms of the trust after 120 days from the later of the time the notice of rejection is given or the claim is due and before the notice of pendency of action or referral or arbitration is filed and given, excluding therefrom any time during which there is a vacancy in the office of the trustee, is not subject to the claim. Neither the trustee nor the distributee is liable on account of the distribution. (e) The prevailing party in the action shall be awarded court costs and, if the court determines that the prosecution or defense of the action against the prevailing party was unreasonable, the prevailing party shall be awarded reasonable litigation expenses, including attorney's fees. For the purpose of this subdivision, the prevailing party shall be the trustee if the creditor recovers an amount equal to or less than the amount of the claim allowed by the trustee, and shall be the creditor if the creditor recovers an amount greater than the amount of the claim allowed by the trustee.


Chapter 9. Claims Established By Judgment

Ca Codes (prob:19300-19304) Probate Code Section 19300-19304



19300. (a) Except as provided in Section 19303, after the death of the settlor all money judgments against the deceased settlor on a claim against the deceased settlor or against the trustee on a claim against the decedent or the trust estate are payable in the course of administration and are not enforceable against property in the trust estate of the deceased settlor under the Enforcement of Judgments Law (Title 9 (commencing with Section 680.010) of Part 2 of the Code of Civil Procedure). (b) Subject to Section 19301, a judgment referred to in subdivision (a) shall be filed in the same manner as other claims.


19301. When a money judgment against a trustee in a representative capacity becomes final, it conclusively establishes the validity of the claim for the amount of the judgment. The judgment shall provide that it is payable out of property in the deceased settlor's trust estate in the course of administration. An abstract of the judgment shall be filed in the trust administration proceedings.


19302. (a) Notwithstanding the death of the settlor, a judgment for possession of trust property or a judgment for sale of trust property may be enforced under the Enforcement of Judgments Law (Title 9 (commencing with Section 680.010) of Part 2 of the Code of Civil Procedure). Nothing in this subdivision authorizes enforcement under the Enforcement of Judgments Law against any property in the trust estate of the deceased settlor other than the property described in the judgment for possession or sale. (b) After the death of the settlor, a demand for money that is not satisfied from the trust property described in a judgment for sale of property shall be filed as a claim in the same manner as other claims and is payable in the course of administration.


19303. If trust property of the deceased settlor is subject to an execution lien at the time of the settlor's death, enforcement against the property may proceed under the Enforcement of Judgments Law (Title 9 (commencing with Section 680.010) of Part 2 of the Code of Civil Procedure) to satisfy the judgment. The levying officer, as defined in Section 680.260 of the Code of Civil Procedure, shall account to the trustee for any surplus. If the judgment is not satisfied, the balance of the judgment remaining unsatisfied is payable in the course of administration.


19304. (a) An attachment lien may be converted into a judgment lien on property in the trust estate subject to the attachment lien, with the same priority as the attachment lien, in either of the following cases: (1) Where the judgment debtor dies after entry of judgment in an action in which the property was attached. (2) Where a judgment is entered after the death of the defendant in an action in which the property was attached. (b) To convert the attachment lien into a judgment lien, the levying officer shall, after entry of judgment in the action in which the property was attached and before the expiration of the attachment lien, do one of the following: (1) Serve an abstract of the judgment, and a notice that the attachment lien has become a judgment lien, on the trustee or other person holding property subject to the attachment lien. (2) Record or file in any office where the writ of attachment and notice of attachment are recorded or filed an abstract of the judgment and a notice that the attachment lien has become a judgment lien. If the attached property is real property, the plaintiff or the plaintiff's attorney may record the required abstract and notice with the same effect as if recorded by the levying officer. (c) After the death of the settlor, any members of the deceased settlor's family who were supported in whole or in part by the deceased settlor may claim an exemption provided in Section 487.020 of the Code of Civil Procedure for property levied on under the writ of attachment if the right to the exemption exists at the time the exemption is claimed. The trustee may claim the exemption on behalf of members of the deceased settlor's family. The claim of exemption may be made at any time before the time the abstract and notice are served, recorded, or filed under subdivision (b) with respect to the property claimed to be exempt. The claim of exemption shall be made in the same manner as an exemption is claimed under Section 482.100 of the Code of Civil Procedure.


Chapter 10. Allocation Of Debts Between Trust And Surviving Spouse

Ca Codes (prob:19320-19326) Probate Code Section 19320-19326



19320. If it appears that a debt of the deceased settlor has been paid or is payable in whole or in part from property in the deceased settlor's trust, then the trustee, the surviving spouse, the personal representative, if any, or a deceased settlor's probate estate, or a beneficiary may petition for an order to allocate the debt.


19321. A petition under Section 19320 shall include a statement of all of the following: (a) All debts of the deceased settlor and surviving spouse known to the petitioner that are alleged to be subject to allocation and whether paid in whole or in part or unpaid. (b) The reason why the debts should be allocated. (c) The proposed allocation and the basis for allocation alleged by the petitioner.


19322. If it appears from the petition under Section 19320 that allocation would be affected by the value of the separate property of the surviving spouse and any community property and quasi-community property not administered in the trust, and if an inventory and appraisal of the property has not been provided by the surviving spouse, the court shall make an order to show cause why the information should not be provided.


19323. (a) At least 30 days before the time set for the hearing on the petition, the petitioner shall cause notice of the time and place of the hearing and a copy of the petition to be served on the surviving spouse in the manner provided in Chapter 4 (commencing with Section 413.10) of Title 5 of Part 2 of the Code of Civil Procedure. (b) At least 30 days before the time set for the hearing on the petition, the petitioner shall cause notice of the time and place of hearing, together with a copy of the petition, to be mailed to each of the following persons who are not petitioners: (1) All trustees of the trust and of any trusts to which an allocation of liability may be approved by the court pursuant to the petition. (2) All beneficiaries affected. (3) The personal representative of the deceased settlor's estate, if any is known to the trustee. (4) The Attorney General, if the petition relates to a charitable trust subject to the jurisdiction of the Attorney General, unless the Attorney General waives notice.


19324. (a) The trustee, the personal representative, if any, of a deceased settlor's probate estate, and the surviving spouse may provide for allocation of debts by agreement so long as the agreement substantially protects the rights of other interested persons. The trustee, the personal representative, or the spouse may request and obtain court approval of the allocation provided in the agreement. (b) In the absence of an agreement, each debt subject to allocation shall first be characterized by the court as separate or community, in accordance with the laws of the state applicable to marital dissolution proceedings. Following that characterization, the debt or debts shall be allocated as follows: (1) Separate debts of either spouse shall be allocated to that spouse's separate property assets, and community debts shall be allocated to the spouses' community property assets. (2) If a separate property asset of either spouse is subject to a secured debt that is characterized as that spouse's separate debt, and the net equity in that asset available to satisfy that secured debt is less than that secured debt, the unsatisfied portion of that secured debt shall be treated as an unsecured separate debt of that spouse and allocated to the net value of that spouse's other separate property assets. (3) If the net value of either spouse's separate property assets is less than that spouse's unsecured separate debt or debts, the unsatisfied portion of the debt or debts shall be allocated to the net value of that spouse's one-half share of the community property assets. If the net value of that spouse's one-half share of the community property assets is less than that spouse's unsatisfied unsecured separate debt or debts, the remaining unsatisfied portion of the debt or debts shall be allocated to the net value of the other spouse's one-half share of the community property assets. (4) If a community property asset is subject to a secured debt that is characterized as a community debt, and the net equity in that asset available to satisfy that secured debt is less than that secured debt, the unsatisfied portion of that secured debt shall be treated as an unsecured community debt and allocated to the net value of the other community property assets. (5) If the net value of the community property assets is less than the unsecured community debt or debts, the unsatisfied portion of the debt or debts shall be allocated equally between the separate property assets of the deceased settlor and the surviving spouse. If the net value of either spouse's separate property assets is less than that spouse's share of the unsatisfied portion of the unsecured community debt or debts, the remaining unsatisfied portion of the debt or debts shall be allocated to the net value of the other spouse' s separate property assets. (c) For purposes of this section: (1) The net value of either spouse's separate property asset shall refer to its fair market value as of the date of the deceased settlor's death, minus the date-of-death balance of any liens and encumbrances on that asset that have been characterized as that spouse's separate debts. (2) The net value of a community property asset shall refer to its fair market value as of the date of the deceased settlor's death, minus the date-of-death balance of any liens and encumbrances on that asset that have been characterized as community debts. (3) In the case of a nonrecourse debt, the amount of that debt shall be limited to the net equity in the collateral, based on the fair market value of the collateral as of the date of the decedent's death, that is available to satisfy that debt. For the purposes of this paragraph, "nonrecourse debt" means a debt for which the debtor' s obligation to repay is limited to the collateral securing the debt, and for which a deficiency judgment against the debtor is not permitted by law. (d) Notwithstanding the foregoing provisions of this section, the court may order a different allocation of debts between the deceased settlor's probate estate, trust, and the surviving spouse if the court finds a different allocation to be equitable under the circumstances. (e) Nothing contained in this section is intended to impair or affect the rights of third parties. If a trustee, a personal representative, if any, of a deceased settlor's probate estate, or the surviving spouse incurs any damages or expense, including attorney's fees, on account of the nonpayment of a debt that was allocated to the other party pursuant to subdivision (b), or as the result of a debt being misallocated due to fraud or intentional misrepresentation by the other party, the party incurring damages shall be entitled to recover from the other party for damages or expense deemed reasonable by the court that made the allocation.


19325. On making a determination as provided in this chapter, the court shall make an order that: (a) Directs the trustee to make payment of the amounts allocated to the trust by payment to the surviving spouse or creditors. (b) Directs the trustee to charge amounts allocated to the surviving spouse against any property or interests of the surviving spouse that are in the possession or control of the trustee. To the extent that property or interests of the surviving spouse in the possession or control of the trustee are insufficient to satisfy the allocation, the court order shall summarily direct the surviving spouse to pay the allocation to the trustee.


19326. Notwithstanding any other statute, funeral expenses and expenses of last illness, in the absence of specific provisions in a will or trust to the contrary, shall be charged against the deceased settlor's probate estate and thereafter, against the deceased settlor' s share of the trust and shall not be allocated to or charged against, the community share of the surviving spouse, whether or not the surviving spouse is financially able to pay the expenses and whether or not the surviving spouse or any other person is also liable for the expenses.


Chapter 11. Liability Of Settlor's Surviving Spouse

Ca Codes (prob:19330) Probate Code Section 19330



19330. If proceedings are commenced under this part for the settlement of claims against the trust, and the time for filing claims has commenced, any action upon the liability of the surviving spouse under Chapter 3 (commencing with Section 13550) is barred to the same extent as provided for claims under this part, except as to the following: (a) Any creditor who commences judicial proceedings to enforce a claim and serves the surviving spouse with the complaint prior to the expiration of the time for filing claims. (b) Any creditor who has or who secures the surviving spouse's acknowledgment in writing of the liability of the surviving spouse for the claim. (c) Any creditor who files a timely claim in the proceedings for the administration of the estate of the deceased spouse.


Chapter 12. Distributee Liability

Ca Codes (prob:19400-19403) Probate Code Section 19400-19403



19400. Subject to Section 366.2 of the Code of Civil Procedure, if there is no proceeding to administer the estate of the deceased settlor, and if the trustee does not file a proposed notice to creditors pursuant to Section 19003 and does not publish notice to creditors pursuant to Chapter 3 (commencing with Section 19040), then a beneficiary of the trust to whom payment, delivery, or transfer of the deceased settlor's property is made pursuant to the terms of the trust is personally liable, to the extent provided in Section 19402, for the unsecured claims of the creditors of the deceased settlor's estate.

19401. Subject to Section 19402, if the trustee filed a proposed notice to creditors pursuant to Section 19003 and published notice to creditors pursuant to Section 19040, and if the identity of the creditor was known to, or reasonably ascertainable by, the trustee within four months of the first publication of notice pursuant to Section 19040, then a person to whom property is distributed is personally liable for the claim of the creditor, without a claim first having been filed, if all of the following conditions are satisfied: (a) The claim of the creditor was not merely conjectural. (b) Notice to the creditor was not given to the creditor under Chapter 4 (commencing with Section 19050) and neither the creditor nor the attorney representing the creditor in the matter had actual knowledge of the administration of the trust estate sooner than one year after the date of first publication of notice pursuant to Section 19040. (c) The statute of limitations applicable to the claim under Section 366.2 of the Code of Civil Procedure has not expired at the time of commencement of an action under this section.


19402. (a) In any action under this chapter, subject to Section 366.2 of the Code of Civil Procedure, the distributee may assert any defenses, cross-complaints, or setoffs that would have been available to the deceased settlor if the settlor had not died. (b) Personal liability under this chapter is applicable only to the extent the claim of the creditor cannot be satisfied out of the trust estate of the deceased settlor and is limited to a pro rata portion of the claim of the creditor, based on the proportion that the value of the property distributed to the person out of the trust estate bears to the total value of all property distributed to all persons out of the trust estate. Personal liability under this chapter for all claims of all creditors shall not exceed the value of the property distributed to the person out of the trust estate. As used in this chapter, the value of the property is the fair market value of the property on the date of its distribution, less the amount of any liens and encumbrances on the property at that time.


19403. Nothing in this chapter affects the rights of a purchaser or encumbrancer of property in good faith and for value from a person who is personally liable under this section.


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