text:
(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.

history: (History: Added by Stats. 2003, Ch. 585, Sec. 1. Effective January 1, 2004.)

article: 1. Trustee’s Duties in General


kind: section

code: PROB

citation: PROB § 16005

text: 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.

history: (History: Enacted by Stats. 1990, Ch. 79.)

division: 9. TRUST LAW

part: 4. TRUST ADMINISTRATION

chapter: 1. Duties of Trustees

article: 1. Trustee’s Duties in General

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 1. Duties of Trustees > 1. Trustee’s Duties in General


citation: PROB § 16006

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

article: 1. Trustee’s Duties in General


citation: PROB § 16007

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

article: 1. Trustee’s Duties in General


citation: PROB § 16009

text:
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.

article: 1. Trustee’s Duties in General


citation: PROB § 16010

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

article: 1. Trustee’s Duties in General


citation: PROB § 16011

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

article: 1. Trustee’s Duties in General


citation: PROB § 16012

text:
(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.

history: (History: Amended by Stats. 1995, Ch. 63, Sec. 3. Effective January 1, 1996.)

article: 1. Trustee’s Duties in General


citation: PROB § 16013

text:
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.

article: 1. Trustee’s Duties in General


citation: PROB § 16014

text:
(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.

article: 1. Trustee’s Duties in General


citation: PROB § 16015

text: 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: 1. Trustee’s Duties in General


citation: PROB § 16040

text:
(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).

history: (History: Amended by Stats. 1995, Ch. 63, Sec. 4. Effective January 1, 1996.)

article: 2. Trustee’s Standard of Care

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 1. Duties of Trustees > 2. Trustee’s Standard of Care


citation: PROB § 16041

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

article: 2. Trustee’s Standard of Care


citation: PROB § 16042

text:
(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.

history: (History: Added by Stats. 1997, Ch. 93, Sec. 4. Effective January 1, 1998.)

article: 2. Trustee’s Standard of Care


citation: PROB § 16045

text: 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.

history: (History: Added by Stats. 1995, Ch. 63, Sec. 6. Effective January 1, 1996.)

article: 2.5. Uniform Prudent Investor Act

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 1. Duties of Trustees > 2.5. Uniform Prudent Investor Act


citation: PROB § 16046

text:
(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.

article: 2.5. Uniform Prudent Investor Act


citation: PROB § 16047

text:
(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.

article: 2.5. Uniform Prudent Investor Act


citation: PROB § 16048

text: 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.

article: 2.5. Uniform Prudent Investor Act


citation: PROB § 16049

text: 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.

article: 2.5. Uniform Prudent Investor Act


citation: PROB § 16050

text: 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.

article: 2.5. Uniform Prudent Investor Act


citation: PROB § 16051

text: 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.

article: 2.5. Uniform Prudent Investor Act


citation: PROB § 16052

text:
(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.

article: 2.5. Uniform Prudent Investor Act


citation: PROB § 16053

text: 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.”

article: 2.5. Uniform Prudent Investor Act


citation: PROB § 16054

text: 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: 2.5. Uniform Prudent Investor Act


citation: PROB § 16060

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

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 1. Duties of Trustees > 3. Trustee’s Duty to Report Information and Account to Beneficiaries


text: 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.

history: (History: Amended by Stats. 2000, Ch. 34, Sec. 2. Effective January 1, 2001.)

article: 3. Trustee’s Duty to Report Information and Account to Beneficiaries


text: 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.

history: (History: Added by Stats. 2010, Ch. 621, Sec. 2. (SB 202) Effective January 1, 2011.)


citation: PROB § 16061

text: 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.

history: (History: Amended by Stats. 2010, Ch. 621, Sec. 3. (SB 202) Effective January 1, 2011.)


text:
(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.

history: (History: Amended by Stats. 2010, Ch. 621, Sec. 4. (SB 202) Effective January 1, 2011.)


text:
(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 any of the methods described in Section 1215 to the last known address.

(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, 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 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.

history: (History: Amended by Stats. 2017, Ch. 319, Sec. 87. (AB 976) Effective January 1, 2018.)


text: A person upon whom the notification by the trustee is served pursuant to paragraph (1) of subdivision (a) of Section 16061.7, whether the notice is served on the person within or after the time period set forth in subdivision (f) of Section 16061.7, shall not bring an action to contest the trust more than 120 days from the date the notification by the trustee is served upon the person, or 60 days from the date on which a copy of the terms of the trust is delivered pursuant to Section 1215 to the person during that 120-day period, whichever is later.

history: (History: Amended by Stats. 2022, Ch. 30, Sec. 1. (AB 1745) Effective January 1, 2023.)


text:
(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 delivered notice pursuant to Section 1215 to the heir at the heir’s last 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.

history: (History: Amended by Stats. 2017, Ch. 319, Sec. 89. (AB 976) Effective January 1, 2018.)


citation: PROB § 16062

text:
(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 either of the following:

(1) A disqualified person as defined in former Section 21350.5 (as repealed by Chapter 620 of the Statutes of 2010).

(2) Described in subdivision (a) of Section 21380, but not described in Section 21382.

history: (History: Amended by Stats. 2016, Ch. 86, Sec. 250. (SB 1171) Effective January 1, 2017.)


citation: PROB § 16063

text:
(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.

history: (History: Repealed and added by Stats. 1997, Ch. 724, Sec. 26. Effective January 1, 1998.)


citation: PROB § 16064

text:
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.

history: (History: Amended by Stats. 2010, Ch. 621, Sec. 7. (SB 202) Effective January 1, 2011.)


citation: PROB § 16068

text:
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.

history: (History: Added by Stats. 2010, Ch. 621, Sec. 8. (SB 202) Effective January 1, 2011.)


citation: PROB § 16069

text:
(a) The trustee is not required to account to the beneficiary, provide the terms of the trust to a beneficiary, or provide requested information to the beneficiary pursuant to Section 16061, in any of the following circumstances:

(1) In the case of a beneficiary of a revocable trust, as provided in subdivision (a) of Section 15800, for the period when the trust may be revoked.

(2) If the beneficiary and the trustee are the same person.

(b) Notwithstanding subdivision (a), in the case of a revocable trust, if no person holding the power to revoke the trust, in whole or in part, is competent, the trustee’s duties to account shall be owed to those beneficiaries specified in paragraph (2) of subdivision (b) of Section 15800.

history: (History: Amended by Stats. 2021, Ch. 749, Sec. 2. (AB 1079) Effective January 1, 2022.)


citation: PROB § 16080

text: 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.

history: (History: Enacted by Stats. 1990, Ch. 79.)

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 1. Duties of Trustees > 4. Duties With Regard to Discretionary Powers


citation: PROB § 16081

text:
(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.

history: (History: Amended by Stats. 1996, Ch. 410, Sec. 1. Effective January 1, 1997.)

article: 4. Duties With Regard to Discretionary Powers


citation: PROB § 16082

text: 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.


citation: PROB § 16100

text:
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.

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 1. Duties of Trustees > 5. Duties of Trustees of Private Foundations, Charitable Trusts, and Split-Interest Trusts


citation: PROB § 16101

text: 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.

article: 5. Duties of Trustees of Private Foundations, Charitable Trusts, and Split-Interest Trusts


citation: PROB § 16102

text:
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.


citation: PROB § 16103

text:
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.


citation: PROB § 16104

text: 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.


citation: PROB § 16105

text:
(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.


citation: PROB § 16110

text:
(a) On and after January 1, 2025, or upon the regulations provided for in subdivision (b) taking effect, whichever occurs first, a trustee holding assets subject to a charitable trust shall give written notice to the Attorney General at least 20 days before the trustee sells, leases, conveys, exchanges, transfers, or otherwise disposes of all or substantially all of the charitable assets.

(b) On or after January 1, 2022, the Attorney General shall establish rules and regulations necessary to administer this section.

history: (History: Added by renumbering Section 16106 by Stats. 2023, Ch. 478, Sec. 60. (AB 1756) Effective January 1, 2024.)

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 1. Duties of Trustees > 6. Notice to the Attorney General of Disposal of Charitable Assets


citation: PROB § 16200

text:
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.

history: (History: Amended by Stats. 1995, Ch. 63, Sec. 7. Effective January 1, 1996.)

chapter: 2. Powers of Trustees

article: 1. General Provisions

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 2. Powers of Trustees > 1. General Provisions


citation: PROB § 16201

text: 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.

article: 1. General Provisions


citation: PROB § 16202

text: 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.

article: 1. General Provisions


citation: PROB § 16203

text: 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: 1. General Provisions


citation: PROB § 16220

text: 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.

article: 2. Specific Powers of Trustees

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 2. Powers of Trustees > 2. Specific Powers of Trustees


citation: PROB § 16221

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

article: 2. Specific Powers of Trustees


citation: PROB § 16222

text:
(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.

article: 2. Specific Powers of Trustees


citation: PROB § 16224

text:
(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.

article: 2. Specific Powers of Trustees


citation: PROB § 16225

text:
(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.

article: 2. Specific Powers of Trustees


citation: PROB § 16226

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

article: 2. Specific Powers of Trustees


citation: PROB § 16227

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16228

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16229

text:
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.

article: 2. Specific Powers of Trustees


citation: PROB § 16230

text:
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.

article: 2. Specific Powers of Trustees


citation: PROB § 16231

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16232

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16233

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16234

text:
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.

article: 2. Specific Powers of Trustees


citation: PROB § 16235

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

article: 2. Specific Powers of Trustees


citation: PROB § 16236

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

article: 2. Specific Powers of Trustees


citation: PROB § 16237

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16238

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16239

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16240

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16241

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16242

text:
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.

article: 2. Specific Powers of Trustees


citation: PROB § 16243

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16244

text:
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.

article: 2. Specific Powers of Trustees


citation: PROB § 16245

text: 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.

history: (History: Amended by Stats. 1996, Ch. 862, Sec. 39. Effective January 1, 1997.)

article: 2. Specific Powers of Trustees


citation: PROB § 16246

text: 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.

history: (History: Amended by Stats. 1998, Ch. 682, Sec. 12. Effective January 1, 1999.)

article: 2. Specific Powers of Trustees


citation: PROB § 16247

text: 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.

history: (History: Amended by Stats. 1994, Ch. 806, Sec. 38. Effective January 1, 1995.)

article: 2. Specific Powers of Trustees


citation: PROB § 16248

text: 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.

article: 2. Specific Powers of Trustees


citation: PROB § 16249

text: 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.

history: (History: Amended by Stats. 2001, Ch. 49, Sec. 5. Effective January 1, 2002.)

article: 2. Specific Powers of Trustees


citation: PROB § 16320

text: This section shall be known, and may be cited, as the Uniform Fiduciary Income and Principal Act.

history: (History: Repealed and added by Stats. 2023, Ch. 28, Sec. 2. (SB 522) Effective January 1, 2024.)

article: 1. General Provisions and Definitions

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 3. Uniform Fiduciary Income and Principal Act > 1. General Provisions and Definitions


citation: PROB § 16321

text:
The following definitions apply for purposes of this chapter:

(a) “Accounting period” means a calendar year, unless a fiduciary selects another period of 12 calendar months or approximately 12 calendar months. The term includes a part of a calendar year or another period of 12 calendar months or approximately 12 calendar months that begins when an income interest begins or ends when an income interest ends.

(b) “Asset-backed security” means a security that is serviced primarily by the money flows of a discrete pool of fixed or revolving receivables or other financial assets that by their terms convert into money within a finite time. The term includes rights or other assets that ensure the servicing or timely distribution of proceeds to the holder of the asset-backed security. The term does not include an asset to which Section 16340, 16348, or 16353 applies.

(c) “Beneficiary” includes the following:

(1) For a trust:

(A) A current beneficiary, including a current income beneficiary and a beneficiary that may receive only principal.

(B) A remainder beneficiary.

(C) Any other successor beneficiary.

(2) For an estate, an heir, legatee, and devisee.

(3) For a life estate or term interest, a person that holds a life estate, term interest, or remainder or other interest following a life estate or term interest.

(d) “Court” means the court in this state having jurisdiction relating to a trust, estate, or life estate or other term interest described in subdivision (b) of Section 16322.

(e) “Current income beneficiary” means a beneficiary to which a fiduciary may distribute net income, whether or not the fiduciary also may distribute principal to the beneficiary.

(f) “Distribution” means a payment or transfer by a fiduciary to a beneficiary in the beneficiary’s capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiary’s right to receive the payment or transfer under the terms of the trust. “Distribute,” “distributed,” and “distributee” have corresponding meanings.

(g) “Estate” means a decedent’s estate, and includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration.

(h) “Fiduciary” includes a trustee, personal representative, life tenant, holder of a term interest, and person acting under a delegation from a fiduciary. “Fiduciary” includes a person that holds property for a successor beneficiary whose interest may be affected by an allocation of receipts and expenditures between income and principal. If there are two or more cofiduciaries, the term includes all cofiduciaries acting under the terms of the trust and applicable law.

(i) “Income” means money or other property a fiduciary receives as current return from principal. The term includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 4 (commencing with Section 16340).

(j) “Income interest” means the right of a current income beneficiary to receive all or part of net income, whether the terms of the trust require the net income to be distributed or authorize the net income to be distributed in the fiduciary’s discretion. The term includes the right of a current beneficiary to use property held by a fiduciary.

(k) “Independent person” means a person that is not:

(1) For a trust, any of the following:

(A) A beneficiary that is a distributee or permissible distributee of trust income or principal or would be a distributee or permissible distributee of trust income or principal if either the trust or the interests of the distributees or permissible distributees of trust income or principal were terminated, assuming no power of appointment is exercised.

(B) A settlor of the trust.

(C) An individual whose legal obligation to support a beneficiary may be satisfied by a distribution from the trust.

(2) For an estate, a beneficiary.

(3) A spouse, parent, brother, sister, or issue of an individual described in paragraph (1) or (2).

(4) A corporation, partnership, limited liability company, or other entity in which persons described in paragraphs (1) to (3), inclusive, in the aggregate, have voting control.

(5) An employee of a person described in paragraphs (1) to (4), inclusive.

(l) “Mandatory income interest” means the right of a current income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.

(m) “Net income” means the total allocations during an accounting period to income under the terms of a trust and this chapter minus the disbursements during the period, other than distributions, allocated to income under the terms of the trust and this chapter. To the extent the trust is a unitrust under Article 3 (commencing with Section 16330), the term means the unitrust amount determined under that article. The term includes an adjustment from principal to income under Section 16327. The term does not include an adjustment from income to principal under Section 16327.

(n) “Person” means an individual, estate, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.

(o) “Personal representative” means an executor, administrator, successor personal representative, special administrator, or person that performs substantially the same function with respect to an estate under the law governing the person’s status.

(p) “Principal” means property held in trust for distribution to, production of income for, or use by a current or successor beneficiary.

(q) “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.

(r) “Settlor” means a person, including a testator, that creates or contributes property to a trust. If more than one person creates or contributes property to a trust, the term includes each person, to the extent of the trust property attributable to that person’s contribution, except to the extent another person has the power to revoke or withdraw that portion.

(s) “Special tax benefit” means any of the following:

(1) Exclusion of a transfer to a trust from gifts described in Section 2503(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2503(b), as amended) because of the qualification of an income interest in the trust as a present interest in property.

(2) Status as a qualified subchapter S-trust described in Section 1361(d)(3) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 1361(d)(3), as amended), at a time the trust holds stock of an S-corporation described in Section 1361(a)(1) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 1361(a)(1), as amended).

(3) An estate or gift tax marital deduction for a transfer to a trust under Section 2056 or 2523 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2056 or 2523, as amended), which depends or depended, in whole or in part, on the right of the settlor’s spouse to receive the net income of the trust.

(4) Exemption in whole or in part of a trust from the federal generation-skipping transfer tax imposed by Section 2601 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2601, as amended) because the trust was irrevocable on September 25, 1985, if there is a possibility of any of the following:

(A) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2612(b), as amended), could be made from the trust.

(B) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended, (26 U.S.C. Sec. 2612(a), as amended), could occur with respect to the trust.

(C) An inclusion ratio, as defined in Section 2642(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2642(a), as amended), of the trust that is less than one, if there is any possibility of any of the following:

(i) A taxable distribution, as defined in Section 2612(b) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2612(b), as amended), could be made from the trust.

(ii) A taxable termination, as defined in Section 2612(a) of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 2612(a), as amended), could occur with respect to the trust.

(t) “Successive interest” means the interest of a successor beneficiary.

(u) “Successor beneficiary” means a person entitled to receive income or principal or to use property when an income interest or other current interest ends.

(v) “Terms of a trust” means any of the following:

(1) (A) For a trust, 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.

(B) “Terms of a 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.

(C) “Terms of a trust” does not include documents that were intended to affect disposition only while the trust was revocable. If a trust has been completely restated, “terms of a trust” does not include trust instruments or amendments that are superseded by the last restatement before the settlor’s death, but it does include amendments executed after the restatement. “Terms of a trust” also includes any document irrevocably exercising a power of appointment over the trust or over any portion of the trust that has become irrevocable.

(2) For an estate, a will.

(3) For a life estate or term interest, the corresponding manifestation of the rights of the beneficiaries.

(w) (1) “Trust” includes both of the following:

(A) An express trust, private or charitable, with additions to the trust, wherever and however created.

(B) A trust created or determined by judgment or decree under which the trust is to be administered in the manner of an express trust.

(2) “Trust” does not include any of the following:

(A) A constructive trust.

(B) A resulting trust, conservatorship, guardianship, multiparty account, custodial arrangement for a minor, business trust, voting trust, security arrangement, liquidation trust, or trust for the primary purpose of paying debts, dividends, interest, salaries, wages, profits, pensions, retirement benefits, or employee benefits of any kind.

(C) An arrangement under which a person is a nominee, escrowee, or agent for another.

(x) “Trustee” means a person, other than a personal representative, that owns or holds property for the benefit of a beneficiary. The term includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court.

(y) “Will” means a testamentary instrument recognized by applicable law that makes a legally effective disposition of an individual’s property, effective at the individual’s death. “Will” includes a codicil or other amendment to a testamentary instrument.

chapter: 3. Uniform Fiduciary Income and Principal Act

article: 1. General Provisions and Definitions


citation: PROB § 16322

text:
Except as otherwise provided in the terms of a trust or this chapter, this chapter applies to the following:

(a) A trust or an estate.

(b) A life estate or other term interest in which the interest of one or more persons will be succeeded by the interest of one or more other persons.

article: 1. General Provisions and Definitions


citation: PROB § 16323

text: Except as otherwise provided in the terms of a trust or this chapter, this chapter applies when this state is the principal place of administration of a trust or estate or the situs of property that is not held in a trust or estate and is subject to a life estate or other term interest described in subdivision (b) of Section 16322. By accepting the trusteeship of a trust having its principal place of administration in this state or by moving the principal place of administration of a trust to this state, the trustee submits to the application of this chapter to any matter within the scope of this chapter involving the trust.

article: 1. General Provisions and Definitions


citation: PROB § 16325

text:
(a) In making an allocation or determination or exercising discretion under this chapter, all of the following apply:

(1) A fiduciary shall act in good faith, based on what is fair and reasonable to all beneficiaries.

(2) A fiduciary 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.

(3) A fiduciary 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.

(4) A fiduciary 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.

(b) A fiduciary’s allocation, determination, or exercise of discretion under this chapter is presumed to be fair and reasonable to all beneficiaries. A fiduciary may exercise a discretionary power of administration given to the fiduciary by the terms of the trust, and an exercise of the power that produces a result different from a result required or permitted by this chapter does not create an inference that the fiduciary abused the fiduciary’s discretion.

(c) A fiduciary shall do both of the following:

(1) Add a receipt to principal, to the extent neither the terms of the trust nor this chapter allocates the receipt between income and principal.

(2) Charge a disbursement to principal, to the extent neither the terms of the trust nor this chapter allocates the disbursement between income and principal.

(d) A fiduciary may exercise the power to adjust under Section 16327, convert an income trust to a unitrust under paragraph (1) of subdivision (a) of Section 16332, change the percentage or method used to calculate a unitrust amount under paragraph (2) of subdivision (a) of Section 16332, or convert a unitrust to an income trust under paragraph (3) of subdivision (a) of Section 16332, if the fiduciary determines the exercise of the power will assist the fiduciary to administer the trust or estate impartially.

(e) Factors the fiduciary shall consider in making the determination under subdivision (d) include all of the following:

(1) The terms of the trust.

(2) The nature, distribution standards, and expected duration of the trust.

(3) The effect of the allocation rules, including specific adjustments between income and principal, under Article 4 (commencing with Section 16340) to Article 7 (commencing with Section 16375), inclusive.

(4) The desirability of liquidity and regularity of income.

(5) The desirability of the preservation and appreciation of principal.

(6) The extent to which an asset is used or may be used by a beneficiary.

(7) The increase or decrease in the value of principal assets, reasonably determined by the fiduciary.

(8) Whether and to what extent the terms of the trust give the fiduciary power to accumulate income or invade principal or prohibit the fiduciary from accumulating income or invading principal.

(9) The extent to which the fiduciary has accumulated income or invaded principal in preceding accounting periods.

(10) The effect of current and reasonably expected economic conditions.

(11) The reasonably expected tax consequences of the exercise of the power.

article: 2. Fiduciary Duties and Judicial Review

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 3. Uniform Fiduciary Income and Principal Act > 2. Fiduciary Duties and Judicial Review


citation: PROB § 16326

text:
(a) For purposes of this section, “fiduciary decision” means any of the following:

(1) A fiduciary’s allocation between income and principal or another determination regarding income and principal required or authorized by the terms of the trust or this chapter.

(2) The fiduciary’s exercise or nonexercise of a discretionary power regarding income and principal granted by the terms of the trust or this chapter, including the power to adjust under Section 16327, convert an income trust to a unitrust under paragraph (1) of subdivision (a) of Section 16332, change the percentage or method used to calculate a unitrust amount under paragraph (2) of subdivision (a) of Section 16332, or convert a unitrust to an income trust under paragraph (3) of subdivision (a) of Section 16332.

(3) The fiduciary’s implementation of a decision described in paragraph (1) or (2).

(b) The court may not order a fiduciary to change a fiduciary decision unless the court determines that the fiduciary decision was an abuse of the fiduciary’s discretion.

(c) If the court determines that a fiduciary decision was an abuse of the fiduciary’s discretion, the court may order a remedy authorized by law. To place the beneficiaries in the positions the beneficiaries would have occupied if there had not been an abuse of the fiduciary’s discretion, the court may order any of the following:

(1) The fiduciary to exercise or refrain from exercising the power to adjust under Section 16327.

(2) The fiduciary to exercise or refrain from exercising the power to convert an income trust to a unitrust under paragraph (1) of subdivision (a) of Section 16332, change the percentage or method used to calculate a unitrust amount under paragraph (2) of subdivision (a) of Section 16332, or convert a unitrust to an income trust under paragraph (3) of subdivision (a) of Section 16332.

(3) The fiduciary to distribute an amount to a beneficiary.

(4) A beneficiary to return some or all of a distribution.

(5) The fiduciary to withhold an amount from one or more future distributions to a beneficiary.

(6) Upon a petition by a fiduciary for instruction, the court may determine whether a proposed fiduciary decision will result in an abuse of the fiduciary’s discretion. If the petition describes the proposed decision, contains sufficient information to inform the beneficiary of the reasons for making the proposed decision and the facts on which the fiduciary relies, and explains how the beneficiary will be affected by the proposed decision, a beneficiary that opposes the proposed decision has the burden to establish that it will result in an abuse of the fiduciary’s discretion.

article: 2. Fiduciary Duties and Judicial Review


citation: PROB § 16327

text:
(a) Except as otherwise provided in the terms of a trust or this section, a fiduciary, in a record, without court approval, may adjust between income and principal if the fiduciary determines the exercise of the power to adjust will assist the fiduciary in administering the trust or estate impartially.

(b) This section does not create a duty to exercise or consider the power to adjust under subdivision (a) or to inform a beneficiary about the applicability of this section.

(c) A fiduciary that in good faith exercises or fails to exercise the power to adjust under subdivision (a) is not liable to a person affected by the exercise or failure to exercise.

(d) In deciding whether and to what extent to exercise the power to adjust under subdivision (a), a fiduciary shall consider all factors the fiduciary considers relevant, including relevant factors in subdivision (e) of Section 16325 and the application of subdivision (i) of Section 16340 and Sections 16347 and 16352.

(e) A fiduciary may not exercise the power under subdivision (a) to make an adjustment or under Section 16347 to make a determination that an allocation is insubstantial under any of the following circumstances:

(1) The adjustment or determination would reduce the amount payable to a current income beneficiary from a trust that qualifies for a special tax benefit, except to the extent the adjustment is made to provide for a reasonable apportionment of the total return of the trust between the current income beneficiary and successor beneficiaries.

(2) The adjustment or determination would change the amount payable to a beneficiary, as a fixed annuity or a fixed fraction of the value of the trust assets, under the terms of the trust.

(3) The adjustment or determination would reduce an amount that is permanently set aside for a charitable purpose under the terms of the trust, unless both income and principal are set aside for the charitable purpose.

(4) Possessing or exercising the power would cause a person to be treated as the owner of all or part of the trust for federal income tax purposes.

(5) Possessing or exercising the power would cause all or part of the value of the trust assets to be included in the gross estate of an individual for federal estate tax purposes.

(6) Possessing or exercising the power would cause an individual to be treated as making a gift for federal gift tax purposes.

(7) The fiduciary is not an independent person.

(8) The trust is irrevocable and provides for income to be paid to the settlor and possessing or exercising the power would cause the adjusted principal or income to be considered an available resource or available income under a public benefit program.

(9) The trust is a unitrust under Article 3.

(f) If paragraph (4), (5), (6), or (7) of subdivision (e) applies to a fiduciary:

(1) A cofiduciary to which paragraph (4), (5), (6), or (7) of subdivision (e) does not apply may exercise the power to adjust, unless the exercise of the power by the remaining cofiduciary or cofiduciaries is not permitted by the terms of the trust or law other than this chapter.

(2) If there is no cofiduciary to which paragraph (4), (5), (6), or (7) of subdivision (e) does not apply, the fiduciary may appoint a cofiduciary to which paragraph (4), (5), (6), or (7) of subdivision (e) does not apply, which may be a special fiduciary with limited powers, and the appointed cofiduciary may exercise the power to adjust under subdivision (a), unless the appointment of a cofiduciary or the exercise of the power by a cofiduciary is not permitted by the terms of the trust or law other than this chapter.

(g) A fiduciary may release or delegate to a cofiduciary the power to adjust under subdivision (a) if the fiduciary determines that the fiduciary’s possession or exercise of the power will or may do either of the following:

(1) Cause a result described in paragraphs (1) to (6), inclusive, or (8) of subdivision (e).

(2) Deprive the trust of a tax benefit or impose a tax burden not described in paragraphs (1) to (6), inclusive, of subdivision (e).

(h) A fiduciary’s release or delegation to a cofiduciary under subdivision (g) of the power to adjust pursuant to subdivision (a):

(1) Shall be in a record.

(2) Applies to the entire power, unless the release or delegation provides a limitation, which may be a limitation to the power to make any of the following adjustments:

(A) From income to principal.

(B) From principal to income.

(C) For specified property.

(D) In specified circumstances.

(3) For a delegation, may be modified by a redelegation under this subdivision by the cofiduciary to which the delegation is made.

(4) Subject to paragraph (3), is permanent, unless the release or delegation provides a specified period, including a period measured by the life of an individual or the lives of more than one individual.

(i) Terms of a trust that deny or limit the power to adjust between income and principal do not affect the application of this section, unless the terms of the trust expressly deny or limit the power to adjust under subdivision (a).

(j) The exercise of the power to adjust under subdivision (a) in any accounting period may apply to the current period, the immediately preceding period, and one or more subsequent periods.

(k) A description of the exercise of the power to adjust under subdivision (a) shall be either of the following:

(1) Included in a report, if any, sent to beneficiaries.

(2) Communicated at least annually to all beneficiaries that receive or are entitled to receive income from the trust or would be entitled to receive a distribution of principal if the trust were terminated at the time the notice is sent, assuming no power of appointment is exercised.

article: 2. Fiduciary Duties and Judicial Review


citation: PROB § 16330

text:
The following definitions apply for purposes of this article:

(a) “Applicable value” means the amount of the net fair market value of a trust taken into account under Section 16336.

(b) “Express unitrust” means a trust for which, under the terms of the trust without regard to this article, income or net income shall or may be calculated as a unitrust amount.

(c) “Income trust” means a trust that is not a unitrust.

(d) “Net fair market value of a trust” means the fair market value of the assets of the trust, less the noncontingent liabilities of the trust.

(e) “Unitrust” means a trust for which net income is a unitrust amount. The term includes an express unitrust.

(f) “Unitrust amount” means an amount computed by multiplying a determined value of a trust by a determined percentage. For a unitrust administered under a unitrust plan, the term means the applicable value, multiplied by the unitrust rate.

(g) “Unitrust plan” means a plan described in Sections 16334 to 16338, inclusive, and adopted pursuant to Section 16332.

(h) “Unitrust rate” means the rate used to compute the unitrust amount under subdivision (f) for a unitrust administered under a unitrust plan.

history: (History: Added by Stats. 2023, Ch. 28, Sec. 2. (SB 522) Effective January 1, 2024.)

article: 3. Unitrust

path: 9. TRUST LAW > 4. TRUST ADMINISTRATION > 3. Uniform Fiduciary Income and Principal Act > 3. Unitrust


citation: PROB § 16331

text:
(a) Except as otherwise provided in subdivision (b), this article applies to both of the following:

(1) An income trust, unless the terms of the trust expressly prohibit use of this article by a specific reference to this article or an explicit expression of intent that net income not be calculated as a unitrust amount.

(2) An express unitrust, except to the extent the terms of the trust explicitly do any of the following:

(A) Prohibit use of this article by a specific reference to this article.

(B) Prohibit conversion to an income trust.

(C) Limit changes to the method of calculating the unitrust amount.

(b) This article does not apply to a trust described in Section 170(f)(2)(B), 642(c)(5), 664(d), 2702(a)(3)(A)(ii) or (iii), or 2702(b) of the Internal Revenue Code of 1986 (26 U.S.C. Secs. 170(f)(2)(B), 642(c)(5), 664(d), 2702(a)(3)(A)(ii) or (iii), or 2702(b)).

(c) An income trust to which this article applies under paragraph (1) of subdivision (a) may be converted to a unitrust under this article regardless of the terms of the trust concerning distributions. Conversion to a unitrust under this article does not affect other terms of the trust concerning distributions of income or principal.

(d) This article applies to an estate only to the extent a trust is a beneficiary of the estate. To the extent of the trust’s interest in the estate, the estate may be administered as a unitrust, the administration of the estate as a unitrust may be discontinued, or the percentage or method used to calculate the unitrust amount may be changed, in the same manner as for a trust under this article.

(e) This article does not create a duty to take or consider action under this article or to inform a beneficiary about the applicability of this article.

(f) A fiduciary that in good faith takes or fails to take an action under this article is not liable to a person affected by the action or inaction.

article: 3. Unitrust


citation: PROB § 16332

text:
(a) A fiduciary, without court approval, by complying with subdivisions (b) and (f), may do any of the following:

(1) Convert an income trust to a unitrust if the fiduciary creates in a record a unitrust plan for the trust providing for both of the following:

(A) That in administering the trust, the net income of the trust will be a unitrust amount rather than net income determined without regard to this article.

(B) The percentage and method used to calculate the unitrust amount.

(2) Change the percentage or method used to calculate a unitrust amount for a unitrust if the fiduciary implements in a record a unitrust plan or an amendment or replacement of a unitrust plan providing changes in the percentage or method used to calculate the unitrust amount.

(3) Convert a unitrust to an income trust if the fiduciary implements in a record a determination that, in administering the trust, the net income of the trust will be net income determined without regard to this article rather than a unitrust amount.

(b) A fiduciary may take an action under subdivision (a) if all of the following conditions are met:

(1) The fiduciary determines that the action will assist the fiduciary to administer a trust impartially.

(2) The fiduciary sends a notice in a record, in the manner required by Section 16333, describing and proposing to take the action.

(3) No beneficiary objects to the proposed action in a writing delivered to the trustee within the period prescribed by subdivision (d) of Section 16502.

(c) If a fiduciary receives, on or before the date stated in the notice under Section 16333, an objection in a record to a proposed action, the fiduciary or a beneficiary may request the court to have the proposed action taken as proposed, taken with modifications, or prevented. A person described in subdivision (a) of Section 16333 may oppose the proposed action in the proceeding under this subdivision, whether or not the person previously consented or objected.

(d) If, after sending a notice under paragraph (2) of subdivision (b), a fiduciary decides not to take the action proposed in the notice, the fiduciary shall notify in a record each person described in subdivision (a) of Section 16333 of the decision not to take the action and the reasons for the decision.

(e) If a beneficiary requests in a record that a fiduciary take an action described in subdivision (a) and the fiduciary declines to act or does not act within 90 days after receiving the request, the beneficiary may request the court to direct the fiduciary to take the action requested.

(f) In deciding whether and how to take an action authorized by subdivision (a), or whether and how to respond to a request by a beneficiary under subdivision (e), a fiduciary shall consider all factors relevant to the trust and the beneficiaries, including relevant factors in subdivision (e) of Section 16325.

(g) A fiduciary may release or delegate the power to convert an income trust to a unitrust under paragraph (1) of subdivision (a), change the percentage or method used to calculate a unitrust amount under paragraph (2) of subdivision (a), or convert a unitrust to an income trust under paragraph (3) of subdivision (a), for a reason described in subdivision (g) of Section 16327 and in the manner described in subdivision (h) of Section 16327.

article: 3. Unitrust


citation: PROB § 16333

text:
A notice required by paragraph (2) of subdivision (b) of Section 16332 shall be sent as required by Chapter 5 (commencing with Section 16500), including notice to a beneficiary who is a minor and to the minor’s guardian, if any, and shall include all of the following:

(a) The action proposed under paragraph (2) of subdivision (b) of Section 16332.

(b) For a conversion of an income trust to a unitrust, a copy of the unitrust plan adopted under paragraph (1) of subdivision (a) of Section 16332.

(c) For a change in the percentage or method used to calculate the unitrust amount, a copy of the unitrust plan or amendment or replacement of the unitrust plan adopted under paragraph (2) of subdivision (a) of Section 16332.

(d) A statement that the person to which the notice is sent may object to the proposed action by stating in a record the basis for the objection and sending or delivering the record to the fiduciary.

(e) The date by which an objection under subdivision (d) shall be received by the fiduciary, which shall be at least 30 days after the date the notice is sent.

(f) The date on which the action is proposed to be taken and the date on which the action is proposed to take effect.

(g) The name and contact information of the fiduciary.

(h) The name and contact information of a person who may be contacted for additional information.

article: 3. Unitrust


citation: PROB § 16334

text:
(a) In administering a unitrust under this article, a fiduciary shall follow a unitrust plan adopted under paragraph (1) or (2) of subdivision (a) of Section 16332, or amended or replaced under paragraph (2) of subdivision (a) of Section 16332.

(b) A unitrust plan shall provide all of the following:

(1) The unitrust rate or the method for determining the unitrust rate under Section 16335.

(2) The method for determining the applicable value under Section 16336.

(3) The rules described in Sections 16335 to 16338, inclusive, that apply in the administration of the unitrust, whether the rules are either of the following:

(A) Mandatory, as provided in subdivision (a) of Section 16336 or subdivision (a) of Section 16337.

(B) Optional, as provided in Section 16335, subdivision (b) of Section 16336, subdivision (b) of Section 16337, and subdivision (a) of Section 16338, to the extent the fiduciary elects to adopt those rules.

article: 3. Unitrust


citation: PROB § 16335

text:
(a) A unitrust rate may not be less than 3 percent, or greater than 5 percent, unless the unitrust plan has been approved by court order. If the unitrust plan has been approved by court order, any unitrust rate may be used. Except as otherwise provided in this subdivision and in paragraph (1) of subdivision (b) of Section 16338, a unitrust rate may be either of the following:

(1) A fixed unitrust interest rate.

(2) A unitrust rate that is determined for each period, using either of the following:

(A) A market index or other published data.

(B) A mathematical blend of market indices or other published data over a stated number of preceding periods.

(b) Except as otherwise provided in subdivision (a) of Section 16335 and paragraph (1) of subdivision (b) of Section 16338, a unitrust plan may provide any of the following:

(1) A limit on how high the unitrust rate determined under paragraph (2) of subdivision (a) may rise.

(2) A limit on how low the unitrust rate determined under paragraph (2) of subdivision (a) may fall.

(3) A limit on how much the unitrust rate determined under paragraph (2) of subdivision (a) may increase over the unitrust rate for the preceding period or a mathematical blend of unitrust rates over a stated number of preceding periods.

(4) A limit on how much the unitrust rate determined under paragraph (2) of subdivision (a) may decrease below the unitrust rate for the preceding period or a mathematical blend of unitrust rates over a stated number of preceding periods.

(5) A mathematical blend of any of the unitrust rates determined under paragraph (2) of subdivision (a) and paragraphs (1) to (4), inclusive, of this subdivision.

article: 3. Unitrust


citation: PROB § 16336

text:
(a) A unitrust plan shall provide the method for determining the fair market value of an asset for the purpose of determining the unitrust amount, including both of the following:

(1) The frequency of valuing the asset, which need not require a valuation in every period.

(2) The date for valuing the asset in each period in which the asset is valued.

(b) Except as otherwise provided in paragraph (2) of subdivision (b) of Section 16338, a unitrust plan may provide methods for determining the amount of the net fair market value of the trust to take into account in determining the applicable value, including all of the following:

(1) Obtaining an appraisal of an asset for which fair market value is not readily ascertainable.

(2) Exclusion of specific assets or groups or types of assets.

(3) Exceptions or modifications of the treatment of specific assets or groups or types of assets.

(4) Identification and treatment of money or property held for distribution.

(5) Use of either of the following:

(A) An average of fair market values over a stated number of preceding periods.

(B) Another mathematical blend of fair market values over a stated number of preceding periods.

(6) A limit on how much the applicable value of all assets, groups of assets, or individual assets may increase over either of the following:

(A) The corresponding applicable value for the preceding period.

(B) A mathematical blend of applicable values over a stated number of preceding periods.

(7) A limit on how much the applicable value of all assets, groups of assets, or individual assets may decrease below:

(A) The corresponding applicable value for the preceding period.

(B) A mathematical blend of applicable values over a stated number of preceding periods.

(8) The treatment of accrued income and other features of an asset that affect value.

(9) Determining the liabilities of the trust, including treatment of liabilities to conform to the treatment of assets under paragraphs (1) to (8), inclusive.

article: 3. Unitrust


citation: PROB § 16337

text:
(a) A unitrust plan shall provide the period used under Sections 16335 and 16336. Except as otherwise provided in paragraph (3) of subdivision (b) of Section 16338, the period may be any of the following:

(1) A calendar year.

(2) A 12-month period other than a calendar year.

(3) A calendar quarter.

(4) A three-month period other than a calendar quarter.

(5) Another period.

(b) Except as otherwise provided in Section 16338, a unitrust plan may provide standards for any of the following:

(1) Using fewer preceding periods under subparagraph (B) of paragraph (2) of subdivision (a) of, or paragraph (3) or (4) of subdivision (b) of, Section 16335 if any of the following circumstances exists:

(A) The trust was not in existence in a preceding period.

(B) Market indices or other published data are not available for a preceding period.

(2) Using fewer preceding periods under subparagraph (A) or (B) of paragraph (5) of, subparagraph (B) of paragraph (6) of, or subparagraph (B) of paragraph (7) of subdivision (b) of, Section 16366, under either of the following circumstances:

(A) The trust was not in existence in a preceding period.

(B) Fair market values are not available for a preceding period.

(3) Prorating the unitrust amount on a daily basis for a part of a period in which the trust or the administration of the trust as a unitrust or the interest of any beneficiary commences or terminates.

article: 3. Unitrust


citation: PROB § 16338

text:
(a) A unitrust plan may include any of the following:

(1) Provide methods and standards for all of the following:

(A) Determining the timing of distributions.

(B) Making distributions in money or in kind or partly in money and partly in kind.

(C) Correcting an underpayment or overpayment to a beneficiary based on the unitrust amount if there is an error in calculating the unitrust amount.

(2) Specify sources and the order of sources, including categories of income for federal income tax purposes, from which distributions of a unitrust amount are paid.

(3) Provide other standards and rules the fiduciary determines serve the interests of the beneficiaries.

(b) If a trust qualifies for a special tax benefit or a fiduciary is not an independent person:

(1) The unitrust rate established under Section 16335 may not be less than 3 percent or more than 5 percent.

(2) The only provisions of Section 16336 that apply are subdivision (a) and paragraphs (1), (4), and (9) of, and subparagraph (A) of paragraph (5) of, subdivision (b) of that section.

(3) The only period that may be used under Section 16337 is a calendar year under paragraph (1) of subdivision (a) of Section 16337.

(4) The only other provisions of Section 16337 that apply are subparagraph (A) of paragraph (2) of, and paragraph (3) of, subdivision (b) of that section.

article: 3. Unitrust