New California Law – Trustee Duties/Beneficiary Rights

November 1, 2010

On September 20, 2010, California passed Senate Bill 202 which affects the rights and responsibilities of trustees and beneficiaries.

Here are six points to keep in mind:

(1) gives a trustee the power to terminate a trust whose assets are under $40,000 in value  instead of current $20,000 in value level;

(2) when a trust becomes irrevocable, requires the trustee, on reasonable request, to report to the beneficiary regarding the terms and administration of the trust.  Exception – if the beneficiary and trustee are the same person;

(3) allows a beneficiary or trustee to petition the court to determine the existence of a trust if a trustee has failed to report the requested information within 60 days after written request,

(4) requires a court to compel a trustee to account, regardless of waiver by a beneficiary, upon a showing that it is reasonably likely that a material breach of the trust has occurred and would provide when a waiver is void as against public policy;

(5) permits a court, on its own motion, to set a hearing  to show why a professional trustee should not be removed, for not having a valid professional license;

(6) requires the trustee to provide a true and complete copy of the terms of an irrevocable trust, or the irrevocable portion of the trust, to any beneficiary or heir of a deceased settlor who requests it, as provided, including when the power of appointment is effective or lapses upon the death of a settlor, except as provided, to any beneficiary whenever there is a change of trustee of an irrevocable trust (and if the trust is a charitable trust subject to the supervision of the Attorney General, to the Attorney General) as provided, and specifies that  the duty to serve the notification by the trustee is the duty of the continuing or successor trustee.

(2009 California Senate Bill No. 202, California 2009-2010 Regular Session; Version: Adopted, September 30, 2010).  The legislation amends sections 15408, 16061, 16061.5, 16061.7, 16061.8, 16064, 16336.4, and 17200 of, and to add sections 16060.7, 16068, and 16069 to, the probate code, relating to probate.

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