BILL NUMBER: AB 1705	CHAPTERED  09/29/03

	CHAPTER  585
	FILED WITH SECRETARY OF STATE  SEPTEMBER 29, 2003
	APPROVED BY GOVERNOR  SEPTEMBER 28, 2003
	PASSED THE ASSEMBLY  AUGUST 28, 2003
	PASSED THE SENATE  AUGUST 21, 2003
	AMENDED IN SENATE  JUNE 26, 2003
	AMENDED IN ASSEMBLY  APRIL 30, 2003

INTRODUCED BY   Committee on Judiciary (Corbett (Chair), Dutra,
Hancock, Jackson, Laird, Longville, Montanez, Steinberg, and Vargas)

                        FEBRUARY 26, 2003

   An act to add Section 16004.5 to the Probate Code, relating to
trusts.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1705, Committee on Judiciary.  Trustees:  distributions:
liability.
   Existing law regulates trust administration and requires a trustee
to administer the trust according to the trust instrument, as
specified.  Existing law prohibits a trustee from using or dealing
with trust property for the trustee's own profit or for any other
purpose unconnected with the trust.
   This bill would prohibit a trustee from requiring 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.
The bill would provide that its provisions may not be construed as
affecting the trustee's right to take specified actions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 16004.5 is added to the Probate Code, to read:

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