BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1683|
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CONSENT
Bill No: AB 1683
Author: Hagman (R), et al.
Amended: 3/22/12 in Assembly
Vote: 21
SENATE JUDICIARY COMMITTEE : 4-0, 6/12/12
AYES: Evans, Harman, Corbett, Leno
NO VOTE RECORDED: Blakeslee
ASSEMBLY FLOOR : 68-0, 3/29/12 - See last page for vote
SUBJECT : Revocable trusts
SOURCE : Executive Committee of the Trusts and Estates
Section of the
State Bar of California
DIGEST : This bill provides that the power of a person
other than the settlor (person creating the trust) to
revoke a trust applies to all or a portion of the trust
contributed by the settlor, regardless of whether the
settlors portion was separate or community property, and
regardless of whether the power to revoke is exercisable
during the lifetime of the settlor or continues after the
settlor's death, or both. This bill also provides priority
of disposition of trust property when a trust is revoked by
either the settlor or the person with power of trust
revocation.
ANALYSIS : Existing law:
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1.Provides that, unless a trust is expressly made
irrevocable by the trust instrument, the trust is
revocable by the settlor.
2.Provides that a revocable trust may be revoked by
complying with any method of revocation provided in the
trust instrument or by a writing signed by the settlor
during the settlor's lifetime.
3.Provides that, unless otherwise specified in the trust
instrument, if a trust is created by more than one
settlor, each settlor may revoke the trust as to the
portion of the trust contributed by that settlor, except
as provided Family Code Section 761.
4.With respect to community property, provides that, unless
the trust instrument expressly provides otherwise:
Community property that is transferred into a trust
remains community property during the marriage,
regardless of the identity of the trustee, if the
trust, originally or as amended before or after the
transfer, provides that the trust is revocable as to
that property during the marriage and the power, if
any, to modify the trust as to the rights and
interests in that property during the marriage may be
exercised only with the joinder or consent of both
spouses; and
A power to revoke may be exercised by either spouse
acting alone; however, community property that is
distributed or withdrawn from a trust by revocation
remains community property unless there is a valid
transmutation of the property at the time of
distribution or withdrawal.
This bill provides that a revocable trust may be revoked by
the settlor or any other person as follows:
1.By complying with any method of revocation provided in
the trust instrument or by a writing signed by the
settlor or any other person holding the power of
revocation and delivered to the trustee during the
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lifetime of the settlor or the person holding power of
revocation;
2.Unless otherwise provided in the trust instrument, a
trust created by more than one settlor may be revoked by
each settlor as to the portion of the trust contributed
by that settlor, except as provided by Family Code
Section 761; and
3.A settlor may grant to another person, including, but not
limited to, his or her spouse, a power of revocation of
all or part of that portion of the trust contributed by
that settlor, regardless of whether that portion was
separate or community property of that settlor, and
regardless of whether the power to revoke is exercisable
during the settlor's lifetime, continues after the
settlor's death, or both.
Existing law also provides that, at the termination of a
trust, the trust property shall be disposed of as follows:
1.In the case of a trust that is revoked by the settlor, as
directed by the settlor;
2.In the case of a trust that is terminated by the consent
of the settlor and all beneficiaries, as agreed by the
settlor and all beneficiaries;
3.In any other case, as provided in the trust instrument or
in a manner directed by the court that conforms as nearly
as possible to the intention of the settlor as expressed
in the trust instrument;
4.If a trust is terminated by the trustee, as specified,
the trust property may be distributed as determined by
the trustee without the need for a court order; or
5.Where the trust instrument does not provide a manner of
distribution at termination and the settlor's intent is
not adequately expressed in the trust instrument, the
trustee may distribute the trust property to the living
beneficiaries on an actuarial basis.
This bill provides that, at the termination of a trust that
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is revoked by the settlor, the trust property shall be
disposed of in the following order of priority:
1.As directed by the settlor;
2.As provided in the trust instrument; and
3.To the extent there is no direction by the settlor or in
the trust instrument, to the settlor, or his or her
estate, as the case may be.
This bill provides that, at the termination of a trust that
is revoked by any person holding a power of revocation
other than the settlor, the trust property shall be
disposed of in the following order of priority:
1.As provided in the trust instrument;
2.As directed by the person exercising the power of
revocation; or
3.To the extent there is no direction in the trust
instrument or by the person exercising the power of
revocation, to the person exercising the power of
revocation, or his or her estate, as the case may
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/13/12)
Executive Committee of the Trusts and Estates Section of
the State Bar of California (source)
California Judges Association
ARGUMENTS IN SUPPORT : According to the author:
The key issue is clarifying two probate code sections
that relate to revocation of trusts. Because the code
sections are unclear, powers to revoke are subject to
incorrect interpretations. In one case, a gentleman
who was a joint revocable trust settlor was denied
revocation power by the Court (in Estate of Powell, 83
Cal.App.4th 1434 (2000)) over his wife's half of the
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estate upon her death, even though he and his wife
combined their estates when entering into the joint
revocable trust together and there were indications
that that was the wife's intent. Subsequent cases
have further clouded the waters.
AB 1683 would take away the uncertainty that resulted
from the Court's interpretation of powers of
revocation while providing much needed protection of
surviving spouses' (and other joint settlors) property
rights as declared in the trust.
The Executive Committee of the Trusts & Estates Section of
the State Bar of California states:
Estate of Powell, 83 Cal.App.4th 1434 (2000), and some
subsequent unpublished cases available for review on
line have created some confusion as to whether or not
a settlor can grant a power of revocation over that
settlor's property that is in a joint trust to a
spouse after the death of the settlor (or to another
party that is not a spouse, for that matter). This
proposal would clarify the law by amending the Probate
Code to make it clear that a settlor can grant a
spouse or other party a power of revocation over the
settlor's property in a joint trust and that that
power can continue after the death of the settlor.
Separately, the same line of cases suggested a need to
clarify Section 15410 of the Probate Code to more
clearly address what should happen to property that is
subject to a power of revocation. This legislative
proposal would provide that needed clarification.
ASSEMBLY FLOOR : 68-0, 3/29/12
AYES: Achadjian, Alejo, Allen, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Gatto, Gordon, Grove, Hagman,
Halderman, Harkey, Hayashi, Hill, Huber, Hueso, Huffman,
Jeffries, Jones, Lara, Logue, Ma, Mansoor, Mendoza,
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Miller, Monning, Morrell, Nestande, Nielsen, Olsen, Pan,
Perea, V. Manuel Pérez, Silva, Skinner, Smyth, Solorio,
Swanson, Torres, Valadao, Wagner, Wieckowski, Williams,
Yamada, John A. Pérez
NO VOTE RECORDED: Ammiano, Cedillo, Fletcher, Garrick,
Gorell, Hall, Roger Hernández, Knight, Bonnie Lowenthal,
Mitchell, Norby, Portantino
RJG:nl 6/14/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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