BILL NUMBER: AB 1985	CHAPTERED
	BILL TEXT

	CHAPTER  195
	FILED WITH SECRETARY OF STATE  AUGUST 27, 2012
	APPROVED BY GOVERNOR  AUGUST 27, 2012
	PASSED THE SENATE  JULY 5, 2012
	PASSED THE ASSEMBLY  AUGUST 9, 2012
	AMENDED IN SENATE  JUNE 15, 2012
	AMENDED IN ASSEMBLY  APRIL 9, 2012

INTRODUCED BY   Assembly Member Silva

                        FEBRUARY 23, 2012

   An act to amend Section 21134 of the Probate Code, relating to
trusts and estates.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1985, Silva. Trusts and estates: construction of instruments.
   Existing law provides rules for the interpretation of wills,
trusts, deeds, and other instruments, which are to be used as
interpretive aids if the intention of the transferor is not indicated
by the instrument. Under existing law, if after the execution of the
instrument of gift, specifically given property is sold, or
mortgaged by a conservator or by an agent acting within the authority
of a durable power of attorney for an incapacitated principal, the
transferee of the specific gift has the right to a general pecuniary
gift equal to the net sale price of, or the amount of the unpaid loan
encumbrance on, the property.
   This bill would extend these provisions to any case in which
specifically given property is encumbered by a deed of trust,
mortgage, or other instrument. The bill would also apply these
provisions to property that is sold by a trustee acting for an
incapacitated settlor of a trust established by the settlor as a
revocable trust. The bill would further specify that a transferee of
a specific gift has the right to a general pecuniary gift equal to
the net sale price of the property unreduced by the payoff of any
such encumbrance or the amount of the unpaid encumbrance on the
property, as well as the property itself.
   Under existing law, if an eminent domain award for the taking of
specifically given property is paid to a conservator or to an agent
acting within the authority of a durable power of attorney for an
incapacitated principal, or if the proceeds on fire or casualty
insurance on, or recovery for injury to, specifically gifted property
are paid to a conservator or to an agent acting within the authority
of a durable power of attorney for an incapacitated principal, the
recipient of a specific gift has the right to a general pecuniary
gift equal to the eminent domain award or the insurance proceeds or
recovery.
   This bill would extend these provisions to eminent domain awards,
or insurance proceeds or recovery, paid to a trustee acting for an
incapacitated settlor of a trust established by the settlor as a
revocable trust. The bill would also specify that in those cases the
recipient of the specific gift has the right to a general pecuniary
gift equal to the eminent domain award or the insurance proceeds or
recovery unreduced by the payoff of any encumbrance paid on the
property by the conservator, agent, or trustee, after the execution
of the instrument.


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

  SECTION 1.  Section 21134 of the Probate Code is amended to read:
   21134.  (a) Except as otherwise provided in this section, if,
after the execution of the instrument of gift, specifically given
property is sold, or encumbered by a deed of trust, mortgage, or
other instrument, by a conservator, by an agent acting within the
authority of a durable power of attorney for an incapacitated
principal, or by a trustee acting for an incapacitated settlor of a
trust established by the settlor as a revocable trust, the transferee
of the specific gift has the right to a general pecuniary gift equal
to the net sale price of the property unreduced by the payoff of any
such encumbrance, or the amount of the unpaid encumbrance on the
property as well as the property itself.
   (b) Except as otherwise provided in this section, if an eminent
domain award for the taking of specifically given property is paid to
a conservator, to an agent acting within the authority of a durable
power of attorney for an incapacitated principal, or to a trustee
acting for an incapacitated settlor of a trust established by the
settlor as a revocable trust, or if the proceeds on fire or casualty
insurance on, or recovery for injury to, specifically gifted property
are paid to a conservator, to an agent acting within the authority
of a durable power of attorney for an incapacitated principal, or to
a trustee acting for an incapacitated settlor of a trust established
by the settlor as a revocable trust, the recipient of the specific
gift has the right to a general pecuniary gift equal to the eminent
domain award or the insurance proceeds or recovery unreduced by the
payoff of any encumbrance placed on the property by the conservator,
agent, or trustee, after the execution of the instrument of gift.
   (c) For the purpose of the references in this section to a
conservator, this section does not apply if, after the sale,
mortgage, condemnation, fire, or casualty, or recovery, the
conservatorship is terminated and the transferor survives the
termination by one year.
   (d) For the purpose of the references in this section to an agent
acting with the authority of a durable power of attorney for an
incapacitated principal, or to a trustee acting for an incapacitated
settlor of a trust established by the settlor as a revocable trust,
(1) "incapacitated principal" or "incapacitated settlor" means a
principal or settlor who is an incapacitated person, (2) no
adjudication of incapacity before death is necessary, and (3) the
acts of an agent within the authority of a durable power of attorney
are presumed to be for an incapacitated principal. However, there
shall be no presumption of a settlor's incapacity concerning the acts
of a trustee.
   (e) The right of the transferee of the specific gift under this
section shall be reduced by any right the transferee has under
Section 21133.