SB 1158 Senate Bill - INTRODUCED

BILL NUMBER: SB 1158	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Anderson

                        FEBRUARY 18, 2016

   An act to amend Sections 15403, 15404, and 15406 of the Probate
Code, relating to trusts.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1158, as introduced, Anderson. Trusts: modification or
termination.
   Existing law authorizes the beneficiaries of an irrevocable trust,
upon the consent of all beneficiaries, to compel the modification or
termination of the trust upon petition to the court. Existing law
prohibits the modification or termination of an irrevocable trust if
the continuance of the trust is necessary to carry out a material
purpose of the trust, unless the court determines that modification
or termination under the circumstances outweighs the interest in
accomplishing a material purpose of the trust. Notwithstanding that
provision, existing law prohibits the court from terminating a trust
that is subject to a valid restraint on the transfer of a beneficiary'
s interest.
   This bill would revise and recast these provisions to instead
authorize, upon the consent of all beneficiaries, the modification or
termination of an irrevocable trust as agreed to by the
beneficiaries upon petition to the court. The bill would instead
authorize the court, in determining whether modification or
termination would defeat a material purpose of the trust, to take
into consideration any factors deemed relevant to the court,
including whether the trust is subject to a valid restraint on the
transfer of a beneficiary's interest. The bill would delete the
provision that the court is prohibited from terminating an
irrevocable trust that is subject to a valid restraint on the
transfer of a beneficiary's interest.
   Existing law authorizes the settlor and the beneficiaries of a
trust, upon the consent of the settlor and all beneficiaries, to
compel the modification or termination of the trust.
   This bill would revise and recast those provisions and instead
authorize the trust to be modified or terminated by the written
consent of the settlor and all beneficiaries without court approval
of the modification or termination.
   Existing law provides that the presumption of fertility is
rebuttable in determining the class of beneficiaries whose consent is
necessary to modify or terminate a trust pursuant to the
above-described provisions.
   This bill would additionally authorize the court to limit the
beneficiaries whose consent is required under those provisions to
beneficiaries whose interests would be substantially impaired by the
modification or termination, as specified.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

  SECTION 1.  Section 15403 of the Probate Code is amended to read:
   15403.  (a) Except as provided in subdivision (b), if all
beneficiaries of an irrevocable trust  consent, they may
compel   consent to a  modification or termination
of the  trust   trust, the trust shall be
modified or terminated by the court as agreed to by the beneficiaries
 upon petition to the court.
   (b)  If the continuance of the trust is necessary to carry
out a material purpose of the trust, the trust cannot be modified or
terminated unless the court, in its discretion, determines that the
reason for doing so under the circumstances outweighs the interest in
accomplishing   The   court shall grant a
petition for modification or termination made pursuant to subdivision
(a) unless the court determines the modification or termination
would defeat  a material purpose of the  trust. Under
this section the court does not have discretion to permit termination
of a trust that   trust, after considering, in addition
to any other factors deemed relevant to the court, whether the trust
 is subject to a valid restraint on  the  transfer of
 the   a  beneficiary's interest as
provided in Chapter 2 (commencing with Section 15300).  The court
is not precluded from modifying or terminating the trust solely
because of such a restraint on the transfer. 
  SEC. 2.  Section 15404 of the Probate Code is amended to read:
   15404.  (a)  If   A trust may be modified or
terminated by the written consent of  the settlor and all
beneficiaries  of a trust consent, they may compel the
  without court approval of the  modification or
 termination of the trust.   termination. 
   (b) If any beneficiary does not consent to the modification or
termination of the trust, upon petition to the court, the other
beneficiaries, with the consent of the settlor, may compel a
modification or a partial termination of the trust if the interests
of the beneficiaries who do not consent are not substantially
impaired.
   (c) If the trust provides for the disposition of principal to a
class of persons described only as "heirs" or "next of kin" of the
settlor, or using other words that describe the class of all persons
who would take under the rules of intestacy, the court may limit the
class of beneficiaries whose consent is needed to compel the
modification or termination of the trust to the beneficiaries who are
reasonably likely to take under the circumstances.
  SEC. 3.  Section 15406 of the Probate Code is amended to read:
   15406.  In determining the class of beneficiaries whose consent is
necessary to modify or terminate a trust pursuant to Section 15403
or 15404,  the presumption of fertility is rebuttable.
  both of the following shall apply:  
   (a) The presumption of fertility is rebuttable.  
   (b) The court in its discretion may limit the beneficiaries whose
consent is required to beneficiaries whose interests would be
substantially impaired by the modification or termination. For
purposes of this subdivision, the court may consider the likelihood
of a beneficiary taking under the trust.