BILL NUMBER: SB 1158	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 25, 2016

INTRODUCED BY   Senator Anderson

                        FEBRUARY 18, 2016

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



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1158, as amended, 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   require the court, in making the
determination described above with respect to a proposed termination
of an irrevocable trust, to consider 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. 
The bill would also make clarifying changes. 
   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 to a
modification or termination of the trust, the trust shall be modified
or terminated by the court as agreed to by the beneficiaries upon
petition to the court.   consent, they may petition the
court for modification or termination of the trust.  
   (b) 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, 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 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.  
   (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 a material purpose of the trust. In making that
determination with respect to a proposed termination of an
irrevocable trust, the court shall consider whether the trust is
subject to a valid restraint on the transfer of a beneficiary's
interest as provided in Chapter 2 (commencing with Section 15300).
 
   (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 necessary to modify or
terminate a trust to the beneficiaries who are reasonably likely to
take under the circumstances. 
  SEC. 2.  Section 15404 of the Probate Code is amended to read:
   15404.  (a) A trust may be modified or terminated by the written
consent of the settlor and all beneficiaries without court approval
of the modification or termination.
   (b) If any beneficiary does not consent to the modification or
termination of the trust,  the court may modify or partially
terminate the trust upon petition to the  court,
  court by  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   necessary to
modify or terminate a  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, 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.