Trusts and Estates
Ca. Trs. & Estates Quarterly Volume 11, Issue 3, Fall 2005
Content
- Advising Trustees of Special Needs Trusts
- And Now the Rest of the Story: No Contest Clauses Under the New Rules of Section 21305
- Elder Abuse and Dependent Adult Civil Protection Act: Governmental Aspects
- Hearsay Evidence In Trust and Estate Litigation
- Realities of the Trust Situs Marketplace
- THE NEW UNITRUST CONVERSION POWER UNDER THE CALIFORNIA UNIFORM PRINCIPAL AND INCOME ACT - A Useful Complement to the Adjustment Power
THE NEW UNITRUST CONVERSION POWER UNDER THE CALIFORNIA UNIFORM PRINCIPAL AND INCOME ACT – A Useful Complement to the Adjustment Power
By James L. Deeringer, Esq. and Silvio Reggiardo III, Esq.*
I. INTRODUCTION
Governor Schwarzenegger recently signed SB 754 (Chapter 100, Statutes of 2005), which adds "unitrust conversion" provisions to the California Uniform Principal and Income Act (the "UPAIA").1 Those new provisions, found in Probate Code §§ 16336.4 and 16336.5, allow a trustee, under circumstances described in those sections, to convert a net income trust to a unitrust. The unitrust conversion provisions become effective on January 1, 2006.
This article will describe the new unitrust conversion power and contrast it with the adjustment power that the UPAIA granted to trustees when it was first enacted in California in 1999. The adjustment power and the unitrust conversion power both enable a trustee to override the traditional principal and income allocations mandated by a net income trust, but the two powers differ in many respects.