Legislation Alert: AB 1745

By Anna Soliman
Fiduciary Trust International
www.fiduciarytrust.com

Headnote: Clarification of 120-Day Deadline to Contest a Trust Under Section 16061.8

Summary:  Assembly Bill No. 1745, which passed in June 2022, amends Section 16061.8 of the California Probate Code to specify that the 120-day limitation period, in which a person may bring an action to contest a trust (upon receiving notice under Section 16061.7), only applies when a revocable trust becomes irrevocable because of the death of a settlor of the trust. 

Section 16061.7 states that a trustee is required to serve notification to certain individuals, within 60 days of the following triggering events:

(1) when a revocable trust or any portion thereof becomes irrevocable because of a death of a settlor,
(2) whenever there is a change of trustee of an irrevocable trust, and
(3) whenever a power of appointment retained by a settlor is effective or lapses upon the death of a settlor. 

Pursuant to Section 16061.7, subdivision (h), if the triggering event is due to a revocable trust or any portion thereof becoming irrevocable because of the death of a settlor, the notification must contain warning language stating that the beneficiary or heir has 120 days from the date of notification (or 60 days from the date on which a copy of the terms of the trust is delivered, whichever is later) to bring an action to contest the trust.  This warning language is not required in the notices for the other triggering events. 

Section 16061.8 is the provision that imposes the 120-day limitation to contest a trust after notice is given under Section 16061.7.  As previously written, it was overly broad and ambiguous.  There was a question as to whether the 120-day limitation also applied in the other triggering events.  For example, a change in trustee during the post-death trust administration would trigger a notification, even if the predecessor trustee already served a notification. Under the previous law, it was not clear whether the recipients of the notification had a new 120-day period to contest the trust following the subsequent notification.

The language in the new amended law appropriately ensures that Section 16061.8 is consistent with Section 16061.7, subdivision (h), and that the 120-day limitation only applies in situations where notice is given because a revocable trust became irrevocable due to death of a settlor. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB1745