Would you like everyone you have ever mentioned in your Trust to receive a copy of that document? What about ex-friends, remote family members, or even ex-lovers. What about charities, house help, gardeners, etc? But wait a minute Jack, what if I removed them in a subsequent Amendment, you reply? Yeah, that’s right, you did, and presumably they won’t be an heir in your estate. However, that will not prevent them from taking a gander at your Trust and all of the Amendments at your death. How is that possible if you removed them from the Trust? It is not only possible but it is required by California law. Additionally, your children will have the opportunity to see how you changed the distribution to them over the years through Amendments. The source of this law is California P.C. Section 16061.7. It requires that when any portion of a Trust becomes irrevocable, all beneficiaries and heirs at law, mentioned in the original document and all Amendments, are entitled to a copy. Additionally, they are given 120 days to contest the Trust, if they wish.
Example #1: Initially, Bob included bequests to three charities in his Trust in addition to an ex-girlfriend. Also, he included his six grandchildren.
Subsequently, he amended the Trust and only provided for his two children. On Bob’s death, his Successor Trustee will need to provide statutory notice to obtain a copy of the Trust to the charities, the ex-girlfriend and all of the grandchildren even though each of them were removed as beneficiaries by subsequent Amendment.
Many laws create as many problems as they attempt to solve but P.C. Section 16061.7 provides a solution to this situation. You can stop amending your Trust and create what is known as a Restatement of Trust. The Restatement in its entirety supercedes the original Trust and all of the Amendments to the original Trust. In essence, it is a new Trust. However, if you retain the old Trust name and date, you won’t have to re-title all of the assets owned by the Trust.
Another reason to restate is the additional time it takes the attorney administering your Trust at your death to read and implement all of those Amendments. Additional time results in additional fees.
The essence of this article is to take a look at your existing Trust with all the Amendments, before your incapacity or death, and make a determination as to whether you want all beneficiaries named therein to see those documents. If not, restate in its entirety.
But what about A-B Trusts? Does P.C. Section 16061.7 affect those Trusts? Absolutely. The B Trust, as the deceased spouse’s Trust, becomes irrevocable on her/her death. Thus, notice must be given to receive a copy of the irrevocable portion of the Trust.
Example #2: Rhonda and Rick create an A-B Trust and amend it over the years. They have reduced a granddaughter’s share because of her marriage to an unacceptable individual and created a sub-Trust for a grandson to withhold his share because of his “spending habits.” Subsequently, the grandchildren are removed by Amendment. After Rick’s death, Rhonda, as the sole Trustee of the Trust, must give statutory notice to the beneficiaries to request a copy of the irrevocable portions of the B Trust. Both of the grandchildren will be able to review the distribution provisions of the B Trust to see the limitations and their subsequent removal as heirs.
What if a child has been disinherited? Would such a child be able to receive a copy of the Trust? Yes, because all beneficiaries and heirs at law are entitled to a copy if requested. A child is an heir at law.