Nonprobate Transfers of Community Property
(Trust Provision) (CA)

Summary

This template is a trust provision that may be used to specify that the provisions of the California Probate Code governing nonprobate transfers of community property on death will be inapplicable to the trust. This template includes practical guidance and drafting notes. The California statutes governing nonprobate transfers of community property on death (Cal. Prob. Code §§ 5010-5032) are applicable to trusts. See Cal. Prob. Code § 5014(a); Cal. Prob. Code § 5000(a). These statutes basically provide that a nonprobate transfer of community property on death executed by a married person without the written consent of that person's spouse is not effective as to the nonconsenting spouse's interest in the property, and does not affect the nonconsenting spouse's disposition (by will, intestate succession, or nonprobate transfer) of the nonconsenting spouse's interest in the property on the death of the nonconsenting spouse. See Cal. Prob. Code § 5020. Consent is revocable during the marriage (see Cal. Prob. Code § 5030(a)), but becomes irrevocable on the death of either spouse (see Cal. Prob. Code § 5030(c)). On the death of the first spouse, any modification of the disposition by the surviving spouse will be ineffective as to the deceased spouse's community property interest (see Cal. Prob. Code § 5023(b)(2)) unless the deceased spouse, either in the instrument or a written consent, authorizes the other spouse to execute a modification after the death of the consenting spouse, in which case the deceased spouse's interest is deemed transferred to the surviving spouse on the deceased spouse's death (see Cal. Prob. Code § 5023(b)(3)). Application of these rules may be limited by the terms of the instrument under which the nonprobate transfer is made, or by a written consent to the transfer. See Cal. Prob. Code § 5011(a), (c). When the nonprobate transfer statutes were first proposed and enacted, some commentators expressed concern that the foregoing rules might frustrate estate plans that include inter vivos trusts jointly created by husbands and wives. However, an amendment to Cal. Prob. Code § 5023(a) that became operative January 1, 1994, eliminated this concern by specifically providing that the exercise of a power of appointment under a trust is not a "modification" under the nonprobate transfer statutes. See Cal. Prob. Code § 5023(a), as amended by Stats. 1993, ch. 527, § 3. Before its amendment by Stats. 1993, ch. 527, § 3, Cal. Prob. Code § 5023(a) provided simply that "modification" means "revocation of a provision for a nonprobate transfer on death in whole or part, designation of a different beneficiary, or election of a different benefit or payment option." Although the 1993 amendment eliminated the principal concerns about application of the nonprobate transfer statutes to revocable trusts, these statutes are still relatively new, and it is uncertain how the courts will interpret and apply them. Since none of these provisions are necessary to the smooth operation of the trust, it may still be prudent to preclude any possibility of confusion over their interaction with the terms of the trust instrument by restricting their application to the trust or making them completely inapplicable to it. For information about creating valid trusts, see Requirements and Restrictions on Trust Purposes and Administration (CA).