California Wills & Trusts: August 2007 Summary

Legal Developments

New Probate Code § 6132: Option to Reference List for Tangible Personal Property Revised

New Probate Code § 6132 effective January 1, 2007 authorizes a will to refer to a writing that directs the disposition of tangible property of a personal nature.  The writing must be dated either in the testator's handwriting or signed by the testator, and must describe the items and the recipients of the property.  Prior to Probate Code 6132, you could refer to an external writing in a Will as long as it existed at the time the Will was signed.  The new statute provides greater flexibility. The new option references the Code section.  See Progress at Question 96.  Question 100 is no longer presented for a standalone will.

New IRS Revenue Procedures Addressing the Use of Charitable Lead Trusts

On July 16, 2007, the IRS issued two new Revenue Procedures 2007-45 and 2007-46 provide sample forms, annotations and alternate provisions for inter vivos and testamentary

charitable lead trusts. Links to the full text are provided in Revenue Rulings and

Procedures in Resources in the California Wills & Trusts title. Rev. Proc. Charitable

Remainder Trusts: Question 1.

Updated Product Features

New “Five and Five” Withdrawal Rights Provisions in Bypass and Marital Trusts

New Five and Five provisions include a “short form” or “long form.”  The 5 and 5 provisions allow you to specify a fixed dollar limit without any associated percentage limit.  You may also specify whether or not to delay withdrawal rights for fifteen months after death to avoid interfering with any QTIP election. The long form allows payments during the year as advancements against an annual amount with provision for adjustments at the end of the year. The long form also allows you to specify whether the controlling limit will be the greater or lesser of the dollar limit and the percentage limit.  These provisions allow greater customization of the withdrawal provisions.  New Questions 428-433  (Bypass trust) and New Questions 447-452 (Marital trust).

New Trustee Discretion Option

The Trustee Discretion option was removed from the list at Question 670 (Trustee Authority). A new question asks if the grantor wants the trustee to have absolute discretion. This question is asked no matter what is selected at Question 670.  This was done to draw attention to this question, since the trustee discretion can have a substantial impact on the administration of the trust.  New Question 671.

New Option to Allocate Principal and Income in Accordance with CA Uniform Principal and Income Act.

The program always allowed the trustee to allocate between principal and income without requiring that the trustee to follow the California Uniform Principal & Income Act.  A new option has been added in the Discretionary Powers article, which requires the trustee to follow the Act.  New Question 683.

New Option to Add Custom Provisions to Trusts

You have always been able to add custom provisions to many articles in the program, including all of the Trustees articles as well as the Residuary Trust, to name a few.  You can now add your own custom provisions to the bypass, marital, beneficiary, descendants, grandchildren, and special needs trusts.  This not only allows for greater drafting flexibility, but your custom provisions will become part of a ‘template’ if you choose to create one from your client answer file. See Using Templates topic by selecting Help from the Lawgic menu and then Help again.  New Questions 434-437 (Bypass trust), 454-457 (Marital trust), 499-501 (Beneficiary trust), 563-566 (Grandchildren trust), 586-589 (Descendants trust), and 604-606 (Special Trusts).

New Option to omit Table of Contents

You now have the option to omit the Table of Contents from a will or trust.  Question 905.

New Transfer Tax Exemption Option

In the Trust Transfer Deed you can now choose between California Revenue & Taxation Code exemption § 11911 or § 11930, depending on the county.  New Question 942.

New Substance Abuse Provision Added to California Irrevocable Trusts Title

You may now add an article authorizing the trustee to withhold distributions from a beneficiary engaging in substance abuse or otherwise dependent on drugs.  The provision provides for testing and treatment of the beneficiary.  The trustee may resume normal distributions to the beneficiary if there has been no drug use by the beneficiary for a period ranging from 12 to 36 months.  When the normal distributions are resumed, any suspended amounts also may be paid out to the beneficiary.  The article also provides the trustee with certain protections from liability for actions taken (or not taken) pursuant to the article.  California Irrevocable Trusts - New Questions 430-433.

Software Upgrades

New ‘Search’ Feature Added

A major upgrade to the software in the form of a new ‘Search’ feature has been added that will greatly enhance use of the program. You may now search the Navigator, Answers, Law & Strategy, Notes, Question Help, and the Text that appears in the Progress window by selecting Search on the Lawgic menu and then Search again. This greatly expands the search capabilities of the program and eliminates the need to create the ‘Outline’ document --- created by selecting File, Send, Navigator/Outline -- for purposes of searching the questions and answers.

Drop-Down Menus Added

Drop-down menus have replaced radio buttons for ‘bundle’ questions (screens with more than one question on them), which contain long lists of answer choices.