AB 2658: Community property in trust.

Existing law establishes procedures for the creation, modification, and termination of a trust, and regulates the administration of trusts by trustees on behalf of beneficiaries. Under existing law, upon the death of a person who is married or in a registered domestic partnership, ¹/₂ of the community property and quasi-community property belongs to the surviving spouse, unless the spouses have agreed in writing to divide the property in another manner. Existing law authorizes a decedents surviving spouse to require the transferee of quasi-community property in which the surviving spouse had an expectancy at the time of transfer to restore to the decedents estate ¹/₂ of the property if the transferee retains the property or, if not, ¹/₂ of its proceeds or, if none, ¹/₂ of its value at the time of transfer, provided outlined requirements are met.

This bill would clarify that a spouse may establish a trust and fund that trust by transferring to it that spouses ¹/₂ of the community real property, community personal property, and quasi-community personal property for the purpose of disposing of that spouses ¹/₂ on that spouses death. The bill would specify that a spouses interest in community property that is transferred to the trust remains community property, unless both spouses agree otherwise in writing.