(1) "Trust funded by court order" under this rule means and refers to a trust that will receive funds under Probate Code section 2580 et seq. (substituted judgment); section 3100 et seq. (proceedings for particular transactions involving disabled spouses or registered domestic partners); or section 3600 et seq. (settlement of claims or actions or disposition of judgments involving minors or persons with disabilities).
(2) "Continuing jurisdiction of the court" under (b) means and refers to the court's continuing subject matter jurisdiction over trust proceedings under division 9 of the Probate Code (Prob. Code, § 15000 et seq.).
(3) "Court supervision under the Probate Code" under (b) means and refers to the court's authority to require prior court approval or subsequent confirmation of the actions of the trustee as for the actions of a guardian or conservator of the estate under division 4 of the Probate Code (Prob. Code, § 1400 et seq.).
(b) Continuing jurisdiction and court supervision.
The order creating or approving the funding of a trust funded by court order must provide that the trust is subject to the continuing jurisdiction of the court and may provide that the trust is to be subject to court supervision under the Probate Code.
(c) Required provisions in trust instruments.
Except as provided in (d), unless the court otherwise orders for good cause shown, trust instruments for trusts funded by court order must:
(1) Not contain "no-contest" provisions;
(2) Prohibit modification or revocation without court approval;
(3) Clearly identify the trustee and any other person with authority to direct the trustee to make disbursements;
(4) Prohibit investments by the trustee other than those permitted under Probate Code section 2574;
(5) Require persons identified in (3) to post bond in the amount required under Probate Code section 2320 et seq.;
(6) Require the trustee to file accounts and reports for court approval in the manner and frequency required by Probate Code sections 1060 et seq. and 2620 et seq.;
(7) Require court approval of changes in trustees and a court order appointing any successor trustee; and
(8) Require compensation of the trustee, the members of any advisory committee, or the attorney for the trustee, to be in just and reasonable amounts that must be fixed and allowed by the court. The instrument may provide for periodic payments of compensation on account, subject to the requirements of Probate Code section 2643 and rule 7.755.
(Subd (c) amended effective January 1, 2007; previously amended effective July 1, 2005.)
(d) Trust instruments for smaller trusts.
Unless the court otherwise orders for good cause shown, the requirements of (c)(5)–(8) of this rule do not apply to trust instruments for trusts that will have total assets of $20,000 or less after receipt of the property ordered by the court.
Rule 7.903 amended effective January 1, 2007; adopted effective January 1, 2005; previously amended effective July 1, 2005.
Advisory Committee Comment
Subdivision (a) of this rule defines a court-funded trust as a product of three court proceedings. Two of these-a petition for substituted judgment in a probate conservatorship (Prob. Code,
§ 2580) and a proceeding for a particular transaction in the property of an impaired spouse or domestic partner without a conservator (Prob. Code, § 3100; Fam. Code, § 297.5)-are regularly heard in the probate department of the court. The third proceeding, an application for an order approving the settlement of a minor's claim or a pending action involving a minor or person with a disability or approving the disposition of the proceeds of a judgment in favor of a minor or person with a disability (Prob. Code, § 3600), may be heard in either a probate or a civil department.
The Judicial Council has adopted standard 7.10 of the Standards of Judicial Administration to address proceedings under Probate Code section 3600 that involve court-funded trusts and are heard in civil departments. The standard makes two recommendations concerning the expertise of judicial officers who hear these proceedings on trust issues. The recommendations are to develop practices and procedures that (1) provide for determination of the trust issues in these matters by the probate department of the court or by a judicial officer who regularly hears probate proceedings or (2) ensure that judicial officers who hear these matters have experience or receive training in substantive and technical issues involving trusts, including special needs trusts.