mgraves said:
In a family will, a trust was set up and I had a question about the language. When the last remaining direct beneficiary dies, it says "upon such termination the principal of the Trust Estate and any accumlated income shall be distributed BY RIGHT OF REPRESENTATION to the issue of my father and my aunt. What does that mean?
Also, it says that the rights of beneficiaries shall be governed by the provisions of the Principal and Income Act -- where can I read about that?
Thanking you in advance,
mg
My response:
Where a will, trust, or other instrument directs distribution of property "per stirpes," "by representation," "in the manner provided in Section 246 of the Probate Code" or "by right of representation," the property is divided into as many equal shares as there are living children of the designated ancestor, and deceased children with issue then living. Each living child of the designated ancestor is allocated one share, and the share of each deceased child is divided among that child’s issue in the same manner. [Prob C §246]
A testator may select the generation at which calculation of the per stirpes distribution begins. For example, a testatrix created a residuary trust allocating income in one-seventh shares to her designated nieces and grandnieces. She stipulated that on termination of the trust the principal was to be divided "per stirpes in my said grandnieces and in the lawful issue of said four nieces." The trial court directed that, contrary to the testatrix’s wishes, the principal should be divided per stirpes into seven shares. In reversing the trial court, the court of appeal held that although in traditional per stirpes division, the family roots are found not among the persons who are to take the property but among the ancestors of the takers, that rule must succumb to a contrary intent. Thus, a testator may select the family roots from which a stirpital division is to be made. [Estate of Edwards (1988, 2nd Dist) 203 Cal App 3d 1366, 250 Cal Rptr 779]
If an instrument executed on or after January 1, 1986, directs distribution "per stirpes," "by representation," or "by right of representation," only an express provision can prevent the application of the above method of distribution. [Prob C §246(b)]
If the instrument was executed before January 1, 1986, and directs distribution in this manner, it is sufficient to merely show that the transferor did not intend the application of these rules. [Prob C §246(c)]
California PROBATE CODE
SECTION 16320-16328
16320. This chapter may be cited as the Uniform Principal and
Income Act.
16321. The definitions in this article govern the construction of
this chapter.
16322. "Accounting period" means a calendar year unless another
12-month period is selected by a fiduciary. The term includes a
portion of a calendar year or other 12-month period that begins when an income interest begins or ends when an income interest ends.
16323. "Fiduciary" means a personal representative or a trustee.
16324. "Income" means money or property that a fiduciary receives as current return from a principal asset. The term includes a portion of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Article 5.1 (commencing with Section 16350), 5.2 (commencing with Section 16355), or 5.3 (commencing with Section 16360).
16325. "Income beneficiary" means a person to whom net income of a trust is or may be payable.
16326. "Income interest" means the right of an income beneficiary to receive all or part of net income, whether the trust requires it to be distributed or authorizes it to be distributed in the trustee's discretion.
16327. "Mandatory income interest" means the right of an income
beneficiary to receive net income that the trust requires the
fiduciary to distribute.
16328. "Net income" means the total receipts allocated to income
during an accounting period minus the disbursements made from income during the accounting period, plus or minus transfers under this chapter to or from income during the accounting period.
