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California holds that trusts are presumed revocable by the settlor. A trust is irrevocable if expressly made so by the trust instrument. Cal. Prob. Code § 15400 (West 2000).

A trust in relation to real property is not valid unless evidenced by a written instrument signed by the trustee (or agent of), by a written instrument conveying the trust property signed by the settlor (or agent of), or by operation of law. Cal. Prob. Code § 15206 (West 2000). The existence of an oral trust of personal property may be established only by clear and convincing evidence. Cal. Prob. Code § 15207 (West 2000).

In California a trustee is not required to give a bond to secure performance of the trustee's duties. However, bond is required if required by the trust instrument, if found by the court to be necessary to protect the beneficiaries, or if the court appoints a trustee not named in the trust instrument. Cal. Prob. Code § 15602 (West 2000).

Although a trust may be registered if it involves real property, there is no mandatory registration requirement in California.Cal. Prob. Code § 15210 (West 2000).

The trustee shall administer the trust with reasonable care, skill, and caution of a prudent person acting in a like capacity, to accomplish the purposes of the trust as determined from the trust instrument. This standard may be expanded or restricted by express provisions in the trust instrument. Cal. Prob. Code § 16040 (West 2000). Additionally, California imposes the Uniform Prudent Investor Act. Under this rule, the trustee shall invest and manage assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution. Cal. Prob. Code § 16047 (West 2000). A list of circumstances that are appropriate to consider in investing and managing trust assets is given in Cal. Prob. Code § 16047(c). Under Cal. Prob. Code § 16048, the trustee has a duty to diversify the investments of the trust unless, under the circumstances, it is prudent not to do so.

A trustee does not need to obtain court authorization to exercise the powers conferred by the trust instrument and the powers conferred by statute (except as limited in the trust instrument). Except as limited in the trust instrument, the trustee also has the power to perform any act that a trustee would perform for the purposes of the trust under the standard of care provided in Section 16040 or 16047. Cal. Prob. Code § 16200 (West 2000). A detailed list of trustee powers is given in Sections 16220-249, although these powers can be modified in the trust instrument. And the court may grant additional powers beyond those the settlor or statute provides as well as limit powers in any manner.

The specific rules are covered in the Uniform Principal and Income Act. In allocating receipts and disbursements between principal and income, a fiduciary shall follow direction in the trust or will. The fiduciary can exercise any discretionary power that is given by the trust or will, even if the exercise produces a different result that is required by statute. The rules provided in the statute shall govern the administration of a trust or decedentís estate if the trust or will does not contain a different provision or give the fiduciary a discretionary power of administration. The fiduciary shall administer the trust or decedent's estate impartially, unless the trust or will expresses an intention to favor one or more of the beneficiaries. The exercise of discretion is presumed to be fair and reasonable to all beneficiaries. Cal. Prob. Code § 16335 (West 2000). The act distinguishes allocation of three different types of receipts: 1) Receipts From Entities (Cal. Prob. Code §§ 16350-52 (West 2000)), 2) Receipts Not Normally Apportioned (Cal. Prob. Code §§ 16355-58 (West 2000)), and 3) Receipts Normally Apportioned (Cal. Prob. Code §§ 16360-67 (West 2000)).

Loyalty/self-dealing statute The trustee has a duty to administer the trust solely in the interest of the beneficiaries. Cal. Prob. Code § 16002 (West 2000). If a trust has two or more beneficiaries, the trustee has a duty to deal impartially with them. Cal. Prob. Code § 16003 (West 2000). The trustee has a duty not to use or deal with trust property for the trustee's own profit or for any other purpose unconnected with the trust, nor to take part in any transaction in which the trustee has an interest adverse to the beneficiary. Cal. Prob. Code § 16004 (West 2000). The trustee has a duty to apply the full extent of the trustee's skills. Cal. Prob. Code § 16014 (West 2000).

If the trust instrument provides for the trustee's compensation, the trustee is entitled to be compensated in accordance with the trust instrument. The court may fix or allow greater or lesser compensation than could be allowed under the terms of the trust in certain circumstances. Cal. Prob. Code § 15680 (West 2000). If the trust instrument does not specify the trustee's compensation, the trustee is entitled to reasonable compensation under the circumstances. Cal. Prob. Code § 15681 (West 2000).