CA AB1985

Extends rules for interpreting gifts in wills and trusts to include cases where specifically given property is encumbered by deeds of trust, mortgages, or other instruments, in addition to cases where property is sold.

Applies protections to property sold or encumbered by a trustee acting for an incapacitated settlor of a revocable trust, expanding coverage beyond conservators and agents with durable power of attorney.

Guarantees recipients of specific gifts receive a general pecuniary gift equal to the net sale price (unreduced by encumbrance payoff) or the unpaid encumbrance amount, plus the property itself.

Extends eminent domain award and fire/casualty insurance proceeds rules to trustees acting for incapacitated settlors, with proceeds paid unreduced by any encumbrance payoffs made after the instrument's execution.

Defines "incapacitated principal" or "incapacitated settlor" as a person determined to be incapacitated, with no adjudication of incapacity before death required.