CA SB1159

Repeals the Uniform Principal and Income Act and replaces it with the Uniform Fiduciary Income and Principal Act, which sets forth powers and duties of fiduciaries regarding allocation of receipts and disbursements between principal and income, making adjustments, and converting trusts to unitrusts.

Applies when California is the principal place of administration of a trust or estate, or the situs of property subject to a life estate or term interest; trustees accepting California trusteeship or moving administration to California submit to the act's application.

Authorizes fiduciaries to convert income trusts to unitrusts, change unitrust percentages or methods, or convert unitrusts back to income trusts if the fiduciary determines such action assists in administering the trust impartially, with notice to beneficiaries and opportunity to object.

Establishes detailed rules for allocating receipts from various sources (entity distributions, rental income, interest, insurance, natural resources, timber, derivatives) between income and principal, with specific treatment for different asset types and business activities.

Specifies how fiduciaries must allocate disbursements (compensation, expenses, insurance premiums, taxes, repairs) between income and principal, with provisions for depreciation, transfers between accounts, and tax adjustments.