SECTIONS 3600-3605 - California Statutes

PROBATE CODE

SECTION 3600-3605

3600. This chapter applies whenever both of the following
conditions exist:
(a) A court (1) approves a compromise of, or the execution of a
covenant not to sue on or a covenant not to enforce judgment on, a
minor's disputed claim, (2) approves a compromise of a pending action
or proceeding to which a minor or person with a disability is a
party, or (3) gives judgment for a minor or person with a disability.
(b) The compromise, covenant, or judgment provides for the payment
or delivery of money or other property for the benefit of the minor
or person with a disability.

3601. (a) The court making the order or giving the judgment
referred to in Section 3600, as a part thereof, shall make a further
order authorizing and directing that reasonable expenses, medical or
otherwise and including reimbursement to a parent, guardian, or
conservator, costs, and attorney's fees, as the court shall approve
and allow therein, shall be paid from the money or other property to
be paid or delivered for the benefit of the minor or person with a
disability.
(b) The order required by subdivision (a) may be directed to the
following:
(1) A parent of the minor, the guardian ad litem, or the guardian
of the estate of the minor or the conservator of the estate of the
person with a disability.
(2) The payer of any money to be paid pursuant to the compromise,
covenant, or judgment for the benefit of the minor or person with a
disability.

3602. (a) If there is no guardianship of the estate of the minor or
conservatorship of the estate of the person with a disability, the
remaining balance of the money and other property, after payment of
all expenses, costs, and fees as approved and allowed by the court
under Section 3601, shall be paid, delivered, deposited, or invested
as provided in Article 2 (commencing with Section 3610).
(b) Except as provided in subdivisions (c) and (d), if there is a
guardianship of the estate of the minor or conservatorship of the
estate of the person with a disability, the remaining balance of the
money and other property, after payment of all expenses, costs, and
fees as approved and allowed by the court under Section 3601, shall
be paid or delivered to the guardian or conservator of the estate.
Upon application of the guardian or conservator, the court making the
order or giving the judgment referred to in Section 3600 or the
court in which the guardianship or conservatorship proceeding is
pending may, with or without notice, make an order that all or part
of the money paid or to be paid to the guardian or conservator under
this subdivision be deposited or invested as provided in Section
2456.
(c) Upon ex parte petition of the guardian or conservator or upon
petition of any person interested in the guardianship or
conservatorship estate, the court making the order or giving the
judgment referred to in Section 3600 may for good cause shown order
one or more of the following:
(1) That all or part of the remaining balance of money not become
a part of the guardianship or conservatorship estate and instead be
deposited in an insured account in a financial institution in this
state, or in a single-premium deferred annuity, subject to withdrawal
only upon authorization of the court.
(2) If there is a guardianship of the estate of the minor, that
all or part of the remaining balance of money and other property not
become a part of the guardianship estate and instead be transferred
to a custodian for the benefit of the minor under the California
Uniform Transfers to Minors Act, Part 9 (commencing with Section
3900).
(3) That all or part of the remaining balance of money and other
property not become a part of the guardianship estate and, instead,
be transferred to the trustee of a trust which is either created by,
or approved of, in the order or judgment described in Section 3600.
This trust shall be revocable by the minor upon attaining 18 years of
age, and shall contain other terms and conditions, including, but
not limited to, terms and conditions concerning trustee's accounts
and trustee's bond, as the court determines to be necessary to
protect the minor's interests.
(d) Upon petition of the guardian, conservator, or any person
interested in the guardianship or conservatorship estate, the court
making the order or giving the judgment referred to in Section 3600
may order that all or part of the remaining balance of money not
become a part of the guardianship or conservatorship estate and
instead be paid to a special needs trust established under Section
3604 for the benefit of the minor or person with a disability.
(e) If the petition is by a person other than the guardian or
conservator, notice of hearing on a petition under subdivision (c)
shall be given for the period and in the manner provided in Chapter 3
(commencing with Section 1460) of Part 1.
(f) Notice of the time and place of hearing on a petition under
subdivision (d), and a copy of the petition, shall be mailed to the
State Director of Health Services, the Director of Mental Health, and
the Director of Developmental Services at the office of each
director in Sacramento at least 15 days before the hearing.

3603. Where reference is made in this chapter to a "person with a
disability," the reference shall be deemed to include the following:
(a) A person for whom a conservator may be appointed.
(b) Any of the following persons, subject to the provisions of
Section 3613:
(1) A person who meets the definition of disability as defined in
Section 1382c(a)(3) of Title 42 of the United States Code, or as
defined in Section 416(i)(1) of Title II of the federal Social
Security Act (42 U.S.C. Sec. 401 et seq.) and regulations
implementing that act, as set forth in Part 416.905 of Title 20 of
the Federal Code of Regulations.
(2) A person who meets the definition of disability as defined in
paragraphs (1), (2), and (3) of subsection (d) of Section 423 of
Title II of the federal Social Security Act (42 U.S.C. Sec. 401 et
seq.) and regulations implementing that act, as set forth in Part
404.1505 of Title 20 of the Federal Code of Regulations.
(3) A minor who meets the definition of disability, as set forth
in Part 416.906 of Title 20 of the Federal Code of Regulations.
(4) A person with a developmental disability, as defined in
Section 4512 of the Welfare and Institutions Code.

3604. (a) (1) If a court makes an order under Section 3602 or 3611
that money of a minor or person with a disability be paid to a
special needs trust, the terms of the trust shall be reviewed and
approved by the court and shall satisfy the requirements of this
section. The trust is subject to continuing jurisdiction of the
court, and is subject to court supervision to the extent determined
by the court. The court may transfer jurisdiction to the court in the
proper county for commencement of a proceeding as determined under
Section 17005.
(2) If the court referred to in subdivision (a) could have made an
order under Section 3602 or 3611 to place that money into a special
needs trust, but that order was not requested, a parent, guardian,
conservator, or other interested person may petition a court that
exercises jurisdiction pursuant to Section 800 for that order. In
doing so, notice shall be provided pursuant to subdivisions (e) and
(f) of Section 3602, or subdivision (c) of Section 3611, and that
notice shall be given at least 15 days before the hearing.
(b) A special needs trust may be established and continued under
this section only if the court determines all of the following:
(1) That the minor or person with a disability has a disability
that substantially impairs the individual's ability to provide for
the individual's own care or custody and constitutes a substantial
handicap.
(2) That the minor or person with a disability is likely to have
special needs that will not be met without the trust.
(3) That money to be paid to the trust does not exceed the amount
that appears reasonably necessary to meet the special needs of the
minor or person with a disability.
(c) If at any time it appears (1) that any of the requirements of
subdivision (b) are not satisfied or the trustee refuses without good
cause to make payments from the trust for the special needs of the
beneficiary, and (2) that the State Department of Health Services,
the State Department of Mental Health, the State Department of
Developmental Services, or a county or city and county in this state
has a claim against trust property, that department, county, or city
and county may petition the court for an order terminating the trust.
(d) A court order under Section 3602 or 3611 for payment of money
to a special needs trust shall include a provision that all statutory
liens in favor of the State Department of Health Services, the State
Department of Mental Health, the State Department of Developmental
Services, and any county or city and county in this state shall first
be satisfied.

3605. (a) This section applies only to a special needs trust
established under Section 3604 on or after January 1, 1993.
(b) While the special needs trust is in existence, the statute of
limitations otherwise applicable to claims of the State Department of
Health Services, the State Department of Mental Health, the State
Department of Developmental Services, and any county or city and
county in this state is tolled. Notwithstanding any provision in the
trust instrument, at the death of the special needs trust beneficiary
or on termination of the trust, the trust property is subject to
claims of the State Department of Health Services, the State
Department of Mental Health, the State Department of Developmental
Services, and any county or city and county in this state to the
extent authorized by law as if the trust property is owned by the
beneficiary or is part of the beneficiary's estate.
(c) At the death of the special needs trust beneficiary or on
termination of the trust, the trustee shall give notice of the
beneficiary's death or the trust termination, in the manner provided
in Section 1215, to all of the following:
(1) The State Department of Health Services, the State Department
of Mental Health, and the State Department of Developmental Services,
addressed to the director of that department at the Sacramento
office of the director.
(2) Any county or city and county in this state that has made a
written request to the trustee for notice, addressed to that county
or city and county at the address specified in the request.
(d) Failure to give the notice required by subdivision (c)
prevents the running of the statute of limitations against the claim
of the department, county, or city and county not given the notice.
(e) The department, county, or city and county has four months
after notice is given in which to make a claim with the trustee. If
the trustee rejects the claim, the department, county, or city and
county making the claim may petition the court for an order under
Chapter 3 (commencing with Section 17200) of Part 5 of Division 9,
directing the trustee to pay the claim. A claim made under this
subdivision shall be paid as a preferred claim prior to any other
distribution. If trust property is insufficient to pay all claims
under this subdivision, the trustee shall petition the court for
instructions and the claims shall be paid from trust property as the
court deems just.
(f) If trust property is distributed before expiration of four
months after notice is given without payment of the claim, the
department, county, or city and county has a claim against the
distributees to the full extent of the claim, or each distributee's
share of trust property, whichever is less. The claim against
distributees includes interest at a rate equal to that earned in the
Pooled Money Investment Account, Article 4.5 (commencing with Section
16480) of Chapter 3 of Part 2 of Division 4 of Title 2 of the
Government Code, from the date of distribution or the date of filing
the claim, whichever is later, plus other accruing costs as in the
case of enforcement of a money judgment.