Prob. Code, § 16325

(a) In making an allocation or determination or exercising discretion under this chapter, all of the following apply:

(1) A fiduciary shall act in good faith, based on what is fair and reasonable to all beneficiaries.

(2) A fiduciary shall administer a trust or decedent’s estate in accordance with the trust or the will, even if there is a different provision in this chapter.

(3) A fiduciary may administer a trust or decedent’s estate by the exercise of a discretionary power of administration given to the fiduciary by the trust or the will, even if the exercise of the power produces a result different from a result required or permitted by this chapter, and no inference that the fiduciary has improperly exercised the discretion arises from the fact that the fiduciary has made an allocation contrary to a provision of this chapter.

(4) A fiduciary shall administer a trust or decedent’s estate in accordance with this chapter if the trust or the will does not contain a different provision or does not give the fiduciary a discretionary power of administration.

(b) A fiduciary’s allocation, determination, or exercise of discretion under this chapter is presumed to be fair and reasonable to all beneficiaries. A fiduciary may exercise a discretionary power of administration given to the fiduciary by the terms of the trust, and an exercise of the power that produces a result different from a result required or permitted by this chapter does not create an inference that the fiduciary abused the fiduciary’s discretion.

(c) A fiduciary shall do both of the following:

(1) Add a receipt to principal, to the extent neither the terms of the trust nor this chapter allocates the receipt between income and principal.

(2) Charge a disbursement to principal, to the extent neither the terms of the trust nor this chapter allocates the disbursement between income and principal.

(d) A fiduciary may exercise the power to adjust under Section 16327, convert an income trust to a unitrust under paragraph (1) of subdivision (a) of Section 16332, change the percentage or method used to calculate a unitrust amount under paragraph (2) of subdivision (a) of Section 16332, or convert a unitrust to an income trust under paragraph (3) of subdivision (a) of Section 16332, if the fiduciary determines the exercise of the power will assist the fiduciary to administer the trust or estate impartially.

(e) Factors the fiduciary shall consider in making the determination under subdivision (d) include all of the following:

(1) The terms of the trust.

(2) The nature, distribution standards, and expected duration of the trust.

(3) The effect of the allocation rules, including specific adjustments between income and principal, under Article 4 (commencing with Section 16340) to Article 7 (commencing with Section 16375), inclusive.

(4) The desirability of liquidity and regularity of income.

(5) The desirability of the preservation and appreciation of principal.

(6) The extent to which an asset is used or may be used by a beneficiary.

(7) The increase or decrease in the value of principal assets, reasonably determined by the fiduciary.

(8) Whether and to what extent the terms of the trust give the fiduciary power to accumulate income or invade principal or prohibit the fiduciary from accumulating income or invading principal.

(9) The extent to which the fiduciary has accumulated income or invaded principal in preceding accounting periods.

(10) The effect of current and reasonably expected economic conditions.

(11) The reasonably expected tax consequences of the exercise of the power.