Legal Question in Wills and Trusts in California

It sounds like you are referring to the surviving spouse who is the trustee and sole lifetime beneficiary of a living trust established by him/her and the deceased spouse. The answer to your question depends on the terms of the trust document. If the trust remains completely revocable after the first death, the surviving spouse may do what you described. If it is an "A/B" trust, there will be some limitations on how much principal, and for what purpose, the surviving spouse can withdraw from the irrevocable "B" (usually called Bypass or Exemption) Trust. If you have a copy of the trust, I recommend that you have a lawyer read it, who can explain the terms to you and tell you if the remainder beneficiaries have any rights during the lifetime of the surviving spouse.

The terms of the trust control the distribution of the assets.