BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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                              UNFINISHED BUSINESS


          Bill No:  SB 308
          Author:   Harman (R)
          Amended:  6/15/09
          Vote:     21

           
           SENATE JUDICIARY COMMITTEE  :  5-0, 3/31/09
          AYES:  Corbett, Harman, Florez, Leno, Walters

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           SENATE FLOOR  :  37-0, 4/23/09 (Consent)
          AYES: Aanestad, Alquist, Ashburn, Benoit, Calderon,  
            Cedillo, Cogdill, Corbett, Correa, Cox, Denham,  
            DeSaulnier, Dutton, Florez, Hancock, Hollingsworth, Huff,  
            Kehoe, Leno, Liu, Lowenthal, Maldonado, Negrete McLeod,  
            Oropeza, Padilla, Pavley, Romero, Runner, Simitian,  
            Steinberg, Strickland, Walters, Wiggins, Wolk, Wright,  
            Wyland, Yee
          NO VOTE RECORDED: Ducheny, Harman, Vacancy

           ASSEMBLY FLOOR  :  76-0, 8/17/09 (Consente) - See last page  
            for vote


           SUBJECT  :    Professional fiduciaries:  donative transfers

           SOURCE  :     California Judges Association


           DIGEST  :    This bill is a technical measure that refines  
          the definition of "professional fiduciary" under the  
          Professional Fiduciaries Act to include varying types of  
                                                           CONTINUED





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          conservators and guardians and specifies how trusts and  
          beneficiaries are counted for purposes of the definition.   
          It also excludes from the definition employees of public  
          officers or agencies that are now specifically exempt from  
          the requirements imposed on professional fiduciaries, when  
          those employees are acting within the scope of their  
          employment duties.

           Assembly Amendments  make conforming changes and clarify  
          specific definitions relative to probate issues.

           ANALYSIS  :    

          Existing law defines and regulates the activities of  
          professional fiduciaries. (Business & Professions Code  
          Section 6501 et seq.  All references are to the Business &  
          Professions Code unless otherwise indicated.)

          Existing law defines "professional fiduciary" as a person  
          who acts as a conservator or guardian for two or more  
          persons at the same time who are not related to the  
          professional fiduciary or to each other by blood, adoption,  
          marriage, or registered domestic partnership. (Section  
          6501(f).)

          This bill clarifies that a "conservator" may be a  
          "conservator of the person, the estate, or person and  
          estate" and that a "guardian" means a "guardian of the  
          estate, or person and estate."

          Existing law defines "professional fiduciary" to also  
          include a person who acts as a trustee, agent under a  
          durable power of attorney for health care, or agent under a  
          durable power of attorney for finances, for more than three  
          people or more than three families, or a combination  
          thereof that totals more than three at the same time, that  
          are not related to the professional fiduciary by blood,  
          marriage, or registered domestic partnership.

          This bill clarifies that in making this determination:  (1)  
          all individuals who are related to each other shall count  
          as one individual; (2) trustors related to each other shall  
          count as one individual; and (3) neither the number of  
          beneficiaries nor the number of trusts will be counted for  







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          purposes of this qualification of a professional fiduciary.  
           This bill also specifies that individuals who are related  
          to the fiduciary shall not be counted.

          Existing law provides certain classes of entities and  
          individuals exemptions from the designation of  
          "professional fiduciary."  An employee of a trust company  
          or a Federal Deposit Insurance Corporation (FDIC)-insured  
          institution or its affiliate (both of which are exempt  
          under existing law) is also exempt from designation as a  
          professional fiduciary for purposes of the Professional  
          Fiduciaries Act (PFA), as long as the employee is acting in  
          the course and scope of that employment.

          Existing law also exempts from the designation of  
          "professional fiduciary" a public officer or public agency,  
          including the public guardian, public conservator, or other  
          agency of the state or a county, including a regional  
          center for persons with developmental disabilities, when  
          the officer or agency is acting in the course and scope of  
          their official duties.

          This bill includes employees of a public agency and a  
          public officer of a public agency, as specified, acting in  
          the course and scope of their official duties, in the  
          exemption for public agencies and public officers.

          Existing law, effective January 1, 2010, in relation to  
          wills, trusts, and other instruments, defines and regulates  
          no contest clauses.  Existing law limits the application of  
          a no contest clause to specific contests and provides that  
          a no contest clause may be enforced against a direct  
          contest only when it is brought without probable cause.   
          Former law exempted certain contests from the enforcement  
          of the no contest clause under specified circumstances,  
          including if there was reasonable cause to believe that  
          instrument had been revoked.  Former law also permitted a  
          beneficiary to apply to a court for a determination of  
          whether a particular motion, petition, or other act by the  
          beneficiary would be a contest within the terms of a no  
          contest clause.

          This bill makes conforming changes to clarify under what  
          circumstances the former law would apply.







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          Existing law provides for a decedent's property to be  
          distributed through intestate succession when the decedent  
          dies without a will, trust, or other instrument based on  
          the degree of kinship.  Existing law prohibits certain  
          property transactions between certain court officials or  
          employees or their relatives and guardians or conservators  
          based on the lineal or collateral consanguinity of the  
          person to the court official or employee.  Existing law  
          requires a guardian or conservator, when engaging in  
          certain property transactions, or when seeking approval for  
          certain acts, with the guardians or conservator's family  
          members, based on lineal or collateral consanguinity, to  
          disclose that relationship to the court upon a petition for  
          approval.

          This bill defines the degree of kinship or consanguinity  
          for the purpose of these provisions.

           Background
           
          In 2006, the Legislature enacted a package of bills to  
          reform the conservatorship system in the State of  
          California.  Major features of the reforms, embodied in the  
          Omnibus Conservatorship and Guardianship Reform Act of 2006  
          (SB 1116 [Scott], Chapter 490 Statutes of 2006, SB 1550  
          [Figueroa], Chapter 491, Statutes of 2006, SB 1716 [Bowen],  
          Chapter 492, Statutes of 2006, and AB 1363 [Jones], Chapter  
          493, Statutes of 2006) are:  (1) increases frequency of  
          review of conservatorships; (2) broadens scope of court  
          investigators' reports; (3) special procedure for the sale  
          of a conservatee's primary residence; and (4) the  
          regulation and licensing of private professional  
          fiduciaries including private professional conservators.   
          The bills were compelled by a series of articles in the  
          media revealing widespread abuse of vulnerable elders and  
          dependent adults by conservators and deficiencies in the  
          courts' oversight of conservatorships.

          SB 1550 (Figueroa) establishes the PFA for the purpose of  
          licensing and regulating individuals who act as  
          conservators, guardians, trustees, personal  
          representatives, or agents under a durable power of  
          attorney for health care or for finances, for two or more  







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          persons unrelated to the professional fiduciary or to each  
          other, as specified.  Public agency fiduciaries (public  
          guardians and public conservators) and those employed by  
          banks and trust companies are exempt from this regulatory  
          scheme.

          SB 1550 (Figueroa) also prohibits a court from appointing a  
          person as a private professional conservator, guardian, or  
          trustee, or permitting a person to continue to serve as  
          such, unless he/she is licensed as a professional fiduciary  
          and has filed evidence of the license with the clerk of the  
          court in each county where a petition for appointment has  
          been filed.

          This bill makes some technical, clarifying amendments to  
          the PFA with regards to conservators, guardians, and  
          trustees who may qualify as a professional fiduciary under  
          the PFA.

           Prior Legislation  

          SB 1550 (Figueroa), Chapter 491, Statutes of 2006  , enacted  
          the Professional Fiduciaries Act.

           AB 299 (Tran), Chapter 130, Statutes of 2007  , exempted from  
          regulation as a professional fiduciary a person whose sole  
          activity as a professional fiduciary is as an investment  
          adviser.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/18/09)

          California Judges Association (source)
          Judicial Council of California


           ARGUMENTS IN SUPPORT  :    The author's office states, this  
          bill is a very technical measure designed to codify the  
          principle that, for purposes of determining when a trustee  
          must be licensed, only trustors should be counted, and not  
          beneficiaries or trusts.  In many cases trusts may have  
          large numbers of beneficiaries, and large numbers of trusts  







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          and sub-trusts might have been established for tax reasons  
          by a small number of trustors.  The language codifying this  
          point is already included in regulations adopted by the  
          Professional Fiduciaries Bureau, Title 16 CCR Section  
          4406(e)(2), but for clarity the rule should be contained in  
          the statute.

          The sponsor believes that Section 6501 is unclear that  
          persons employed by entities exempt from licensure, but who  
          are "moonlighting" as professional fiduciaries, must be  
          licensed.  The bill thus contains language clarifying this  
          point.

           ASSEMBLY FLOOR  : 
          AYES:  Adams, Ammiano, Anderson, Arambula, Beall, Bill  
            Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,  
            Brownley, Buchanan, Caballero, Charles Calderon, Carter,  
            Chesbro, Conway, Coto, Davis, De La Torre, De Leon,  
            DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,  
            Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,  
            Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi,  
            Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,  
            Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza,  
            Miller, Monning, Nava, Nestande, Niello, Nielsen, John A.  
            Perez, V. Manuel Perez, Portantino, Ruskin, Salas, Silva,  
            Skinner, Solorio, Audra Strickland, Swanson, Torlakson,  
            Torres, Torrico, Tran, Villines, Yamada, Bass
          NO VOTE RECORDED:  Cook, Saldana, Smyth, Vacancy


          RJG:do  8/18/09   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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