BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2013-2014 Regular Session
AB 1160 (Wagner)
As Amended June 3, 2013
Hearing Date: June 11, 2013
Fiscal: No
Urgency: No
TMW
SUBJECT
Decedents' Estates: Personal Representative
DESCRIPTION
This bill would authorize the personal representative of a
decedent's estate to file a petition with a court to
participate, as necessary to assist the court, in a third-party
petition for determination on distribution of the estate. This
bill would provide procedural requirements for the personal
representative's petition, and authorize the court to grant or
deny the petition on the pleadings.
This bill would also authorize the court to determine the manner
and capacity in which the personal representative may
participate in the third-party's petition, including filing
papers as a party, or to take other specified action, if deemed
by the court to be necessary.
BACKGROUND
The court may appoint a personal representative to administer a
deceased person's (decedent) estate. The personal
representative may be an executor (a person designated in the
decedent's will to administer the estate), or, if there is no
named executor willing or able to administer the estate or no
will exists, the court may appoint an administrator to
administer the estate. In the event there is no one willing to
act on the decedent's behalf, the court may appoint a public
administrator.
During estate administration, the personal representative, a
(more)
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beneficiary, or any other person having a property right in or
claim against the estate of a decedent (interested person) may
ask the court to determine to whom the estate should be
distributed. If the beneficiary or other interested person
petitions the court for a determination on estate distribution,
then the personal representative is authorized to participate as
a party and to assist the court in the proceeding.
Prior to 1988, when the California Law Revision Commission
(CLRC) recommended, and the Legislature enacted, a revised and
recast Probate Code, a personal representative, who wanted to
participate in an action brought by an interested person for the
determination of estate distribution, was first required to seek
an order from the court to participate in the determination
proceeding. The court order requirement was first enacted in
1976 under AB 3559 (Chel, Ch. 620, Stats. 1976) in order to
create a narrow exception for a personal representative to
appear as a party in a beneficiary's distribution determination
and assist the court in sorting out the validity of claims where
there were no other interested parties contesting a distribution
determination.
This court order requirement allowed the court to determine
whether the personal representative was requesting to
participate in the proceeding as an impartial party or whether
the personal representative desired to participate to protect
his or her own interests in the estate. When the distribution
and discharge statutes of the Probate Code were revised and
recast by AB 2841 (Harris, Ch. 1199, Stats. 1988), the court
order requirement was dropped, but there is no indication,
either in the CLRC's recommendation or the legislative analyses,
as to why.
This bill, sponsored by the Conference of California Bar
Associations, would reinstate the requirement for a personal
representative to seek a court order prior to participating in a
third party's distribution determination proceeding.
CHANGES TO EXISTING LAW
Existing law defines the "personal representative" of a deceased
person (decedent) to mean the executor, administrator,
administrator with the will annexed, special administrator,
successor personal representative, public administrator, or a
person who performs substantially the same function under the
law of another jurisdiction governing the decedent's status.
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(Prob. Code Sec. 58(a).)
Existing law provides that the term "interested person" includes
any of the following: (1) an heir, devisee, child, spouse,
creditor, beneficiary, and any other person having a property
right in or claim against a trust estate or the estate of a
decedent which may be affected by the proceeding; (2) any person
having priority for appointment as personal representative; and
(3) a fiduciary representing an interested person. (Prob. Code
Sec. 48(a).)
Existing law authorizes the personal representative to commence
and maintain actions and proceedings for the benefit of the
estate, and defend actions and proceedings against the decedent,
the personal representative, or the estate. (Prob. Code Sec.
9820.)
Existing law authorizes the personal representative or any
person claiming to be a beneficiary or otherwise entitled to
distribution of a share of the estate, to file a petition for a
court determination of the persons entitled to distribution of
the decedent's estate. (Prob. Code Sec. 11700.)
Existing law provides that any interested person may appear and,
at or before the time of the hearing on the petition for
determination of distribution, file a written statement of the
person's interest in the estate. The written statement may be
in support of, or in opposition to, the petition. No other
pleadings are necessary and the written statement of each
claimant shall be deemed denied by each of the other claimants
to the extent the written statements conflict. (Prob. Code Sec.
11702(a).) Existing law also authorizes the Attorney General to
be deemed a person entitled to distribution of the estate if the
estate involves a charitable trust without a designated trustee,
a devise for a charitable purpose without an identified
beneficiary, or an escheat to the state. (Prob. Code Sec.
11703.)
Existing law provides that the personal representative may file
papers and otherwise participate in the distribution
determination proceeding as a party to assist the court. (Prob.
Code Sec. 11704(b).)
This bill would, instead, authorize the personal representative
to petition the court for authorization to participate, as
necessary to assist the court, in the petition for determination
of distribution proceeding.
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This bill would require that a notice of the hearing on the
personal representative's petition be given to interested
parties.
This bill would authorize the court to grant or deny the
personal representative's petition, in whole or in part, on the
pleadings, without an evidentiary hearing or further discovery.
This bill would prohibit a court from granting the personal
representative's petition unless the personal representative
makes a showing of good cause.
This bill would require the court to determine the manner and
capacity in which the personal representative may provide
assistance in the proceeding, and authorize the court to direct
the personal representative to file papers as a party to the
proceeding or to take other specified action, if deemed by the
court to be necessary to assist the court.
COMMENT
1. Stated need for the bill
The author writes:
AB 1160 would amend Probate Code [Section] 11704 to reinstate
the requirement from the predecessor statute that a personal
representative who wishes to participate in an heirship
determination proceeding as personal representative - and
therefore at estate expense - must first obtain the court's
approval. It would further restore the intent of that earlier
requirement to ensure that personal representative
participation in heirship litigation is the exception rather
than the rule. It would effect this change by specifying that
a personal representative who wishes to participate as such in
an heirship determination hearing must demonstrate good cause
for participation, and by giving the court authority to
determine what level of participation by the personal
representative is needed to actually assist the court, and
therefore what level of participation should be permitted.
AB 1160 does not prohibit or impede personal representative
participation in heirship proceedings where - and to the
extent that - such participation is necessary, beneficial, and
actually does "assist the court." Nor does the bill prohibit
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or restrict a personal representative who is also named in the
will as a beneficiary or an heir from participating in an
heirship determination proceeding as an individual, at his or
her own expense. Rather, AB 1160 provides the court with the
authority and discretion to decide how and under what
circumstances assistance to the court can and should be
provided by the personal representative, while still
protecting the estate.
2. Protection against conflicts of interest
Existing law provides that the personal representative may file
papers and otherwise participate in the distribution
determination proceeding as a party to assist the court. (Prob.
Code Sec. 11704(b).) This bill would authorize the personal
representative to file papers and otherwise participate in the
distribution determination proceeding as necessary to assist the
court as long as the personal representative first made a good
cause showing and obtained a prior court order. This bill would
also authorize the court to allow the personal representative to
file papers as a party to the distribution determination
proceeding.
The author argues that historically, the role of the personal
representatives in probate law has been solely to preserve,
protect, and enhance the decedent's estate until it could be
distributed to its beneficiaries. For this reason, the personal
representative for many years was prohibited from playing an
active role in proceedings to determine who should inherit the
estate. If the personal representative was also an heir or
beneficiary, he or she could participate as a party in heirship
determination, but only as an individual and at their own
expense.
The Conference of California Bar Association, sponsor, notes
that in 1976, in response to the growth in the number and
activity of commercial heir-hunting firms, the Legislature
enacted AB 3559 (Chel, Ch. 620, Stats. 1976) to create a narrow
exception to the long-standing general rule barring a personal
representative from participating in an heirship proceeding. AB
3559 authorized a personal representative to participate as a
party in heirship determination proceedings "to assist the
court" in sorting out the validity of claims where there were no
other interested parties, such as known heirs or beneficiaries,
to contest the claim. However, that authority came with the
specific requirement that personal representatives must first
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obtain the court's permission (court order) before
participating, in order to avoid improperly motivated personal
representatives from abusing the system.
In 1988, the "prior order of the court" requirement was deleted
by AB 2841 (Harris, Ch. 1199, Stats. 1988), a comprehensive
overhaul of the Probate Code recommended by the California Law
Revision Commission (CLRC). No reason was given for the removal
of this requirement, other than the following notation in the
CLRC's recommendation: "There is nothing so unique about the
determination made in such a proceeding that requires rules that
differ from the general rules of civil practice that govern all
other probate procedures, or that precludes the court from
making the determination." (Recommendation Relating to
Distribution and Discharge (Dec. 10, 1987) 19 Cal. L. Revision
Comm'n Reports (1988)
[as of June
2, 2013] p. 958.) The author argues that even after the removal
of the prior court order requirement, courts continued to
require personal representative neutrality before he or she
could be awarded fees out of the estate.
A recent court case has renewed discussion over the court order
requirement. In the Estate of Bartsch (2011) 193 Cal.App.4th
885, the court analyzed whether the statutory language of
Probate Code Section 11704 limited the participation of the
personal representative in a beneficiary's distribution
determination proceeding only "to assist the court" and whether
the personal representative was authorized to participate in the
distribution determination proceeding as a litigation adversary.
The Bartsch court found that the participation of the personal
representative, who had a personal interest in the estate as a
beneficiary, was primarily for the benefit of the other
beneficiaries who did not appear in the proceeding. (Id. at p.
894.) The court held that Probate Code Section 11704 does not
prohibit the personal representative from participating in the
proceeding, even if the personal representative had an interest
in the estate as a beneficiary. (Id. at p. 893.) The Bartsch
case resulted in an award of attorney's fees and costs to the
personal representative for her participation in the proceeding,
in which she had a personal interest, at the expense of the
other beneficiaries of the estate.
Although the Bartsch court found the personal representative's
participation to be helpful to determine the rightful
beneficiaries, as intended by the statute, there may be
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situations where the statute could authorize the personal
representative to participate for sole personal gain at the
expense of other beneficiaries of the estate. In order to avoid
these situations, this bill would reinstate the requirement for
a personal representative to seek a court order prior to
participating in a beneficiary's distribution determination
proceeding. In this way, this bill arguably would restore
fairness to the distribution proceeding by allowing the
interested parties the ability to challenge a self-interested
personal representative's participation in the proceeding prior
to the court's order.
However, it is important to note that there may be other
situations where beneficiaries are unable to challenge a
petition for distribution determination due to distance,
unfamiliarity with the California court system, or the financial
inability to litigate the matter. This bill would require the
court to determine the manner and capacity in which the personal
representative may participate in the proceeding, and may direct
the personal representative to file papers, file papers as a
party to the proceeding, or to take other specified action, if
deemed by the court to be necessary to assist the court. In
this way, the court could authorize the personal representative
to participate as a party in the distribution determination
proceeding in order to protect the interests of the
non-appearing beneficiaries.
3. Improved procedural requirements
Existing law authorizes the personal representative to file
papers and otherwise participate in the distribution
determination proceeding as a party to assist the court. (Prob.
Code Sec. 11704(b).) The court order requirement that this bill
would reinsert into this provision would create an additional
court procedure that was not specifically delineated when the
statute previously included the court order requirement.
However, this bill would provide clarified procedural
requirements regarding the personal representative's assistance
in the distribution determination proceeding.
Specifically, this bill would require the personal
representative to provide notice of the hearing on the personal
representative's petition to the persons identified as having an
interest in the third party's distribution determination
proceeding. This provision would provide all interested parties
with appropriate notice that the personal representative was
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attempting to appear in the distribution determination
proceeding so that other interested parties could challenge the
personal representative's appearance.
This bill would also authorize the court to grant or deny the
personal representative's petition filed, in whole or in part,
on the pleadings, without an evidentiary hearing or further
discovery. Although existing law is silent on this part, this
provision would specifically authorize the court to make its
determination on the personal representative's petition to
participate based on all pleadings filed, by the personal
representative, third party distribution petitioner, as well as
other interested parties. Arguably, this provision would help
the court streamline the process for the personal
representative's petition and decrease time delays related to
the distribution determination proceeding.
Support : Trusts and Estates Section of the State Bar of
California
Opposition : None Known
HISTORY
Source : Conference of California Bar Associations
Related Pending Legislation : None Known
Prior Legislation :
AB 2841 (Harris, Ch. 1199, Stats. 1988) See Background.
AB 3559 (Chel, Ch. 620, Stats. 1976) See Background; Comment 2.
Prior Vote :
Assembly Committee on Judiciary (Ayes 10, Noes 0)
Assembly Floor (Ayes 74, Noes 0)
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