BILL ANALYSIS �
AB 1339
Page 1
Date of Hearing: May 7, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 1339 (Maienschein) - As Amended: April 22, 2013
PROPOSED CONSENT
SUBJECT : PROFESSIONAL FIDUCIARIES: FEES
KEY ISSUE : SHOULD PROFESSIONAL FIDUCIARIES BE REQUIRED TO
PROVIDE WARDS OR CONSERVATEES WITH ADVANCE NOTICE OF THEIR FEES?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This bill, sponsored by the Professional Fiduciaries Association
of California, seeks to do two things. First it requires
professional fiduciaries, when they seek appointment as a
guardian, conservator, or temporary guardian or conservator, to
let the ward or conservatee and their relatives know what the
fiduciaries' fees may be. The idea, according to the sponsor,
is to avoid "sticker shock." However, while the bill requires
notice, it also makes clear that providing the notice does not
preclude a court from later reducing the compensation. Second
the bill clarifies the rules that apply if the guardian or
conservator seeks to receive periodic payments in advance of the
regularly scheduled accounting period. The author believes that
this bill will "add transparency and accountability regarding
the fee schedule, estimate, and proposed compensation when the
courts appoint conservators who are licensed professional
fiduciaries." There is no reported opposition.
SUMMARY : Requires professional guardians and conservators to
provide wards and conservatees with advance notice of their fees
and permits a professional fiduciary to receive periodic
payments from a ward or conservatee. Specifically, this bill :
1)Requires the petition for appointment of a conservator or
guardian, or appointment of a temporary conservator or
guardian, if filed by a professional fiduciary, to include:
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a) Petitioner's proposed hourly fee schedule or other
statement of his or her proposed compensation, but this
does not preclude the court from later reducing the
fiduciary's fees or other compensation; and
b) If not otherwise included in the petition, the
fiduciary's license information, and a statement explaining
who engaged the fiduciary, as well as the fiduciary's prior
relationship with the proposed ward or conservatee and
family.
2)Requires a professional fiduciary, who is serving as a
guardian or conservator, to file, concurrently with the
required inventory and appraisal, the fiduciary's proposed
hourly fee schedule or other statement of his or her proposed
compensation, but this does not preclude the court from later
reducing the fiduciary's fees or other compensation.
3)Allows a court, on petition by a professional fiduciary
serving as a guardian or conservator, to authorize periodic
payments to the guardian or conservator, or the attorney for
the guardian or conservator, for services rendered if that
fiduciary has filed a proposed hourly statement and after the
court has addressed any objections. Requires the petition to
describe the services to be rendered and the reason why
periodic payments are requested. Requires the petition to be
properly noticed and allows for objections to be filed.
Requires the court, prior to ordering periodic payments, to
determine whether making such payments is in the best interest
of the ward or conservatee, taking into consideration the
needs of the ward or conservatee and the need to preserve and
protect the estate. If such payments are not in the best
interest of the ward or conservatee, requires the court to
deny the petition.
4)Allows a guardian or conservator to make periodic payments, if
ordered under #3), above, only if the services are actually
rendered. Requires the court to review the periodic payments
at the next accounting to determine if the amount paid was
reasonable and in the best interest of the ward or
conservatee. If the payments were not, requires the court to
make an appropriate order reducing the guardian's or
conservator's compensation.
5)Provides that an authorization for periodic payments
terminates as of the due date of the next succeeding
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accounting. Does not prohibit a guardian or conservator from
filing a subsequent petition to receive periodic payments.
EXISTING LAW :
1)Allows the court to appoint a guardian of the person, estate
or both, taking into consideration the best interest of the
proposed ward. (Probate Code Section 1500 et seq. Unless
stated otherwise, all further statutory references are to that
code.)
2)Allows the court to appoint a conservator to act on behalf of
a person who is unable to adequately provide for his or her
personal needs (a conservator of the person) or incapable of
managing his or her property or other financial assets (a
conservator of the estate). (Section 1800 et seq.)
3)Allows the court, upon showing of good cause, to appoint a
temporary conservator or guardian to serve pending the
appointment of a permanent conservator or guardian. Unless
the court orders otherwise, provides the temporary conservator
or guardian with only those powers and duties that are
necessary to provide for temporary care of the conservatee or
ward and to preserve and protect the property of the
conservatee or ward from loss or injury. (Section 2250 et
seq.)
4)Requires the conservator or guardian to use ordinary care and
diligence in managing the estate. (Section 2401.)
5)Requires the guardian or conservator to file with the court
and mail to the ward and conservatee, within 90 days of
appointment, or as provided, an inventory and appraisal of the
estate. (Section 2610.)
6)Requires the guardian or conservator, at the end of one year
from the date of appointment, and not less frequently than
biennially thereafter, to present the accounting of the assets
of the estate of the ward or conservatee to the court for
settlement and allowance. (Section 2620.)
7)At any time after the filing of the inventory and appraisal,
but not before the expiration of 90 days from the issuance of
letters or any other period of time as the court for good
cause orders, the guardian or conservator may petition the
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court for an order fixing and allowing compensation for
services rendered to that point by the guardian, conservator
or the attorney for the guardian or conservator. (Sections
2640, 2641.)
8)Permits the court to authorize periodic payments to a
guardian, conservator or the attorney for the guardian or
conservator. Requires the petition requesting periodic
payment to describe the services to be rendered and the reason
why authority to make periodic payments is requested. In
fixing the amount of the periodic payment, requires the court
to take into account the services to be rendered on a periodic
basis and the reasonable value of such services. Provides
that periodic payments are subject to review by the court at
the next accounting to determine that the services were
actually rendered and that the amount paid was not
unreasonable. Requires the court to make an appropriate order
if the court determines that the amount paid was either
excessive or inadequate in view of the services actually
rendered. (Section 2643.)
COMMENTS : In California, if an adult is unable to manage his or
her financial matters, a conservator of the estate may be
appointed by a court to manage the adult's or conservatee's
financial matters. If the adult is unable to manage his or her
medical and personal decisions, a conservator of the person may
be appointed. Similarly, a guardian of the estate or person may
be appointed for a minor child or ward.
A conservator or guardian is authorized to charge the
conservatee's or ward's estate for services rendered in
connection with managing the conservatee's or ward's financial
or personal matters. The conservator or guardian is required to
file a petition for fees for services rendered with the court.
The court, at the hearing on the petition, is required to make
an order allowing for compensation for service rendered provided
the court determines that the compensation is just and
reasonable.
This bill, sponsored by the Professional Fiduciaries Association
of California, seeks to do two things. First it requires
professional fiduciaries, when they seek appointment as a
guardian, conservator, or temporary guardian or conservator, to
let the ward or conservatee and their relatives know what the
possible fees may be. The idea, according to the sponsor, is to
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avoid "sticker shock." However, while the bill requires notice,
it also makes clear that providing the notice does not preclude
a court from later reducing the compensation. Second the bill
clarifies the rules that apply if the guardian or conservator
seeks to receive periodic payments in advance of the regularly
scheduled accounting period.
In support of the bill, the author and sponsor write:
Currently, no fee schedule or statement of the conservator
compensation is required to be submitted to the court prior
to appointment as a conservator. This, at times, can lead
to "sticker shock" when a conservatee's estate does not
learn of the fees until many months after the appointment
of a professional conservator. Understandably, an invoice
can seem unreasonably high when a significant span of time
has passed before a bill is received.
AB 1339 would require that when a petition to appoint a
conservator or a temporary conservator is filed, and the
petitioner is a professional fiduciary, the petition also
include the petitioner's proposed hourly fee schedule.
In addition, AB 1339 would require an estimate of the
petitioner's proposed compensation from the estate for the
first year, for services to be performed. This estimate
would be submitted concurrently with the completion of an
inventory and appraisal of the estate. This additional
requirement would be submitted by a conservator who is a
licensed fiduciary, within 90 days of the appointment.
These new requirements would add transparency and
accountability regarding the fee schedule, estimate, and
proposed compensation when the courts appoint conservators
who are licensed professional fiduciaries.
AB 1339 also allows for the filing of petitions for
periodic payments for the services rendered by appointed
conservators who are licensed professional fiduciaries. .
. . These periodic payments could ease the financial
impact on an estate that would otherwise be forced to make
a one-time payment for all services already provided over
many months, potentially up to a year and a half.
This bill is the result, in part, of a recent Mercury News
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article that exposed problems conservatees, wards and
beneficiaries of special needs trusts had in challenging
exorbitant fee petitions by professional fiduciaries. The
article reported that "a six-month investigation by this
newspaper found a small group of [Santa Clara] [C]ounty's
court-appointed personal and estate managers are handing out
costly and questionable bills - and charging even more if they
are challenged. The troubling trend is enriching these private
professionals - working as conservators and trustees - and their
attorneys, with eye-popping rates that threaten to force their
vulnerable clients onto government assistance to survive."
(Karen de S�, Santa Clara County's court-appointed personal and
estate managers are handing out costly and questionable bills,
Mercury News (June 30, 2012).)
The bill's sponsor believes that some of the problems uncovered
by the Mercury News could have been lessened if individuals had
had advance notice of their fiduciaries' fees.
Historical Problems with Professional Fiduciaries . Problems
with conservators are not new. In 2006, in response to
shocking reports of abuse, the Legislature passed the Omnibus
Conservatorship and Guardianship Reform Act of 2006, a
landmark package of bills to overhaul California's troubled
conservatorship system. That legislation was designed to
remedy alarming deficiencies in California's conservatorship
system that had resulted in the abuses of California's
elderly and most vulnerable. The package of bill included:
AB 1363 (Jones), Chap 493, Stats. 2006, which required much
stronger review and responsibility by the state's judges of
conservators, along with uniform standards of conduct that
conservators must follow, brand new and aggressive training
rules for all professionals involved in the system, and a new
requirement that Public Guardians take the cases of all those
at imminent risk of harm.
SB 1116 (Scott), Chap 490, Stats. 2006, which sought to remedy
some of the problems with the state's conservatorship system,
particularly related to the sale of a conservatee's home.
SB 1550 (Figueroa), Chap 491, Stats. 2006, which created the
Professional Fiduciaries Bureau within the Department of
Consumer Affairs to license and regulate professional
fiduciaries, including conservators, guardians and trustees.
SB 1716 (Bowen), Chap 492, Stats. 2006, which allowed the
court to take action when it receives informal reports of
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abuse and neglect from concerned friends or family members;
gave the court the ability to order a review of a
conservatorship at any time; and required that court
investigators more fully examine conservatees.
Unfortunately, while the Professional Fiduciaries Bureau within
the Department of Consumer Affairs now licenses and regulates
professional fiduciaries, the important new court oversights
were never funded and, as a result, are not mandated today.
Thus, it is possible that some of the same abuses that took
place in 2006 could still be occurring today.
Advance Notice of Fees Does Not Imply That the Fees are
Reasonable : It is important to keep in mind that providing a
conservatee or ward or their families with notice of the fees
still does not prevent those fees from being exorbitant. This
bill rightly provides that upfront provision of the fee schedule
does not preclude a court from later reducing the fees.
Likewise, even if the court orders periodic payments, which
includes a determination that the periodic payments are in the
best interest of the ward or conservatee, the court must later
review those payments to see if the services were actually
rendered and that the amount paid was reasonable, taking into
consideration the needs of the ward or conservatee. If the
court, upon its review, determines that the periodic payments
were either unreasonable or not in the best interest of the ward
or conservatee, the court is required to reduce the
compensation.
REGISTERED SUPPORT / OPPOSITION :
Support
Professional Fiduciary Association of California (sponsor)
Opposition
None on file
Analysis Prepared by : Leora Gershenzon / JUD. / (916) 319-2334
AB 1339
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