BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2013-2014 Regular Session
AB 1339 (Maienschein)
As Amended June 10, 2013
Hearing Date: June 18, 2013
Fiscal: No
Urgency: No
TMW
SUBJECT
Professional Fiduciaries: Guardians and Conservators
DESCRIPTION
This bill would require a professional fiduciary or other
person, who petitions the court for appointment of the
professional fiduciary to act as a guardian or conservator, to
provide an hourly fee schedule with the petition for
appointment.
This bill would also require the professional fiduciary, upon
filing an inventory and appraisal, to provide an hourly fee
schedule or statement of his or her proposed compensation from
the estate.
This bill would also establish requirements, as specified, for
the authorization of periodic payments from the estate to the
professional fiduciary for services rendered.
BACKGROUND
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 (conservatee) 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 (ward).
A conservator or guardian is authorized to charge the
conservatee's or ward's estate for services rendered in
(more)
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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.
A professional fiduciary is a person who provides
conservatorship or guardianship services for more than one
conservatee or ward to whom the person is not related. In 2006,
in response to reports that individuals acting as professional
fiduciaries were abusing and taking advantage of elders and
dependent adults, SB 1550 (Figueroa, Ch. 491, Stats. 2006) was
enacted and established the Professional Fiduciaries Act (PFA).
The PFA provides a licensing and disciplinary scheme for
professional fiduciaries in order to protect conservatees and
wards.
Recently, a Mercury News article exposed a problem with the
difficulty of conservatees and wards in challenging exorbitant
fee petitions submitted by professional fiduciaries, who may be
appointed by the court to act as the conservator or guardian of
the estate. 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." (de S�, Santa Clara County's
court-appointed personal and estate managers are handing out
costly and questionable bills, Mercury News (June 30, 2012)
[as of June 9, 2013].) Conservatees and wards,
under existing law, may be required to pay the litigation costs
of the conservator and guardian, but existing law does not
similarly allow a conservatee or ward to recover their
litigation costs, even if he or she is successful in challenging
the fee petition.
This bill, sponsored by the Professional Fiduciary Association
of California, seeks to address this problem by requiring a
professional fiduciary to provide to the court and interested
persons an hourly rate schedule in connection with a petition to
appoint the professional fiduciary as conservator or guardian.
This bill would also require the professional fiduciary to
provide an hourly rate schedule when filing an inventory,
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appraisal, or petition for periodic payments.
CHANGES TO EXISTING LAW
1.Existing law , the Professional Fiduciaries Act (PFA),
establishes a licensing and disciplinary scheme for a
professional fiduciary and defines "professional fiduciary" to
mean a person who acts as a conservator, guardian, trustee,
personal representative, agent under a durable power of
attorney for health care, or agent under a durable power of
attorney for finances, for two or more persons not related to
the professional fiduciary or to each other by blood,
adoption, marriage, or registered domestic partnership. (Bus.
& Prof. Code Sec. 6500 et seq.)
Existing law prohibits a superior court from appointing a
person to carry out the duties of a professional fiduciary, or
permitting a person to continue those duties, unless he or
she: (1) holds a valid, unexpired, unsuspended license as a
professional fiduciary under the PFA; (2) is exempt from the
definition of "professional fiduciary" under the PFA; or (3)
is exempt from the licensing requirements of the PFA. (Prob.
Code Sec. 2340.)
Existing law authorizes a court to appoint a guardian of the
person, estate or both, taking into consideration the best
interest of the proposed ward. (Prob. Code Sec. 1500 et seq.)
Existing law authorizes a relative or other person on behalf
of a minor child to petition the court for the appointment of
a guardian of the minor. (Prob. Code Sec. 1510.)
Existing law authorizes a 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). (Prob. Code Sec. 1800
et seq.)
Existing law authorizes a proposed conservatee, or spouse,
domestic partner, relative, friend of the conservatee, public
administrator, or other interested person to petition the
court for the appointment of a conservator of the proposed
conservatee. Existing law requires specified information to
be included in the petition. (Prob. Code Secs. 1820, 1821.)
Existing law authorizes a court, upon a showing of good cause,
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to appoint a temporary conservator or guardian to serve
pending the appointment of a permanent conservator or
guardian. Unless the court orders otherwise, existing law
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.
(Prob. Code Sec. 2250 et seq.)
Existing law requires a professional fiduciary, who files a
petition to be appointed as the temporary or permanent
conservator of a person, to submit to the court a statement of
the professional fiduciary's registration or license
information and a statement explaining who engaged the
professional fiduciary or how the professional fiduciary was
engaged to file the petition for appointment as the temporary
or permanent conservator and what prior relationship the
professional fiduciary had with the proposed conservatee or
the proposed conservatee's family or friends, unless that
information is included in a petition for appointment for a
temporary or general conservator filed at the same time by the
professional fiduciary. (Prob. Code Secs. 1821(c), 2250(c).)
This bill would require a petitioner or professional fiduciary
who petitions the court for appointment of the professional
fiduciary as a guardian or conservator of a ward's or
conservatee's estate to include in the petition the
professional fiduciary's proposed hourly fee schedule or other
statement of his or her proposed compensation from the estate
for services performed.
This bill would provide that the professional fiduciary's
provision of a proposed hourly fee schedule or another
statement of his or her compensation would not preclude a
court from later reducing the professional fiduciary's fees or
other compensation.
This bill would extend the existing requirement of a
professional fiduciary who petitions to become a permanent
conservator to require a professional fiduciary who petitions
to become a permanent guardian to include in the petition a
statement of the professional fiduciary's license information
and a statement explaining who engaged the professional
fiduciary or how the professional fiduciary was engaged to
file the petition for appointment of a guardian or to agree to
accept the appointment as guardian and what prior relationship
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the professional fiduciary had with the proposed ward or the
proposed ward's family or friends.
2.Existing law requires the conservator or guardian to file with
the court and mail to the conservatee or ward, within 90 days
of appointment, or as provided, an inventory and appraisal of
the estate. (Prob. Code Sec. 2610.)
This bill would require a guardian or conservator who is a
professional fiduciary to file, concurrently with the
inventory and appraisal, a proposed hourly fee schedule or
another statement of his or her proposed compensation from the
ward's or conservatee's estate for services performed as the
guardian or conservator.
This bill would provide that the filing of a proposed hourly
fee schedule or another statement of the guardian's or
conservator's compensation would not preclude a court from
later reducing the professional fiduciary's fees or his or her
attorney's fees or other compensation.
3.Existing law provides that 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 conservator or
guardian may petition the court for an order fixing and
allowing compensation for services rendered to that point by
the conservator, guardian, or the attorney for the conservator
or guardian. (Prob. Code Secs. 2640, 2641.)
Existing law permits the court to authorize periodic payments
to a guardian, conservator, or the attorney for the guardian
or conservator. (Prob. Code Sec. 2643(a).)
Existing law provides that the petition requesting periodic
payment must 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, the court is
required to take into account the services to be rendered on a
periodic basis and the reasonable value of such services.
(Prob. Code Sec. 2643(c).)
Existing law 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. The court is required to make an
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appropriate order if the court determines that the amount paid
was either excessive or inadequate in view of the services
actually rendered. (Prob. Code Sec. 2643(c).)
This bill would clarify the above provisions and specify that
if the guardian or conservator is a professional fiduciary,
the court may authorize periodic payments to the professional
fiduciary only if he or she has filed a proposed hourly fee
schedule or another statement of his or her proposed
compensation from the ward's or conservatee's estate for
services performed as a guardian or conservator, and only
after the court has addressed any objections filed.
This bill would require, in the petition for periodic
payments, the professional fiduciary to describe the services
to be rendered on a periodic basis, provide the reason why
authority to make periodic payments is requested, and provide
a good faith estimate of the fees to be charged by the
professional fiduciary from the date the petition is filed up
to, and including, the date of the next succeeding account or,
if the next succeeding account is due in less than one year, a
good faith estimate of the fees to be charged by the
professional fiduciary from the date the petition is filed
through the next succeeding 12 months.
This bill would require, prior to ordering periodic payments
or fixing the amount of the periodic payment, the court to
determine whether making periodic 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 the court determines that making
periodic payments is not in the best interest of the ward or
conservatee, this bill would require the court to deny the
petition to authorize periodic payments. If the court
determines that making periodic payments is in the best
interest of the ward or conservatee, this bill would require
the court to fix the amount of the periodic payment. In
fixing the amount of the periodic payment, this bill would
require the court to take into account the services to be
rendered on a periodic basis and the reasonable value of those
services.
This bill would require a notice of the hearing on the
petition to be served with a notice of how to file an
objection to the petition, and would require both of these
notices to be provided to the court investigator.
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This bill would authorize interested persons to file with the
court a written objection to the authorization of periodic
payments and require the court clerk to set any objections for
a hearing no fewer than 15 days after the date the objections
are filed.
This bill would provide that if an objection is filed, the
guardian or conservator has the burden of establishing the
necessity for and amount, if any, of periodic payments.
This bill would authorize the guardian or conservator of the
estate to make the periodic payments authorized by the order
only if the services described in the petition are actually
rendered.
This bill would require judicial review of the payments made
pursuant to the order upon the next succeeding account of the
guardian or conservator of the estate to determine that the
services were actually rendered and that the amount paid on
account was reasonable and 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.
This bill would require the court to make an appropriate order
reducing the guardian or conservator's compensation if the
court determines that the amount paid on account was either
unreasonable or not in the best interest of the ward or
conservatee in view of the services actually rendered.
This bill would require the authorization for periodic
payments to terminate as of the due date of the next
succeeding account.
This bill would provide that a guardian or conservator would
not be precluded from filing a subsequent petition to receive
periodic payments.
COMMENT
1. Stated need for the bill
The author writes:
Currently, no fee schedule or statement of the conservator
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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.
AB 1339 also allows for the filing of petitions for periodic
payments for the services rendered by appointed conservators
who are licensed professional fiduciaries. Periodic payments
would be subject to objections and would require review by the
court prior to approval. In the case of an objection, the
burden of establishing the necessity for periodic payments
would fall on the conservator. 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.
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 when requesting
periodic payments. 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.
2. Requiring information regarding professional fiduciary billing
rates
This bill would require a professional fiduciary to submit
hourly billing information when petitioning to be appointed as a
conservator or guardian. Existing law does not require the
professional fiduciary to provide this information before
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billing the conservatee's or ward's estate.
A recent Mercury News article revealed problems with the lack of
a requirement for a professional fiduciary to provide hourly
billing information prior to being appointed as a conservator or
guardian: excessive fees may be billed to the conservatee's or
ward's estate which the conservatee or ward may spend
considerable money to challenge. The article discovered that
"[i]n one case reviewed by this newspaper, a conservator charged
a Belmont dementia patient $1,062 to help celebrate her
birthday. Another billed an incapacitated Sunnyvale couple
$26,946, including attorneys' fees, for the 12 days she spent
sorting through mail and orchestrating a cleanup of their
roach-infested home. . . . Now, court investigators and some
attorneys . . . are fighting back against these excesses,
triggering a series of legal confrontations. They're also
taking aim at troubling local practices and state law that they
say have rigged the system against the very people it's supposed
to protect. Under California law, challenging an excessive bill
presents an astounding damned-if-you-do dilemma: A private
estate manager can bill the cost to defend his charges right
back to the person who protested the bill in the first place."
(de S�, Santa Clara County's court-appointed personal and estate
managers are handing out costly and questionable bills, Mercury
News (June 30, 2012)
[as of June 9, 2013].)
This bill seeks to provide conservatees, wards, and other
interested parties with the professional fiduciary's billing
information prior to any services being rendered. Arguably,
knowing the proposed fees that may be charged to the estate
better equips the conservatees, wards, and courts with
information in order to decide whether the professional
fiduciary's fees are excessive or appropriate. This bill would
allow conservatees and wards, and their families, to know in
advance the potential costs of the professional fiduciary's
services rather than having to challenge the fees after the
professional fiduciary has rendered services. In this way,
conservatees and wards would be better protected against
unreasonable charges being billed against their estates.
The Trusts and Estates Section of the State Bar of California
raised the concern that a change in the professional fiduciary's
rates or fee schedules may occur during the guardianship or
conservatorship, which may last for many years, even decades,
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but the bill does not provide for a procedure to notify the
court and interested parties of changes to the rates or fee
schedules. To address this concern, the author has requested to
take the following amendments in Committee:
Author's amendments :
1. On page 12, in line 5, remove and replace "Section" with
"Sections"
2. On page 12, in line 5, remove and replace "is" with "and
2614.8"
3. On page 12, between lines 19 and 20, insert:
2614.8(a) At any time on or after one year from the
submission of an hourly fee schedule or another statement
of proposed compensation under this section or under
Section 1510, 1821, 2250 or 2614.7, a guardian or
conservator who is a professional fiduciary may submit a
new proposed hourly fee schedule or another statement of
his or her proposed compensation from the estate of the
proposed ward or proposed conservatee.
(b) (1) Notice of how to file an objection to the new
proposed hourly fee schedule or another statement of
proposed compensation shall be given for the period and in
the manner provided in Chapter 3 (commencing with Section
1460) of Part 1.
(2) The notices required by paragraph (1) shall be made to
the court investigator, if appointed, for the period and in
the manner provided in Chapter 3 (commencing with Section
1460) of Part 1.
(c) (1) Any person entitled to notice under paragraph (1)
of subdivision (b) may file with the court a written
objection to the new proposed hourly fee schedule or
another statement of proposed compensation. The court
clerk shall set any objections for a hearing no fewer than
15 days after the date the objections are filed.
(2) If an objection is filed pursuant to paragraph (1), the
guardian or conservator shall have the burden of
establishing the need for the new proposed hourly fee
schedule or another statement of proposed compensation.
3. Providing additional information relating to inventories
and appraisals
Existing law requires a conservator or guardian to file with the
court and mail to the conservatee or ward, within 90 days of
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appointment, or as provided, an inventory and appraisal of the
estate, which, depending upon the estate, may require intensive
organization and management. The conservator or guardian is
then allowed to petition the court to be paid from the estate
for services rendered in connection with managing the estate.
This bill would require, when filing the inventory and
appraisal, the professional fiduciary, acting as conservator or
guardian, to file with the court a proposed hourly fee schedule
or another statement of his or her proposed compensation from
the estate. As discussed above, providing the conservatee or
ward with information of the potential costs to the estate prior
to services being rendered provides better transparency in order
to protect the conservatee or ward. Furthermore, this
requirement would provide improved accountability of the
professional fiduciary so that the estate is not charged
excessive, duplicative, or unwarranted amounts for the
professional fiduciary's services. This bill would also provide
that, although the professional fiduciary must submit a proposed
fee schedule, the filing of the fee schedule would not preclude
the court from later reducing the professional fiduciary's or
his or her attorney's fees or other compensation associated with
services provided to the estate. This provision would provide
clarity that courts do have the ability to modify the fees
charged to the estate in order to better protect the estate
assets.
4. Enhanced procedural requirements regarding periodic
payments
Existing law authorizes a court to order periodic payments to be
paid to a conservator, guardian, and his or her attorney.
Existing law requires a petition for periodic payments to
describe the services to be rendered on a period basis and why
authority to make the payments is requested. A notice of
hearing on the petition must be served. The court, in fixing
the amount of the periodic payment, must take into account the
services to be rendered and the reasonable value of the
services. The guardian or conservator can only make authorized
payments if the services are actually rendered, and these
payments are subject to judicial review. The court is required
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.
This bill would establish a separate provision for periodic
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payments requested to be made by a professional fiduciary acting
as a conservator or conservatee. First, the person to be paid
(the guardian, conservator, or his or her attorney) could only
receive payment for services rendered if he or she has filed a
proposed hourly fee schedule or other statement of his or her
proposed compensation from the estate. Second, as in existing
law, the petition for periodic payments must describe the
services to be rendered and the reason why authority to make the
payments is required. However, unlike existing law, the
petition must also include a good faith estimate of the fees to
be charged by the professional fiduciary from the date the
petition is filed to the date of the next succeeding account.
Third, the court must determine whether making the requested
payments is in the best interest of the conservatee or ward,
taking into account the needs of the ward or conservatee and the
need to preserve and protect the estate. If the court
determines the payments are not in the best interests of the
ward or conservatee, the court must deny the petition. If the
court determines that making the payments is appropriate, the
court must fix the amount of the periodic payment, taking into
account the services to be rendered on a periodic basis and the
reasonable value of those services.
Fourth, the petitioner must provide to the conservatee or ward a
notice of the hearing and notice of how to file an objection to
the petition, which must also be given to the court
investigator. This bill would provide that any person entitled
to notice may file a written objection to the petition, and the
court clerk must set a hearing on the objections. If an
objection is filed, this bill would require the professional
fiduciary to establish the necessity for and amount of the
periodic payments requested.
Fifth, as in existing law, the payments may only be made after
the services are actually rendered, and the payments are subject
to judicial review. However, unlike existing law, this bill
would also require the court, when reviewing the payments, to
determine whether the payments were reasonable and in the best
interests of the ward or conservatee. This bill would also
authorize the court to reduce the professional fiduciary's
compensation if the court determines that the amounts paid were
unreasonable or not in the best interest of the ward or
conservatee in view of the services actually rendered.
The enhanced procedures this bill would establish for petitions
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for periodic payments would increase the professional
fiduciary's accountability and provide better judicial oversight
in order to protect the estate of the ward or conservatee.
Furthermore, this bill would provide a better mechanism for
conservatees and wards to gain knowledge of excessive fees and
unreasonable services so that the conservatee or ward can
protect his or her estate during the management of the estate,
as opposed to discovering impropriety after the estate has been
drained.
In response to concern raised regarding the court's ability,
when appropriate, to terminate periodic payments prior to the
filing deadline of the next account, the author has requested to
take the following amendment in Committee:
Author's amendment :
1. On page 14, in line 37, strike "as of" and insert "on a
date determined by the court but not later than"
5. Extending licensing and relationship to conservatee or ward
information requirement
Existing law requires a professional fiduciary, who petitions
the court to be appointed as a temporary or permanent
conservator or temporary guardian, to provide the professional
fiduciary's licensing information as well as a statement
regarding the professional fiduciary's relationship, if any, to
the conservatee, ward, or family members of the conservatee or
ward. This bill would extend this requirement to a professional
fiduciary who petitions a court to be appointed as a permanent
guardian.
6. Clarifying petitioner and professional fiduciary in petitions
Recent amendments to this bill clarify that any time a
professional fiduciary may be appointed as the conservator or
guardian, regardless of whether the professional fiduciary is
the petitioner or another person who seeks to have the
professional fiduciary appointed by the court, the licensing,
relationship, and hourly billing information must be provided to
the court.
Additionally, the recent amendments make a similar clarifying
change for a professional fiduciary filing an inventory or
appraisal for which the professional fiduciary, in his or her
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capacity as the conservator or guardian, may request
compensation for his or her services rendered.
Support : None Known
Opposition : None Known
HISTORY
Source : Professional Fiduciary Association of California
Related Pending Legislation : None Known
Prior Legislation :
SB 1716 (Bowen, Ch. 492, Stats. 2006) authorized court action on
informal reports of 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.
SB 1550 (Figueroa, Ch. 491, Stats. 2006) See Background.
SB 1116 (Scott, Ch. 490, Stats. 2006) remedied some of the
problems with the state's conservatorship system and established
a special procedure for the sale of a conservatee's primary
residence.
AB 1363 (Jones, Ch. 493, Stats. 2006), among other things,
required an enhanced review of conservators and judicial
responsibility, along with uniform standards of conduct required
by conservators.
Prior Vote :
Assembly Committee on Judiciary (Ayes 10, Noes 0)
Assembly Floor (Ayes 75, Noes 0)
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