BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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          |SENATE RULES COMMITTEE            |                       AB 1339|
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                                    THIRD READING


          Bill No:  AB 1339
          Author:   Maienschein (R)
          Amended:  6/24/13 in Senate
          Vote:     21

           
           SENATE JUDICIARY COMMITTEE  :  5-0, 6/18/13
          AYES:  Evans, Walters, Corbett, Leno, Monning
          NO VOTE RECORDED:  Anderson, Jackson
           
          ASSEMBLY FLOOR  :  75-0, 5/13/13 (Consent) - See last page for  
            vote


           SUBJECT  :    Professional fiduciaries:  guardians and  
          conservators

           SOURCE  :     Professional Fiduciary Association of California


           DIGEST  :    This bill requires 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 requires the professional fiduciary,  
          upon filing an inventory and appraisal, to provide an hourly fee  
          schedule or statement of his/her proposed compensation from the  
          estate.  This bill also establishes requirements, as specified,  
          for the authorization of periodic payments from the estate to  
          the professional fiduciary for services rendered.

           ANALYSIS  :    

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          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.   
            (Business and Professions Code Section 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/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.   
            (Probate Code (PROB) Section 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 Section 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 Section 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/her personal needs (a conservator of the person) or  
            incapable of managing his/her property or other financial  
            assets (a conservator of the estate).  (PROB Section 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 Sections 1820, 1821)

            Existing law authorizes a court, upon a showing of good cause,  
            to appoint a temporary conservator or guardian to serve  

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            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 Section 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 Sections 1821(c), 2250(c))

            This bill requires 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/her proposed compensation from the estate for  
            services performed.

            This bill provides that the professional fiduciary's provision  
            of a proposed hourly fee schedule or another statement of  
            his/her compensation would not preclude a court from later  
            reducing the professional fiduciary's fees or other  
            compensation.

            This bill provides a procedure to notify the court and  
            interested parties of changes to rates or fee schedules.

            This bill extends 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  

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            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 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 Section 2610)

            This bill requires 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/her proposed compensation from the  
            ward's or conservatee's estate for services performed as the  
            guardian or conservator.

            This bill provides 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/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 Sections 2640, 2641)

            Existing law permits the court to authorize periodic payments  
            to a guardian, conservator, or the attorney for the guardian  
            or conservator.  (PROB Section 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.   

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            (PROB Section 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  
            appropriate order if the court determines that the amount paid  
            was either excessive or inadequate in view of the services  
            actually rendered.  (PROB Section 2643(c))

            This bill clarifies the above provisions and specifies that if  
            the guardian or conservator is a professional fiduciary, the  
            court may authorize periodic payments to the professional  
            fiduciary only if he/she has filed a proposed hourly fee  
            schedule or another statement of his/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 requires, 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 requires, 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 requires 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 requires the court to fix the amount  
            of the periodic payment.  In fixing the amount of the periodic  
            payment, this bill requires the court to take into account the  

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            services to be rendered on a periodic basis and the reasonable  
            value of those services.

            This bill requires a notice of the hearing on the petition to  
            be served with a notice of how to file an objection to the  
            petition, and requires both of these notices to be provided to  
            the court investigator. 

            This bill authorizes interested persons to file with the court  
            a written objection to the authorization of periodic payments  
            and requires the court clerk to set any objections for a  
            hearing no fewer than 15 days after the date the objections  
            are filed.

            This bill provides 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 authorizes 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 requires 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 requires 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 requires the authorization for periodic payments  
            terminate on a date determined by the court, but not later  
            than the due date of the next succeeding account. 

            This bill provides that a guardian or conservator would not be  
            precluded from filing a subsequent petition to receive  
            periodic payments.

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           Background
           
          In California, if an adult is unable to manage his/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/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  
          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, Chapter 491, Statutes of  
          2006) was enacted and established the 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 Sá, Santa Clara County's  
          court-appointed personal and estate managers are handing out  
          costly and questionable bills, Mercury News (June 30, 2012)  
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          l-and-estate> [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/she is successful in challenging  
          the fee petition.

           Prior Legislation
           
          SB 1716 (Bowen, Chapter 492, Statutes of 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 1116 (Scott, Chapter 490, Statutes of 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, Chapter 493, Statutes of 2006), among other  
          things, required an enhanced review of conservators and judicial  
          responsibility, along with uniform standards of conduct required  
          by conservators.

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

           SUPPORT  :   (Verified  6/24/13)

          Professional Fiduciary Association of California (source)


           ARGUMENTS IN SUPPORT  :    According to the author:

            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.


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            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.  

           ASSEMBLY FLOOR  :  75-0, 5/13/13
          AYES:  Achadjian, Alejo, Atkins, Bigelow, Bloom, Blumenfield,  
            Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian  
            Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,  
            Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,  
            Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,  
            Grove, Hagman, Hall, Harkey, Roger Hernández, Jones,  
            Jones-Sawyer, Levine, Linder, Logue, Maienschein, Mansoor,  
            Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,  
            Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel  
            Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,  
            Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk,  
            Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Allen, Ammiano, Holden, Lowenthal, Vacancy

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          AL:kd  6/24/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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