BILL ANALYSIS Ó
AB 548
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Date of Hearing: April 7, 2015
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
AB 548
(Cristina Garcia) - As Introduced February 23, 2015
SUBJECT: ESTATE ADMINISTRATION: NOMINATION OF PERSONAL
REPRESENTATIVE
KEY ISSUE: SHOULD THE SUNSET BE LIFTED SO THAT OTHERWISE
QUALIFIED NON-U.S. RESIDENTS ARE PERMITTED, ON AN INDEFINITE
BASIS, TO NOMINATE A PERSONAL REPRESENTATIVE TO ADMINISTER THE
ESTATE TO WHICH THEY ARE HEIRS?
SYNOPSIS
When someone creates a will, he or she can name an executor in
the will, whether or not a U.S. resident, who has the right to
be appointed as the personal representative and administer the
estate in court. When someone dies without a will, the court
appoints a personal representative to administer the estate.
Under current law, the personal representative must meet
specified qualifications, including the requirement that he or
she is a resident of the United States. There is a statutory
list of persons who are entitled to appointment as
administrator, and that list is in order of priority, with heirs
(who stand to inherit the estate) given the highest priority.
If no heirs are available, the court may next consider a
guardian or conservator of the decedent's estate, then the
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public guardian and finally creditors of the decedent. Until
2013, a U.S. resident heir could nominate an administrator, but
an otherwise qualified non-U.S. resident heir could not. In
2012 the Legislature approved a pilot project to allow
non-resident heirs to nominate administrators under specified
circumstances. That pilot project is set to expire at the end
of the year and neither this Committee, nor legal organizations
supporting this bill, have heard of any problems with its
operation. This bill, sponsored by the Conference of California
Bar Associations, lifts the sunset so that non-resident heirs
can continue to nominate administrators, subject to the existing
conditions. This allows foreign heirs to nominate a trusted
family friend or lawyer as administrator of the estate, rather
than the public administrator who would in almost all cases be a
stranger to the heirs. It is supported by the United Farm
Workers and the Trusts & Estates Section of the State Bar.
There is no known opposition.
SUMMARY: Allows a foreign heir to nominate an administrator of
a decedent's estate indefinitely. Specifically, this bill lifts
the sunset so that the following provisions exist indefinitely:
1)Authorizes the court to appoint, as administrator of a
decedent's estate, the nominee of a person who would be
entitled to appointment, or the nominee of the guardian or
conservator of that person, even if that person is not a
resident of the United States.
2)Requires an administrator, nominated by a non-United States
resident, to reside in California and provides that if the
administrator ceases to be a California resident he or she
will be deemed to have resigned as administrator.
3)Provides that a court may, in its discretion, deny the
appointment of an administrator nominated by a non-United
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States resident and appoint another person. In determining
whether to appoint the nominee, requires the court to
consider, among other things, whether the nominee has a
conflict of interest with the heirs or any other interested
party; whether the nominee had a business or personal
relationship with the decedent or decedent's family before the
decedent's death; and, whether the nominee is engaged in or
acting on behalf of an individual, a business, or other entity
that solicits heirs to obtain the person's nomination for
appointment as administrator.
4)Provides that, if the court decides to appoint a nominee of a
non-United States resident, the court shall require the
nominee to obtain a bond, unless the court orders otherwise
for good cause, as provided.
EXISTING LAW:
1)Provides that a person has no power to administer an estate
until that person is appointed as personal representative.
(Probate Code Section 8400. Unless stated otherwise, all
further statutory references are to that code.)
2)Provides that a person named as executor in the decedent's
will has the right to appointment as personal representative
even if that person is not a United States resident.
(Sections 8402, 8420.)
3)Provides that if a decedent dies intestate (without a will),
the court must appoint an administrator as a personal
representative. (Section 8460.)
4)Authorizes the court to appoint as administrator of a
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decedent's estate the nominee of a person entitled to the
appointment or the nominee of the guardian or conservator of
that person. (Section 8465(a).)
5)Sets forth individuals entitled to appointment in a priority
list, which begins with the surviving spouse and children, and
includes in priority order grandchildren, parents, other
relatives, conservator or guardian of the estate of the
deceased, public guardian and creditors. (Section 8461.)
6)Allows a court to appoint a qualified non-resident of
California as administrator of a decedent's estate, provided
certain requirements are met. (Section 8570 et seq.)
7)Authorizes the court, until January 1, 2016, to appoint, as
administrator of a decedent's estate the nominee of a person
who would be entitled to appointment, or the nominee of the
guardian or conservator of that person, even if that person is
not a resident of the United States, subject to specified
conditions. (Section 8465.)
8)Allows the public administrator of the county in which an
estate is administered to petition for appointment as personal
representative of the estate if no person of higher priority
has petitioned and if the value of the estate exceeds
$150,000. (Section 7620.)
FISCAL EFFECT: As currently in print this bill is keyed
non-fiscal.
COMMENTS: When someone creates a will, he or she can name an
executor in the will, whether or not a U.S. resident, who has
the right to be appointed as the personal representative and
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administer the estate in court. When someone dies without a
will, the court appoints a personal representative to administer
the estate. A personal representative must meet specified
qualifications, including being a resident of the United States.
The Probate Code lists persons who are entitled to appointment
as estate administrator, and that list is in order of priority.
Relatives, who are the legal heirs of the estate, receive high
priority, with the closest relatives, including spouses and
children, receiving the highest priority. If no relatives are
available, the court may next consider a guardian or conservator
of the decedent's estate, then the public guardian and finally
creditors of the decedent.
Until 2013, California law provided that an heir otherwise
entitled to appoint a personal representative cannot do so if he
or she is not a U.S. resident, even though a decedent could
appoint a non-U.S. resident to serve in that capacity. Recent
legislation (AB 1670 (Lara), Chap. 635, Stats. 2012), created a
pilot program to allow non-resident heirs to nominate
administrators of the estate. To protect against any possible
fraud, additional conditions were added to the law which applied
if a non-resident heir nominated the estate administrator.
These conditions include requiring that the administrator reside
in California during the entire estate administration; requiring
the court to consider, among other things, whether the nominee
has a conflict of interest with the heirs or any other
interested party, whether the nominee had a business or personal
relationship with the decedent or decedent's family before the
decedent's death, whether the nominee is acting on behalf of an
entity that solicits heirs to obtain the person's nomination for
appointment as administrator; and requiring the nominee to
obtain a bond, unless the court orders otherwise for good cause.
The pilot program sunsets on January 1, 2016.
This Committee is not aware of any instances where the
nomination by a non-resident heir during the course of the pilot
resulted in any harm to any interested party and neither have
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the attorney organizations supporting this bill. This bill,
sponsored by the Conference of California Bar Associations,
removes the sunset and allows non-resident heirs to nominate
administrators of the estate, subject to all the limiting
conditions in the existing pilot.
In support of the bill, the author writes:
In a nation (and a state) of immigrants such as ours the
requirement that only heirs who are United States residents
can nominate another resident to serve has no basis in
logic or fact. Suppose that a decedent immigrated from
Mexico, accumulated a significant estate, then died as a
California resident leaving heirs in Mexico. Under
pre-2013 law the heirs would be prohibited from nominating
an administrator (even a California resident) to manage the
estate, even though the family stands to receive all of the
assets. The family would have no say over who controls the
decedent's estate. AB 1670 corrected this unjust result,
which was the unintended result of a code reorganization.
To our knowledge, absolutely no problems have resulted from
this change in the law.
Case Law Demonstrates Difficulties with Law Prior to 2013:
Pre-2013 cases interpreting the statutory scheme for appointment
of an administrator when the heirs are non-U.S. residents were
in conflict. In Estate of Kaussen (1987) 190 Cal.App.3d 1644
(but later unpublished), a decedent left his $26 million estate
to his partner and their four children, all residents of
Germany. The heirs then petitioned the court to appoint an
administrator of their choosing. The trial court appointed the
public guardian instead because the heirs were not United States
residents. The court of appeals, while acknowledging that the
heirs could not themselves be the estate administrator since
none of them resided in the United States, nonetheless reversed,
finding that the heirs' lack of residency did not prevent them
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from nominating a personal representative of their own choosing.
Four years later, the same court of appeals reversed course. In
Estate of Damskog (1991) 1 Cal.App.4th 78, the appeals court
vacated the appointment of the attorney and holder of a durable
power of attorney of a decedent and ordered the appointment of
the public guardian, despite the fact that the only heirs of the
decedent, his two sisters and the children of a deceased sister,
residents of Norway, nominated the attorney. The court
acknowledged that if the sisters from Norway had the right to
nominate (which as non-residents they did not have under
then-existing law), their nominee would have had priority over
the public guardian. In a footnote, the court referred to its
decision in Kaussen, and stated that "the policy considerations
which informed our earlier decision are best left to the
Legislature." (Id. at 82, footnote 5.)
The Damskog court however explicitly stated that "[w]hile it
makes sense to require administrators to reside in the United
States where the probate court can exercise personal
jurisdiction over them, if need be, as they perform their
duties, no such jurisdictional need justifies a residency
requirement for nominators. This very persuasive argument is
better addressed to the Legislature than to the courts." (Id.
[emphasis added].) It should be noted that an administrator
appointed by the court, whether public or private, is
responsible to the court.
ARGUMENTS IN SUPPORT: In support of the bill, the United Farm
Workers writes that before AB 1670, "heirs were prohibited from
nominating an administrator (even a California resident) to
manage the estate, even though the family stood to receive all
of the assets. The family didn't even have any say over who
controlled the decedent's estate. AB 1670 corrected this unjust
result. AB 548 would remove the sunset clause in order to
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preserve this correction."
The Trusts & Estates Section of the State Bar states that "AB
1670 was an improvement to the law" and that the Section "is not
aware of any problems created by that law, and believes it has
worked well."
Adds the Conference of California Bar Associations: "AB 1670
brought equity, fairness and dignity to a situation which for
many years had none of these qualities. . . . To our
knowledge, absolutely no problems have resulted from this change
of law."
Previous Legislation: AB 1670 (Lara), Chap. 635, Stats. 2012,
created the pilot program to allow non-resident heirs to
nominate administrators of the estate. That pilot sunsets on
January 1, 2016.
AB 239 (Kaloogian), Chap. 175, Stats. 1999 would have permitted
the nominee of a non-resident heir to be appointed administrator
of the estate. That provision was dropped from the bill in the
Senate.
REGISTERED SUPPORT / OPPOSITION:
Support
Conference of California Bar Associations (sponsor)
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Trusts & Estates Section of the State Bar
United Farm Workers
Opposition
None on file
Analysis Prepared by:Leora Gershenzon / JUD. / (916) 319-2334