BILL ANALYSIS Ó AB 548 Page 1 ASSEMBLY THIRD READING AB 548 (Cristina Garcia) As Introduced February 23, 2015 Majority vote ----------------------------------------------------------------- |Committee |Votes |Ayes |Noes | |----------------+------+--------------------+--------------------| |Judiciary |10-0 |Mark Stone, Wagner, | | | | |Alejo, Chau, Chiu, | | | | |Gallagher, Cristina | | | | |Garcia, Holden, | | | | |Maienschein, | | | | |O'Donnell | | ----------------------------------------------------------------- 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 AB 548 Page 2 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 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. 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. 3)Provides that if a decedent dies intestate (without a will), the court must appoint an administrator as a personal representative. AB 548 Page 3 4)Authorizes the court to appoint as administrator of a decedent's estate the nominee of a person entitled to the appointment or the nominee of the guardian or conservator of that person. 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. 6)Allows a court to appoint a qualified non-resident of California as administrator of a decedent's estate, provided certain requirements are met. 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. 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. FISCAL EFFECT: None COMMENTS: When someone creates a will, he or she can name an executor in the will, whether or not a United States resident, who has the right to be appointed as the personal representative and administer the estate in court. When someone dies without a will, AB 548 Page 4 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 United States resident, even though a decedent could appoint a non-United States resident to serve in that capacity. Recent legislation (AB 1670 (Lara), Chapter 635, Statutes of 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. The Assembly Judiciary 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 the attorney organizations supporting this bill. This bill, AB 548 Page 5 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. 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-United States 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 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 AB 548 Page 6 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. Analysis Prepared by: Leora Gershenzon / JUD. / (916) 319-2334 FN: 0000093