BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
AB 548 (Cristina Garcia)
Version: February 23, 2015
Hearing Date: June 9, 2015
Fiscal: No
Urgency: No
TMW
SUBJECT
Estates: administrators
DESCRIPTION
Existing law provides that, if a California resident dies
intestate (without a will), the court must appoint an
administrator to manage the decedent's estate, and the
court-appointed administrator must meet several qualifications,
including being a United States resident. Existing law, until
January 1, 2016, authorizes the court to appoint an
administrator nominated by a non-U.S. relative to administer the
decedent's estate. This bill would remove that sunset, thus,
extending the authorization indefinitely.
BACKGROUND
In California, if a person dies intestate, the court must
appoint a personal representative to administer the decedent's
estate. Under existing law, only certain individuals, such as
United States residents, may be appointed as an administrator.
(Prob. Code Sec. 8402(a).) A person (typically a relative and
potential heir of the decedent), who would otherwise qualify to
be the administrator, may nominate another person to be
appointed as administrator. Such nomination may occur because
the beneficiary may believe another person is more qualified to
act as the estate administrator.
Prior to 2013, a relative, who would qualify to be nominated as
an administrator but for the fact that the relative was not a
U.S. resident, could not nominate another person to administer
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the decedent's estate. The problem with the residency
requirements for both the relative and the nominee was
demonstrated in the Estate of Damskog (1991) 1 Cal.App.4th 78,
in which the decedent died intestate and his two sisters,
residents of Norway, nominated an estate administrator. The
public administrator objected to the nomination. The court held
that California law required United States residency for both
nominators and administrators, and the court appointed the
public administrator to oversee the estate administration. The
court, having discussed the legislative history of the
nomination and appointment of administrator provisions,
determined that "although there is no explicit residency
requirement for the nominator in section 8465, she must herself
be 'entitled to appointment' and that entitlement depends on
United States residence under section 8402. Had the Legislature
wished to retain differing residency requirements for
administrators and nominators, it could easily have said so in
the same 'but for' language it used in 1967 about California
residency." (Id. at pp. 81-82.)
AB 1670 (Lara, Chapter 635, Statutes of 2012) was enacted in
response to the Damskog ruling and authorized court-appointment
of an estate administrator nominated by a foreign person. AB
1670 recognized the development of the global economy with U.S.
born beneficiaries now living and working in foreign countries.
Children of California residents who accept jobs in other
countries previously were prohibited from nominating an estate
administrator, who may be an individual known to the family and
who knows the wishes of the decedent better than the public
administrator. AB 1670 ensured that non-resident families of
the decedent had the right to select the person best suited to
manage the estate assets.
AB 1670 sunsets on January 1, 2016. This bill would remove that
sunset, thus, permanently authorizing a court to appoint an
administrator, who is nominated by a non-U.S. relative, to
administer the decedent's estate.
CHANGES TO EXISTING LAW
Existing law provides that, if a person dies intestate, the
court shall appoint an administrator as personal representative.
(Prob. Code Sec. 8460(a).)
Existing law provides that a person is not competent to act as a
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personal representative in any of the following circumstances:
(1) the person is under the age of majority;
(2) the person is subject to a conservatorship of the estate
or is otherwise incapable of executing, or is otherwise unfit
to execute, the duties of the office;
(3) there are grounds for removal of the person from office;
(4) the person is not a resident of the United States; or
(5) the person is a surviving partner of the decedent and an
interested person objects to the appointment. (Prob. Code
Sec. 8402(a).)
Existing law provides that items (4) and (5) above do not apply
to a person named as executor or successor executor in the
decedent's will. (Prob. Code Sec. 8402(b).)
Existing law provides that a person is entitled to appointment
as administrator in the following order of priority based upon
the relation to the decedent: (a) surviving spouse or domestic
partner; (b) children; (c) grandchildren; (d) other issue; (e)
parents; (f) brothers and sisters; (g) issue of brothers and
sisters; (h) grandparents; (i) issue of grandparents; (j)
children of a predeceased spouse or domestic partner; (k) other
issue of a predeceased spouse or domestic partner; (l) other
next of kin; (m) parents of a predeceased spouse or domestic
partner; (n) issue of parents of a predeceased spouse or
domestic partner; (o) conservator or guardian of the estate
acting in that capacity at the time of death who has filed a
first account and is not acting as conservator or guardian for
any other person; (p) public administrator; (q) creditors; or
(r) any other person. (Prob. Code Sec. 8461.)
Existing law authorizes a court to appoint as administrator a
person nominated by any of the following persons:
(1)a person otherwise entitled to appointment;
(2)a person who would otherwise be entitled for appointment but
who is ineligible for appointment because he or she is not a
resident of the United States; or
(3)the guardian or conservator of the estate of a person
otherwise entitled to appointment. The nomination shall be
made in writing and filed with the court. (Prob. Code Sec.
8465(a).)
Existing law provides that if a person making a nomination for
appointment of an administrator is the surviving spouse or
domestic partner, child, grandchild, other issue, parent,
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brother or sister, or grandparent of the decedent, the nominee
has priority next after those in the class of the person making
the nomination. Existing law further provides that if the
person making the nomination is not the surviving spouse or
domestic partner, child, grandchild, other issue, parent,
brother or sister, or grandparent of the decedent, the court is
authorized to appoint either the nominee or a person of a class
lower in priority to that of the person making the nomination,
but other persons of the class of the person making the
nomination have priority over the nominee. (Prob. Code Sec.
8465(b), (c).)
Existing law provides that if a person making a nomination for
appointment of an administrator is a person who would otherwise
be entitled for appointment but who is ineligible for
appointment because he or she is not a resident of the United
States, the court is prohibited from appointing a nominee who is
not a California resident to act as administrator. For
California residents nominated by a person who would otherwise
be entitled for appointment but who is ineligible for
appointment because he or she is not a resident of the United
States, existing law requires the court to consider whether the
nominee is capable of faithfully executing the duties of the
office. (Prob. Code Sec. 8465(d).)
Existing law authorizes the court in its discretion to deny the
appointment of an administrator nominated by a non-U.S. relative
and appoint another person. In determining whether to appoint
the nominee, the factors the court may consider include, but are
not limited to, the following:
(1)whether the nominee has a conflict of interest with the heirs
or any other interested party;
(2)whether the nominee had a business or personal relationship
with the decedent or decedent's family before the decedent's
death;
(3)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; and
(4)whether the nominee has been appointed as a personal
representative in any other estate. (Prob. Code Sec.
8465(d).)
Existing law , if the court decides to appoint a nominee of a
non-U.S. relative, requires the nominee to obtain a bond, unless
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the court orders otherwise for good cause, and any order for
good cause must be supported by specific findings of fact, and
requires the court to consider the need for the protection of
creditors, heirs, and any other interested parties. (Prob. Code
Sec. 8465(e).) Before waiving a bond, the court is required to
consider all other alternatives, including, but not limited to,
the deposit of property in the estate on the condition that the
property, including any earnings thereon, will not be withdrawn
except on authorization of the court. (Id.) Existing law
provides that the waiver of all of the heirs of the requirement
of a bond shall not constitute good cause. (Id.)
Existing law , if the appointed nominee ceases to be a California
resident following his or her appointment, requires the
appointed nominee to be deemed to have resigned as
administrator, and maintains the court's jurisdiction of the
proceeding following that resignation. (Prob. Code Sec.
8465(f).)
Existing law provides that by accepting appointment as personal
representative, the nominee submits personally to the
jurisdiction of the court. (Prob. Code Sec. 8465(g).)
Existing law provides that the above provisions authorizing a
non-U.S. relative to nominate a California resident to be the
administrator of the decedent's estate sunsets on January 1,
2016.
This bill would remove that sunset.
COMMENT
1. Stated need for the bill
The author writes:
When someone dies without a will, the court appoints a
personal representative to administer the estate. The Probate
Code lists in order of priority the persons who are entitled
to appointment as estate administrator, with the closest
relatives (e.g., spouses and children), who are the legal
heirs of the estate, receiving the highest priority. The code
also generally permits a person entitled to appointment as
personal representative to nominate someone else to serve in
that capacity.
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Until 2013, there was one major exception to the ability of a
person entitled to appointment to nominate a personal
representative: An heir otherwise entitled to nominate a
personal representative could not do so if the heir was not a
U.S. resident. Recent legislation (AB 1670 (Lara), Chapter
635, Statutes of 2012), allowed 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. This change
in the law is scheduled to sunset on January 1, 2016.
AB 548 would remove the sunset clause on the changes enacted
by the Legislature through AB 1670 of 2012, thereby making
permanent the ability of heirs of an intestate California
decedent to nominate someone they know and trust as personal
representative for the estate - subject to all the protections
built into the law.
2. Removing sunset on authorization for non-U.S. relative
nomination of administrator
When AB 1670 (Lara, Chapter 635, Statutes of 2012) was reviewed
by the Assembly Judiciary Committee, the sunset of January 1,
2016, was added to the bill so that the Legislature could review
the policy considerations and make certain the bill was working
as intended. When AB 1670 was reviewed by this Committee,
additional protections were added that:
prohibited the appointment of a non-California resident
nominee;
required the court to consider whether the nominee was capable
of faithfully executing the duties of the office;
requiring the appointed nominee to obtain a bond, unless the
court orders otherwise for good cause, which must be supported
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by specific findings of fact, including the need for the
protection of creditors, heirs, and any other interested
parties;
deeming an appointed nominee, who ceases to be a California
resident following his or her appointment, to have resigned as
administrator;
maintaining the court's jurisdiction of the proceeding
following an appointed nominee's resignation; and
requiring the appointed nominee to submit personally to the
jurisdiction of the court.
Additional provisions were added to the bill that allowed the
court, when determining whether to appoint the nominee as the
decedent's estate administrator, to consider whether the nominee
has any conflicts of interest with the decedent's heirs or any
other interested party, whether the nominee has a business or
personal relationship with the decedent or decedent's family
before the decedent's death, 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, and whether the nominee has been
appointed as a personal representative in any other estate.
These provisions were added to determine whether the nominee is
an "heir hunter," who may have solicited his or her services to
foreign beneficiaries in order to take a large percentage of the
estate, and who may not take complete action to identify all
potential beneficiaries of the estate so as to maintain a large
portion going to the nominating beneficiary.
The Conference of California Bar Associations, sponsor, argues
that "AB 1670 brought equity, fairness and dignity to a
situation which for many years had none of those qualities.
Prior to 2013, if a decedent immigrated from Puerto Rico,
accumulated a significant estate, then died as a California
resident leaving heirs in Puerto Rico, his or her heirs would be
permitted to nominate the administrator of the estate - but if
the decedent had come from Mexico and left heirs in Mexico,
those heirs would have no right to nominate. Instead,
administration of the estate likely would be handed to the
Public Guardian or other designee of the court, who had no
relationship to the decedent and no knowledge of the decedent's
wishes with regard to his or her family. 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."
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To determine whether AB 1670 has worked as intended and not
created a way for unscrupulous individuals to prey on foreign
families after a relative's death in California, staff searched
for administrator appointment cases appealed after the enactment
of AB 1670. Surprisingly, the search revealed only one case,
which actually supports the continued enactment of that bill.
In Estate of Schneider (2013) Cal.App. Unpub. LEXIS 8115, the
Court of Appeal, Fourth Appellate District, reviewed the trial
court's issuance of letters of administration to a person
affiliated with the decedent's mother and brother (both
residents of Germany) and denial of a petition to appoint the
public administrator brought by the decedent's live-in
boyfriend. The court noted several concerns with the live-in
boyfriend: (1) the boyfriend initially petitioned the court for
non-probate transfer of the decedent's property because the
boyfriend alleged he was the spouse of the decedent; (2) eight
months later, the boyfriend filed the petition to appoint the
public administrator and represented in that petition the
decedent had no spouse at the time of her death; (3) in a
separate document submitted to the court, the boyfriend
contended he and the decedent held themselves to the public as
husband and wife and had a nonmarital oral agreement that he
would inherit the decedent's property; and (4) the decedent's
estate consisted of nothing of substance except litigation
claims of an unknown value (largely against the boyfriend).
(Id. at pp. 3, 6, 40.) The mother and brother initially filed a
petition nominating a California accountant with experience in
the administration of estates. The nominee ultimately withdrew
his nomination, and counsel for the mother and brother explained
to the court they were looking for a new proposed administrator
to pursue litigation claims on behalf of the estate. (Id. at p.
7.) The court noted that the mother's nomination of the
proposed administrator would have had priority over the public
administrator nominated by the boyfriend, but the mother's
petition was filed before AB 1670 went into effect. (Id. at pp.
28-29.) Ultimately, an attorney affiliated with the mother was
appointed as the administrator of the decedent's estate because
the public administrator opposed the boyfriend's petition to
appoint the public administrator. This bill, by removing the
sunset from current law, would provide families similarly
situated with the mother and brother in the Schneider case the
ability to nominate a California resident, who may have known
the decedent, to administer the decedent's estate.
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Support : Executive Committee of the Trusts and Estates Section
of the State Bar of California
Opposition : None Known
HISTORY
Source : Conference of California Bar Associations
Related Pending Legislation : None Known
Prior Legislation :
AB 1670 (Lara, Chapter 635, Statutes of 2012) See Background,
Comment 2.
AB 239 (Kaloogian, Chapter 175, Statutes of 1999) contained a
provision that was substantially similar to an initial version
of AB 1670. AB 239 originally failed passage in this Committee
but was approved after that provision was deleted from the bill.
Prior Vote :
Assembly Floor (Ayes 76, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
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