BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 355
Assemblymember Ammiano
As Amended June 9, 2009
Hearing Date: June 16, 2009
Probate Code
GMO:jd
SUBJECT
Decedents' Estates: Sister State Personal Representatives
DESCRIPTION
This bill would establish a procedure for the personal
representative of a decedent who died a resident of a sister
state to collect the decedent's personal property in this state
valued in excess of $100,000. The procedure is substantially
similar to the existing simplified affidavit procedure for the
transfer of a nonresident decedent's personal property valued at
less than $100,000 to the decedent's personal representative from
the sister state.
The bill would provide that the transfer of personal property
pursuant to this affidavit procedure would not preclude later
proceedings for the administration of the nonresident decedent's
estate and establish rules for the restoration of the transferred
personal property to the estate in the event a later proceeding
is commenced in California.
BACKGROUND
Under existing law, if a decedent who owns property in California
dies domiciled in another state, the decedent's personal
representative has to maintain two separate court proceedings to
administer the decedent's estate - one in the domiciliary state
and another in California. (See Estate of Glassford (1952) 114
Cal.App.2d 181.). If the property in California is valued at no
more than $100,000, the sister-state personal representative may
collect the property by simply filing an affidavit with the
holder of the property, thus avoiding a costly full-blown
proceeding in probate court. (Prob. Code Sec. 13100 et seq.)
The statutes specify the contents of the affidavit and the timing
(more)
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requirements for the filing of the affidavit.
Sponsored by the Trusts and Estates Section of the State Bar of
California, this bill would make the affidavit procedure
available to sister state personal representatives of decedents
who died domiciled in other states and who owned personal
property in California valued at more than $100,000.
CHANGES TO EXISTING LAW
1. Existing law defines "nondomiciliary decedent" as a person
who dies domiciled in a foreign nation or a state other than
California, and defines "sister state personal representative"
as a personal representative appointed in a state other than
California. (Prob. Code Secs. 12505, 12507.) The personal
representative may be an executor, a trustee, or other entity
authorized by the sister state to collect and administer the
decedent's estate.
Existing law provides that if a person dies while domiciled in
a sister state, the court, in an ancillary administration
proceeding in this state, may make an order for preliminary or
final distribution of all or part of the decedent's personal
property in California to the sister state personal
representative if the court determines that such distribution
is in the best interest of the estate or interested persons.
(Prob. Code Sec. 12540.)
Existing law provides for a simplified affidavit procedure
("the small estate affidavit") that, if followed, enables the
successor of a decedent, without procuring letters of
administration or awaiting probate of the will, to collect or
receive any of the decedent's real or personal property, as
long as the gross value of the decedent's real and personal
property in this state does not exceed $100,000. (Prob. Code
Secs. 13100 to 13116.)
Existing law authorizes a sister state personal representative,
without petitioning for ancillary probate proceedings in
California, to utilize the small estate affidavit procedure to
collect the personal property of a nondomiciliary decedent, as
long as that personal property located in California is valued
at no more than $100,000. (Prob. Code Sec. 12570.)
This bill would authorize the personal representative of a
decedent who died domiciled in another state to collect or
receive personal property valued in excess of $100,000
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belonging to the decedent and located in California, by means
of an affidavit procedure similar to that available where the
in-state property of an out-of-state decedent does not exceed
$100,000. This bill would allow the sister-state
representative of the decedent's estate to present an affidavit
to the holder of property after 120 days had passed since the
date of decedent's death.
Specifically, this bill would:
1) require that an affidavit made under penalty of perjury
be furnished to the holder of the decedent's property,
stating, among others, the decedent's name, the date and
place of death, and a description of the property to be
transferred to the affiant;
2) require that the sister state personal representative
present evidence of ownership with the affidavit to the
holder of the decedent's property, if the holder would
have had the right to require presentation of the evidence
of ownership before incurring the duty to transfer the
property to the decedent. If no evidence of ownership is
presented, then as a condition for payment or transfer of
the property, the holder may require a bond sufficient to
indemnify the holder against all liability;
3) provide that, if the procedural requirements are
satisfied, the sister state personal representative is
entitled to have the property described in the affidavit
to be paid, delivered, or transferred to the personal
representative. If, however, the holder of the property
unreasonably acts to withhold the property, then the
sister state personal representative may recover
attorney's fees in an action to enforce his or her right
to compel transfer of the property;
4) provide that, if the procedural requirements are
satisfied, receipt of the affidavit by the holder of the
decedent's property is sufficient acquittance for the
transfer of the property and also discharge the holder
from any further liability with respect to the property,
including tax liability;
5) provide that if the property claimed in an affidavit
pursuant to this procedure is the subject of a pending
action or proceeding in which the decedent was a party,
then the sister state personal representative, without
waiting for probate of the will, shall be substituted as a
party in place of the decedent by making a motion, as
specified, and by simultaneously filing the affidavit;
6) prohibit the use of this affidavit procedure if any
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proceeding for the administration of the decedent's estate
is pending or has been conducted in California. The bill
would provide that the transfer of the decedent's property
pursuant to this procedure does not preclude later
proceedings for the administration of the decedent's
estate;
7) provide for the restoration of the property to the
decedent's estate if proceedings for the administration of
the estate are later commenced in California, as
specified;
8) provide that an action to enforce liability for the
restoration of the property, as described above, may be
brought only by the personal representative of a
decedent's estate and is forever barred three years after
presentation of the affidavit or discovery of the fraud,
whichever is later;
9) provide that a sister state personal representative to
whom transfer of the decedent's property is made remains
liable for the unsecured debts of the decedent in any
future proceeding in a California court relating to the
estate; and
10) require the sister state representative to provide
reasonable proof of identity to the holder as prescribed
by Probate Code Section 13104.
2. Existing law requires the public administrator of the county
in which the estate of a decedent may be administered has a
duty to petition the court for appointment as personal
representative of the estate if no person with higher priority
comes forward to petition and the estate is valued at greater
than $100,000.
This bill would relieve the public administrator of the
obligation to administer or to petition for administration of a
decedent's estate valued at greater than $100,000, once an
affidavit that complies with the rules established by AB 355 is
received by the public administrator.
3. This bill would expressly prohibit the use of this affidavit
procedure to obtain the possession or transfer of real
property.
COMMENT
1. Need for the bill
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The author states:
This proposal is designed to simplify and reduce the cost of
at-death administration of personal property (such as bank
accounts, brokerage accounts, etc.) located in California when
the individual owning the property died a resident of another
state.
If personal property is located in California but the decedent
died elsewhere, a sister-state Personal Representative is
required to maintain two separate court proceedings to
administer the property, one in the domiciliary state, the
other in California. These proceedings are costly, time
consuming, and can unnecessarily delay distribution of the
estate. This represents a needless and significant burden on
the estate and its beneficiaries. It also unnecessarily
burdens California courts since there is a duplicative
proceeding in the sister state.
2. Affidavit procedure to be available only for personal
property in California exceeding $100,000 in value
Currently, the personal representative of an out-of state or
nondomiciliary decedent who owned real and personal property in
California at the time of death may collect the property via an
affidavit procedure. Forty days after the decedent's date of
death, the sister-state personal representative may present to
the holder of the property an affidavit containing specified
information regarding the decedent, the property claimed, and
the decedent's ownership interest, accompanied by Letters
Testamentary or other evidence of the personal representative's
authority to collect the property. The value of real and
personal property that may be transferred in this manner cannot
exceed the statutory limit defined in Probate Code Section 13100,
which is currently at $100,000.
This affidavit procedure, which is part of the Uniform Probate
Code (UPC), has been adopted in 16 jurisdictions, including
California (although the UPC provides for use of the procedure
only after 60 days have passed since the date of death). The UPC
also contains a procedure for the use of an affidavit by a sister
state representative when the personal property (not real and
personal property, as in the case of property not exceeding
$100,000) of the nondomiciliary decedent exceeds the statutory
limit of $100,000. This bill adopts pertinent provisions of the
uniform model legislation, but uses a timefame of 120 days, which
is different from the current California procedure for smaller
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estates (40 days).
The sponsor of the bill argues that permitting the collection by
and transfer of personal property to the sister state
representative of a nondomiciliary decedent by means of a simple
affidavit would allow consolidation of the decedent's estate in
the sister state for a more efficient estate administration and
thus reduce the use of the probate courts in this state.
It should be noted however, that the transfer of a large estate
consisting only of personal property in California to a sister
state representative could result in a hardship to beneficiaries
who are located in California and who must travel to the sister
state or hire their own lawyer in that state for the probate
proceedings relating to the personal property that was in
California. The sponsor, in its proposal, gave as an example a
decedent with $1,000,000 in Idaho and $150,000 in California, who
died domiciled in Idaho. Under current law, the personal
representative from Idaho will have to maintain a probate
proceeding in Idaho and open an ancillary proceeding in
California. Under this bill, the personal representative may
submit an affidavit to the bank where the $150,000 is located,
collect the funds and consolidate them into the estate in the
Idaho action.
If instead the scenario is that the decedent domiciled in Idaho
died with $150,000 in Idaho and $1,000,000 in California, the
result would be the same under existing law and under AB 355.
Beneficiaries residing in California who may be interested in
keeping a closer watch on the estate administration would be
farther removed from the probate proceeding in Idaho, and may
have to travel to Idaho or hire their own lawyer there to protect
their interests. The same would be true for California
creditors, or even the state, if MediCal payments made for the
decedent by the state are to be recovered.
The procedure outlined in AB 355 would not allow use of the
affidavit procedure if the beneficiaries were to file an action
in California to open a probate proceeding. In fact, it would be
the only way to prevent the use of the affidavit procedure to
transfer such a large and disproportionately substantive portion
of the nondomiciliary decedent's estate out of California, in the
example cited above.
It should also be noted that the affidavit procedure would not be
available to the sister state personal representative if the
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decedent's property in California exceeding the gross value
amount of $100,000 includes real property.
3. Procedure for restoration of transferred estate
This bill would provide a procedure for the restoration of
property transferred to the sister state representative by
affidavit back to the decedent's estate, if proceedings for the
administration of the estate are later commenced in California.
The proposed rules for restoration of the property are as
follows:
a) If the sister state personal representative still has the
property, then the property must be restored to the estate,
including the net income received from the property and, if
applicable, the amount of money necessary to satisfy the
balance of any encumbrance incurred after the transfer of
the property to the sister state personal representative.
b) If the sister state personal representative no longer has
the property, then the property must be restored to the
estate in the form of restitution for the fair market value
of the property as of the time of disposition of the
property less any liens and encumbrances on the property at
that time, plus interest on the fair market value and the
net income received from the property.
c) If any person fraudulently secured the transfer of the
decedent's property through this procedure, then that person
is liable for restitution to the decedent's estate of three
times the fair market value of the property, as defined
above.
Any property and amounts restored to the estate by the sister
state personal representative would be reduced by any payments
made to satisfy unsecured debts of decedent and any
administrative expenses paid or distributions made in good faith
and pursuant to the law of the sister state.
An action to enforce liability of the sister state representative
may be brought only by the personal representative of the estate
of decedent (in California) in an ancillary administration
proceeding in the probate court of this state. A court's
judgment to enforce the liability would be limited to the extent
necessary to protect the interests of the heirs, devisees, and
creditors of the decedent. This action would be barred after
three years from the date the affidavit was presented to the
holder of the decedent's property in California, or three years
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after discovery of the fraud, whichever is later. The three-year
statute is not to be tolled.
4. Relief for public administrator
Under existing law, the public administrator of the county in
which the estate of a decedent may be administered has a duty to
petition the court for appointment as personal representative of
the estate if no person with higher priority comes forward to
petition and the estate is valued at greater than $100,000. For
estates valued at less than $100,000, the law provides for a
summary disposition for efficiency of costs and effort.
This bill would relieve the public administrator of the
obligation to administer or to petition for administration of a
decedent's estate greater than $100,000, once an affidavit that
complies with the rules established by AB 355 is received by the
public administrator.
Once property is transferred by affidavit to a sister state
representative and the public administrator is relieved of the
duty to administer or to petition for appointment, the personal
property of decedent (which would be in excess of $100,000 under
this bill), there would be no way to check whether or not in fact
the transfer was legitimate or fraudulent and if so, there would
be no way to restore that transferred property back to the
decedent's estate in California. In order to protect the
property and potential heirs, devisees, and creditors in the case
where the decedent's estate is greater than $100,000 and there is
no person with higher priority who can commence an ancillary
administration proceeding in the state, this bill should be
amended to not relieve the public administrator of this duty
until after the statute of limitations has run on such an action
(three years from the date the affidavit is presented).
Suggested amendment: Amend proposed Section 12586(c) to relieve
the public administrator of the obligation to administer the
decedent's estate under Section 7620 or to petition for
administration of the estate only three years after the date of
presentation of the affidavit or the date the property is
transferred, whichever is later.
Alternative suggested amendment: An alternative to extending the
duration of liability of the public administrator to three years
after presentation of the affidavit or the transfer of the
property (i.e., the statute of limitations for filing an action
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under the bill), is to exempt public administrators from AB 355,
thus restoring the public administrator's current duty to file a
petition for administration of a decedent's California estate
valued at more than $100,000 (as an ancillary probate proceeding
in California), as specified under Section 7620.
The author has agreed to amend the bill according to the first
suggested amendment. However, the California State Association
of Public Administrators and Public Guardians has expressed its
opposition to AB 355 should the bill provide any residual or
continuing liability of public administrators after the property
is transferred by affidavit under
AB 355.
5. Holder of property may transfer property in good faith and is
relieved of tax liability
If the affidavit presented to the holder of property satisfies
all of the requirements described in this bill, the affidavit
would serve as sufficient acquittance for the payment of money,
delivery of property, or changing registered ownership of the
property, and would discharge the holder from any further
liability with respect to the money or the property. The holder
of property, in this case as in the case of the affidavit
submitted for "smaller estates" of $100,000 or less, has no duty
to inquire into the truth of any statement in the affidavit or
declaration, and may rely in good faith on the statements in the
affidavit.
Further, under the affidavit procedure, the holder of decedent's
property would not be liable for any taxes due to California by
reason of paying money, delivering property, or changing
registered ownership of property pursuant to these provisions.
Thus, under this bill, the holder of property would be relieved
of any liability for having transferred money or property to the
sister state personal representative, whether or not the
affidavit provided was truthful or not, as long as the
information presented on its face is factual as far as the
holder's information is concerned.
Because of the size of this estate, should there be a cursory
investigation by the holder into the truth of the contents of the
affidavit? If the holder does not do so, transfers the property
and a subsequent action is filed to recover and restore the
property based on a fraudulent affidavit, should the holder have
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some liability for making that transfer without even a minimal
review?
Suggested amendment: If the affidavit is patently fraudulent or
defective on its face, the holder of the decedent's personal
property should probably not be relieved of liability for
transferring the property until three years after the date the
property is transferred. With this potential liability for the
duration of the statute of limitations, any holder of property
worth more than $100,000 would at least make the effort to
inspect the affidavit more closely for any fraudulent or
misrepresented fact, withhold transfer of the property and force
the sister state representative to open an ancillary proceeding.
If this amendment were made to the bill, whatever it is worth as
far as protecting the interests of the decedent, it would be more
than what the decedent would get under the current terms of AB
355.
Support : American Federation of State, County, and Municipal
Employees (AFSCME, AFL-CIO); Professional Fiduciary Association
of California
Opposition : None Known
HISTORY
Source : Trusts and Estates Section of the State Bar
Related Pending Legislation : None Known
Prior Legislation : None Known
Prior Vote :
Assembly Judiciary Committee (Ayes 10, Noes 0)(Consent)
Assembly Appropriations (Ayes 16, Noes 0) (Consent)
Assembly Floor (Ayes 73, Noes 0) (Consent)
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