BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
SB 308 S
Senator Harman B
As Introduced
Hearing Date: March 31, 2009 3
Business and Professions Code 0
GMO:jd 8
SUBJECT
Professional Fiduciaries: Qualifications
DESCRIPTION
The Professional Fiduciaries Act, enacted as part of the Omnibus
Conservatorship and Guardianship Reform Act of 2006, defines and
regulates professional fiduciaries. A professional fiduciary
may be a conservator, guardian, or trustee, as specified.
This bill is a technical measure that refines the definition of
"professional fiduciary" to include varying types of
conservators and guardians and specifies how trusts and
beneficiaries are counted for purposes of the definition. It
would also exclude from the definition employees of public
officers or agencies that are now specifically exempt from the
requirements imposed on professional fiduciaries, when those
employees are acting within the scope of their employment
duties.
BACKGROUND
In 2006, the Legislature enacted a package of bills to reform
the conservatorship system in the State of California. Major
features of the reforms, embodied in the Omnibus Conservatorship
and Guardianship Reform Act of 2006 (SB 1116 (Scott, Chapter
490), SB 1550 (Figueroa, Chapter 491), SB 1716 (Bowen, Chapter
492) and AB 1363 (Jones, Chapter 493)) are: (1) increased
frequency of review of conservatorships; (2) broadened scope of
court investigators' reports; (3) special procedure for the sale
of a conservatee's primary residence; and (4) the regulation and
licensing of private professional fiduciaries including private
(more)
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professional conservators. The measures were compelled by a
series of articles in the media revealing widespread abuse of
vulnerable elders and dependent adults by conservators and
deficiencies in the courts' oversight of conservatorships.
SB 1550 established the Professional Fiduciaries Act (PFA) for
the purpose of licensing and regulating individuals who act as
conservators, guardians, trustees, personal representatives, or
agents under a durable power of attorney for health care or for
finances, for two or more persons unrelated to the professional
fiduciary or to each other, as specified. Public agency
fiduciaries (public guardians and public conservators) and those
employed by banks and trust companies are exempt from this
regulatory scheme.
SB 1550 also prohibited a court from appointing a person as a
private professional conservator, guardian, or trustee, or
permitting a person to continue to serve as such, unless he or
she is licensed as a professional fiduciary and has filed
evidence of the license with the clerk of the court in each
county where a petition for appointment has been filed.
This bill would make some technical, clarifying amendments to
the Professional Fiduciaries Act with regards to conservators,
guardians, and trustees who may qualify as a professional
fiduciary under the PFA.
CHANGES TO EXISTING LAW
1. Existing law defines and regulates the activities of
professional fiduciaries. (Business & Professions Code Sec.
6501 et seq. All references are to the Business & Professions
Code unless otherwise indicated.)
Existing law defines "professional fiduciary" as a person who
acts as a conservator or guardian for two or more persons at
the same time who are not related to the professional
fiduciary or to each other by blood, adoption, marriage, or
registered domestic partnership. (Sec. 6501(f).)
This bill would clarify that a "conservator" may be a
"conservator of the person , the estate, or person and estate"
and that a "guardian" means a "guardian of the estate, or
person and estate."
2. Existing law defines "professional fiduciary" to also
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include a person who acts as a trustee, agent under a durable
power of attorney for health care, or agent under a durable
power of attorney for finances, for more than three people or
more than three families, or a combination thereof that totals
more than three at the same time, that are not related to the
professional fiduciary by blood, marriage, or registered
domestic partnership.
This bill would clarify that in making this determination: (1)
all individuals who are related to each other shall count as
one individual; (2) trustors related to each other shall count
as one individual; and (3) neither the number of beneficiaries
nor the number of trusts would be counted for purposes of this
qualification of a professional fiduciary. This bill would
also specify that individuals who are related to the fiduciary
shall not be counted.
3. Existing law provides certain classes of entities and
individuals exemptions from the designation of "professional
fiduciary." An employee of a trust company or an FDIC-insured
institution or its affiliate (both of which are exempt under
existing law) is also exempt from designation as a
professional fiduciary for purposes of the PFA, as long as the
employee is acting in the course and scope of that employment.
Existing law also exempts from the designation of
"professional fiduciary" a public officer or public agency,
including the public guardian, public conservator, or other
agency of the state or a county, including a regional center
for persons with developmental disabilities, when the officer
or agency is acting in the course and scope of their official
duties.
This bill would include employees of a public agency and a
public officer of a public agency, as specified, acting in the
course and scope of their official duties, in the exemption
for public agencies and public officers.
COMMENT
1. Stated need for the bill
The author states:
SB 308 is a very technical measure designed to codify the
principle that, for purposes of determining when a trustee
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must be licensed, only trustors should be counted, and not
beneficiaries or trusts. In many cases trusts may have large
numbers of beneficiaries, and large numbers of trusts and
sub-trusts might have been established for tax reasons by a
small number of trustors. The language codifying this point
is already included in regulations adopted by the Professional
Fiduciaries Bureau, Title 16 CCR Section 4406(e)(2), but for
clarity the rule should be contained in the statute.
? The sponsor believes that Section 6501 is unclear that
persons employed by entities exempt from licensure, but who
are "moonlighting" as professional fiduciaries, must be
licensed. The bill thus contains language clarifying this
point.
2. Conservators, guardians, and trustees
The current language in Sec. 6501 was adopted from the language
in the former Probate Code sections pertaining to private
professional conservators and private professional guardians.
Probate Code Sec. 2341(a) defined "private professional
conservator" as a person or entity appointed as conservator of
the person or estate, or both, of two or more conservatees at
the same time who are not related to the conservator by blood or
marriage. Probate Code Sec. 2341(b) defined "private
professional guardian" as a person or entity appointed as
guardian of the estate of two or more wards at the same time who
are not related to the guardian by blood or marriage. Both
statutes were repealed as of January 1, 2009.
The essence of these provisions are now reflected in Business
and Professions Code Sec. 6501, which defines "professional
fiduciaries" and regulates their licensure and activities.
Under Section 6501(f), a "professional fiduciary" means a person
who acts as a conservator or guardian for two or more persons at
the same time who are not related to the professional fiduciary
by blood, adoption, marriage, or registered domestic
partnership.
This bill would clarify that "conservator" means conservator of
the person or of the estate, or conservator of both the person
and estate, of the conservatee and that "guardian" means
guardian of the estate, or guardian of the person and estate, of
the ward. These changes are consistent with former Probate Code
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Sec. 2341, subdivisions (a) and (b).
Under current Sec. 6501(f), a "professional fiduciary" also
means a person who acts as a trustee or an agent under a durable
power of attorney for health care or for finances for more than
three people or three families, or a combination of people and
families that totals more than three, at the same time, who are
not related to the professional fiduciary by blood, adoption,
marriage, or registered domestic partnership. This language was
adopted from the former statute (Probate Code Sec. 2854)
exempting from the requirement of registration in the Statewide
Registry a trustee who serves as trustee for the benefit of not
more than three people or three families or any combination of
both that totals not more than three. Probate Code Sec. 2854
was repealed on January 1, 2009.
This bill would clarify that the counting of three people or
three families shall be based on the number of trustors who are
related, not the number of beneficiaries of the trusts or the
number of trusts involved. The reason for this is that trusts
may have classes of beneficiaries or a number of beneficiaries
greater than three. There may also be subtrusts created by a
general trust, even by the same trustor or trustors. The
sponsor of the bill, the California Judges Association, wants
clarity in the statute, to ease the transition to the new
professional fiduciary statutes, and to be able to implement the
provisions of the Professional Fiduciaries Act more easily.
Thus, a husband and wife who have executed separate trusts with
mutual provisions will count as one family, even though the two
are related by marriage and there are in reality two trusts that
a trustee would serve under.
These clarifying provisions are already embodied in the
regulations adopted by the Professional Fiduciaries Bureau at
the Department of Consumer Affairs, the agency with jurisdiction
over professional fiduciaries.
3. Restrictions on "moonlighting" employee would apply to
employees of public agencies and public officers
Under current law, an employee of a trust company or
FDIC-insured financial institution or its holding companies,
subsidiaries, or affiliates is exempt from the licensing
requirements of the Professional Fiduciaries Act, provided the
employee is acting in the course and scope of that employment.
This bill would extend these restrictions on "moonlighting"
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employees to employees of public agencies and public officers
who are exempt from the professional fiduciary provisions as
well.
Support : Judicial Council of California
Opposition : None Known
HISTORY
Source : California Judges Association
Related Pending Legislation : None Known
Prior Legislation :
SB 1550 (Figueroa, Ch. 491, Stats. 2006) enacted the
Professional Fiduciaries Act.
AB 299 (Tran, Ch. 130, Stats. 2007), exempted from regulation as
a professional fiduciary a person whose sole activity as a
professional fiduciary is as an investment adviser.
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