BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 308|
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UNFINISHED BUSINESS
Bill No: SB 308
Author: Harman (R)
Amended: 6/15/09
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 3/31/09
AYES: Corbett, Harman, Florez, Leno, Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 37-0, 4/23/09 (Consent)
AYES: Aanestad, Alquist, Ashburn, Benoit, Calderon,
Cedillo, Cogdill, Corbett, Correa, Cox, Denham,
DeSaulnier, Dutton, Florez, Hancock, Hollingsworth, Huff,
Kehoe, Leno, Liu, Lowenthal, Maldonado, Negrete McLeod,
Oropeza, Padilla, Pavley, Romero, Runner, Simitian,
Steinberg, Strickland, Walters, Wiggins, Wolk, Wright,
Wyland, Yee
NO VOTE RECORDED: Ducheny, Harman, Vacancy
ASSEMBLY FLOOR : 76-0, 8/17/09 (Consente) - See last page
for vote
SUBJECT : Professional fiduciaries: donative transfers
SOURCE : California Judges Association
DIGEST : This bill is a technical measure that refines
the definition of "professional fiduciary" under the
Professional Fiduciaries Act to include varying types of
CONTINUED
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conservators and guardians and specifies how trusts and
beneficiaries are counted for purposes of the definition.
It also excludes 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.
Assembly Amendments make conforming changes and clarify
specific definitions relative to probate issues.
ANALYSIS :
Existing law defines and regulates the activities of
professional fiduciaries. (Business & Professions Code
Section 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. (Section
6501(f).)
This bill clarifies 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."
Existing law defines "professional fiduciary" to also
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 clarifies 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 will be counted for
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purposes of this qualification of a professional fiduciary.
This bill also specifies that individuals who are related
to the fiduciary shall not be counted.
Existing law provides certain classes of entities and
individuals exemptions from the designation of
"professional fiduciary." An employee of a trust company
or a Federal Deposit Insurance Corporation (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 Professional
Fiduciaries Act (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 includes 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.
Existing law, effective January 1, 2010, in relation to
wills, trusts, and other instruments, defines and regulates
no contest clauses. Existing law limits the application of
a no contest clause to specific contests and provides that
a no contest clause may be enforced against a direct
contest only when it is brought without probable cause.
Former law exempted certain contests from the enforcement
of the no contest clause under specified circumstances,
including if there was reasonable cause to believe that
instrument had been revoked. Former law also permitted a
beneficiary to apply to a court for a determination of
whether a particular motion, petition, or other act by the
beneficiary would be a contest within the terms of a no
contest clause.
This bill makes conforming changes to clarify under what
circumstances the former law would apply.
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Existing law provides for a decedent's property to be
distributed through intestate succession when the decedent
dies without a will, trust, or other instrument based on
the degree of kinship. Existing law prohibits certain
property transactions between certain court officials or
employees or their relatives and guardians or conservators
based on the lineal or collateral consanguinity of the
person to the court official or employee. Existing law
requires a guardian or conservator, when engaging in
certain property transactions, or when seeking approval for
certain acts, with the guardians or conservator's family
members, based on lineal or collateral consanguinity, to
disclose that relationship to the court upon a petition for
approval.
This bill defines the degree of kinship or consanguinity
for the purpose of these provisions.
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 Statutes of 2006, SB 1550
[Figueroa], Chapter 491, Statutes of 2006, SB 1716 [Bowen],
Chapter 492, Statutes of 2006, and AB 1363 [Jones], Chapter
493, Statutes of 2006) are: (1) increases frequency of
review of conservatorships; (2) broadens 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 professional conservators.
The bills 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 (Figueroa) establishes the 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
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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 (Figueroa) also prohibits 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/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 makes some technical, clarifying amendments to
the PFA with regards to conservators, guardians, and
trustees who may qualify as a professional fiduciary under
the PFA.
Prior Legislation
SB 1550 (Figueroa), Chapter 491, Statutes of 2006 , enacted
the Professional Fiduciaries Act.
AB 299 (Tran), Chapter 130, Statutes of 2007 , exempted from
regulation as a professional fiduciary a person whose sole
activity as a professional fiduciary is as an investment
adviser.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/18/09)
California Judges Association (source)
Judicial Council of California
ARGUMENTS IN SUPPORT : The author's office states, this
bill is a very technical measure designed to codify the
principle that, for purposes of determining when a trustee
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
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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.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Coto, Davis, De La Torre, De Leon,
DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,
Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza,
Miller, Monning, Nava, Nestande, Niello, Nielsen, John A.
Perez, V. Manuel Perez, Portantino, Ruskin, Salas, Silva,
Skinner, Solorio, Audra Strickland, Swanson, Torlakson,
Torres, Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Cook, Saldana, Smyth, Vacancy
RJG:do 8/18/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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