BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1038|
|Office of Senate Floor Analyses | |
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CONSENT
Bill No: SB 1038
Author: Harman (R)
Amended: 4/26/10
Vote: 21
SENATE JUDICIARY COMMITTEE : 4-0, 5/4/10
AYES: Corbett, Harman, Hancock, Leno
NO VOTE RECORDED: Walters
SUBJECT : Powers of attorney: duties
SOURCE : Conference of California Bar Associations
DIGEST : This bill deletes existing laws exemption
providing that an attorney-in-fact is not liable for losses
to the principal's property when the attorney-in-fact is
not compensated. This bill provides the circumstances
under which an attorney-in-fact is chargeable with breaches
of duty.
ANALYSIS : Existing law provides that a principal can
grant to an attorney-in-fact the authority to act on the
principal's behalf regarding the principal's real or
personal property. (Probation Code Section 4123.)
Existing law provides that a designated attorney-in-fact
has no duty to exercise the authority granted in the power
of attorney and is not subject to the other duties of an
attorney-in-fact, regardless of whether the principal has
become incapacitated, is missing, or is otherwise unable to
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act. (Probation Code Section 4230.)
Existing law provides that if an attorney-in-fact is not
compensated, the attorney-in-fact is not liable for a loss
to the principal's property unless the loss results from
the attorney-in-fact's bad faith, intentional wrongdoing,
or gross negligence. (Probation Code Section 4231.)
This bill provides that a non-compensated attorney-in-fact
will be held liable for breaches of duty, regardless of
whether the breach was made in bad-faith or error.
This bill authorizes the court, in its discretion, to
excuse the attorney-in-fact from liability if the
attorney-in-fact acted reasonably and in good faith under
the circumstances known to the attorney-in-fact.
This bill provides that an attorney-in-fact shall be held
liable for twice the value of the property recovered by an
action to recover the property or for surcharge.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/6/10)
Conference of California Bar Associations (source)
The Executive Committee of the Trusts and Estates Section
of the State Bar of California
ARGUMENTS IN SUPPORT : The author's office writes, "There
has been a sharp increase in recent years of predators
acting under Powers of Attorney who are stealing money and
property from disabled adults or the elderly.
Attorneys-in-fact are entrusted with enormous power and
should be held accountable when they breach [their] duties
or fail to adhere to the standards set forth in the Probate
Code. However, there is no specific provision in the
Probate Code that sets forth the liability for
attorneys-in-fact who breach their statutory, legal and/or
fiduciary duties under the code, or which addresses the
enhanced liability of an attorney-in-fact who knowingly or
wrongfully misappropriates the monies of the principal.
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"Current law provides a presumption against liability for
uncompensated attorneys, but provides no definition or
guidance as to what constitutes "compensation" under the
meaning of the statute. A frequent example of how the
problem occurs in real life is where the attorney in fact
does not receive regular payment for his or her services,
but there are numerous cash withdrawals that cannot be
accounted for, or unsupported "reimbursements" to the
agent. A contrary example is the good friend who accepts
de minimus or in-kind compensation (e.g., meals) in return
for the assistance he and she provides or to offset a
sacrifice he or she has made; it seems inapposite to hold
such a person to the same standard as a professional
fiduciary. SB 1038 would remove this confusing and
exploitable distinction, and instead leave it to the court
to determine the proper standard of liability."
The Executive Committee of the Trusts and Estates Section
of the State Bar of California support the bill since it
"provides a means to protect agents under powers of
attorney from liability in appropriate cases by giving
courts discretion to excuse the attorney-in-fact in whole
or in part from liability."
RJG:do 5/6/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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