UNFINISHED BUSINESS  

Bill No: SB 303

Author: Wieckowski (D)

Amended: 7/11/19

Vote: 21

SENATE JUDICIARY COMMITTEE: 9-0, 4/30/19

AYES: Jackson, Borgeas, Allen, Caballero, Jones, Monning, Stern, Umberg, Wieckowski

SENATE FLOOR: 37-0, 5/13/19

AYES: Allen, Archuleta, Atkins, Bates, Beall, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

NO VOTE RECORDED: Borgeas

ASSEMBLY FLOOR: 78-0, 8/12/19 - See last page for vote

SUBJECT: Guardians and conservators

SOURCE: Coalition for Elder & Disability Rights

DIGEST:

This bill imposes a higher standard for the sale of a conservatee’s personal residence and limits the amount of compensation that may be paid to a guardian, conservator, or attorney from a ward’s or conservatee’s government benefits.

Assembly Amendments

(1) harmonize provisions authorizing the sale of a conservatee’s personal residence to ensure that the higher standard generally governs any sale of the conservatee’s personal residence, and (2) provide that compensation to a guardian, conservator, or attorney from a ward’s or conservatee’s government benefits may be awarded by a court as necessary for the support and maintenance of the ward or conservatee; however, this amount cannot exceed the amount permitted under federal law.

ANALYSIS:

Existing law:

1. Establishes a presumption that the personal residence of a conservatee is the least restrictive appropriate residence for the conservatee. (Prob. Code § 2352.5(a).) ^[1] This presumption may be overcome by a preponderance of the evidence. (Id.)
2. Provides that before a conservator may sell the conservatee’s present or former personal residence, the conservator must inform the court of the following:
   1. That the sale has been proposed and that the proposed sale has been discussed with the conservatee;
   2. Whether the conservatee supports or opposes the sale;
   3. Why the sale is necessary;
   4. Whether the conservatee has the ability to live in the home; and
   5. Why other alternatives, including in-home care services, are not available. (§ 2540(b).)
3. Allows a guardian or conservator to sell real or personal property of the estate in any of the following cases:
   1. The income of the estate is insufficient for the comfortable and suitable support, maintenance, and education of the ward or conservatee or of those legally entitled to support, maintenance, or education from the ward or conservatee;
   2. The sale is necessary to pay the debts, as provided; or
   3. The sale is for the advantage, benefit, and best interest of the ward or conservatee, the estate, or the ward or conservatee and those legally entitled to support, maintenance, or education from the ward or conservatee. (§ 2541.)
4. Provides that a court may make an order granting a guardian or conservator certain powers if it finds that it would be to the advantage, benefit, and best interest of the estate, as specified. (§ 2590.) These powers include, among other things, the power to sell at public or private sale the personal residence of the conservatee without confirmation of the court of the sale, as specified. (§ 2591(c)(2).) Additionally provides that a conservator seeking an order under Section 2590 authorizing a sale of the conservatee’s personal residence must demonstrate to the court that the terms of sale, including the price for which the property is to be sold and the commissions to be paid from the estate, are in all respects in the best interests of the conservatee. (§ 2591.5.) Requires an appraisal of a conservatee’s residence no more than six months before its sale. Allows a court, for good cause, to waive these requirements. (Id.)
5. Authorizes a guardian or conservator of the estate or person to petition the court for an order to compensate services rendered by the guardian or conservator of the estate, the guardian or conservator of the person, or the attorney to the guardian or conservator. Requires the compensation to be reasonable and prohibits compensation to a guardian or conservator for any costs or fees incurred in unsuccessfully opposing a petition, or other request or action, made by or on behalf of the ward or conservatee, except as specified. (§§ 2640 & 2641.)

This bill:

1. Provides that, in any hearing to determine if removal of a conservatee from their personal residence is appropriate, the presumption that the residence is the least restrictive appropriate residence may only be overcome by clear and convincing evidence.
2. Authorizes the sale of a conservatee’s present or former personal residence only if the court finds that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.
3. Prevents a conservator from committing any significant resources to the proposed sale of a conservatee’s present or former residence before the conservator notifies the court that the residence of the conservatee is proposed to be sold, unless the conservator can establish that either:
   1. The conservatee has the capacity to consent and unequivocally consents to the sale; or
   2. There are exigent circumstances that require the conservator to commit resources to the sale prior to court approval.
4. Adds to the requirement that a conservator, when seeking an order to sell a conservatee’s personal residence, demonstrate to the court that the terms of the sale are in the best interest of the conservatee, the requirement to consider the estimated capital gains income and tax consequences, and the impact on access to government benefits.
5. Prohibits compensation to a guardian, conservator, or attorney from any government benefits program funds unless deemed by the court as necessary to sustain the support and maintenance of the ward or conservatee, but in no event may this exceed the amount permitted by federal laws and regulations.

Comments

In California, if an adult is unable to manage their financial matters, a conservator of the estate may be appointed by a court to manage the adult’s financial matters. If the adult is unable to manage their medical and personal decisions, a conservator of the person may be appointed. Similarly, a guardian of the estate or person may be appointed for a minor child. A conservator or guardian is authorized to charge the conservatee’s or ward’s estate for services rendered in connection with managing the conservatee’s or ward’s financial or personal matters. Additionally, a conservatee’s or ward’s estate may be charged for the costs of an attorney in conservatorship or guardianship proceedings.

Prompted by the concern that these costs can rapidly deplete the assets of a conservatee’s or ward’s estate, this bill seeks to address two issues of concern: (1) where a conservatee lives and what happens to their residence if they are no longer able to live at home, and (2) the funds used to compensate the conservator and guardian for their services.

Higher Standard for the Sale of a Conservatee’s Personal Residence

Section 2352.5 establishes a presumption that the personal residence of the conservatee is the most appropriate place for the conservatee, unless rebutted by a preponderance of the evidence. The California Supreme Court has described the function of standards of proof as follows:

The function of a standard of proof is to instruct the fact finder concerning the degree of confidence our society deems necessary in the correctness of factual conclusions for a particular type of adjudication, to allocate the risk of error between the litigants, and to indicate the relative importance attached to the ultimate decision. [Citations.]  Thus, “the standard of proof may depend upon the 'gravity of the consequences that would result from an erroneous determination of the issue involved.’” [Citation.] The default standard of proof in civil cases is the preponderance of the evidence. (Evid. Code, § 115.) Nevertheless, courts have applied the clear and convincing evidence standard when necessary to protect important rights.

(Conservatorship of Wendland (2001) 26 Cal.4th 519, 546.) The court stated that the clear and convincing test requires a finding of high probability, based on evidence so clear as to leave no substantial doubt and sufficiently strong to command the unhesitating assent of every reasonable mind. (Id. at 552, quoting In re Angelia P. (1981) 28 Cal. 3d 908, 922.)

Removing a conservatee from their personal residence should be an act of last resort when it is no longer feasible or safe for the conservatee to remain in the personal residence. Additionally, removal is often a prelude to the sale of the residence, which is frequently the primary asset in the conservatee’s estate. A premature or unnecessary sale can have lasting financial consequences for a conservatee and their family.

In view of the need to protect these important rights, this bill elevates the standard for the sale of the conservatee’s personal residence to instances in which there is clear and convincing evidence that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee

Restricts Compensation from Public Benefits

This bill seeks to limit the use of government benefits for compensation to conservators, guardians, and attorneys in conservatorship proceedings. With regard to Social Security, federal law limits the availability of old-age, survivor, and disability benefits for the purpose of satisfying debts by providing as follows:

The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

(42 U.S.C. § 407(a).) This section preempts state laws that establish legal processes to recover institutionalized persons’ support costs through deduction of their Social Security benefits, unless they consent to its use for that purpose. (Crawford v. Gould (9th Cir. 1995) 56 F.3d 1162, 1167.) However, if a Social Security beneficiary is “legally incompetent or mentally incapable of managing benefit payments,” Social Security Act regulations provide that a “legal guardian or some other person” may be appointed as a “representative payee” to use the funds for the maintenance, support, and debts of the beneficiary. (20 C.F.R. §§ 404.2001, 404.2010(a)(1), 404.2021(b) & 404.2040.) That fee is currently the lesser of 10 percent of the monthly benefit amount or $43 per month.^[2]

This bill prohibits compensation to a guardian, conservator, or attorney from any government benefits program funds unless deemed by the court as necessary to sustain the support and maintenance of the ward or conservatee; however, this amount cannot exceed the amount permitted by federal laws and regulations.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 8/13/19)

Coalition for Elder & Disability Rights (source)
California Advocates for Nursing Home Reform

Disability Rights Coalition

National Association of Social Workers – California Chapter

Three individuals

OPPOSITION: (Verified 8/13/19)

California Judges Association

Judicial Council of California

ARGUMENTS IN SUPPORT: According to the author, “SB 303 would provide further protections for two of a conservatee's essential assets, their benefits and their residence, from being used or sold to compensate their conservator or their conservator's attorney fees.”

The sponsor of this bill, the Coalition for Elder & Disability Rights, citing anecdotal incidents in which unscrupulous conservators pauperized conservatees, writes that a conservatorship “is the only profession that grants a service provider unfettered access to client assets. Conservators use client assets to fund litigation against the client and against the client's family. Multi-million-dollar estates are depleted by legal fees, while conservatees languish in substandard care facilities.”

California Advocates for Nursing Home Reform adds: “Government benefits are meant to ensure conservatees have housing, food, health care, and other necessities of life. We strongly believe that conservatees’ benefits should be used to support conservatees, not conservators.”

Disability Rights California writes:

For persons with disabilities and who may be unable to manage their financial affairs and therefore have had a conservator appointed for them, there are probably two things that are most important to them: their home and their public benefits, often their only ongoing source of income.

A person’s home often represents a lifetime of sacrifice and a place of security. It is also the place where a person should be able to live in the least restrictive environment in their community and not in an institution. The disposition of one’s home can forever relegate a person to confinement in an institution, for if there is no home to return to, there is often only institutional care. For that reason, the determination to sell a conservatee’s home should be held to the highest standard. This bill requires that a conservator notify the court of a proposed sale of a residence before a sale. It also makes the determination on whether a conservatee should be removed from their home, and whether the home should be sold, subject to an exacting standard: clear and convincing evidence. This standard provides that only a compelling reason will satisfy losing one’s home.

Second, protecting a conservatee’s government insurance or public benefits, such as Social Security and SSI benefits, which are intended to pay for the necessities for the recipients, should not be used to compensate conservators for their services (except as otherwise allowed by state or federal law). This bill makes clear that only those portions of public benefits that are allowed to be used for fees may be used for fees, for example, the $43 that Congress has authorized as payment for representative payees of the beneficiary.

ARGUMENTS IN OPPOSITION: The California Judges Association opposes this bill unless previous reforms are funded: “Before further burdens are imposed upon the courts, specific and appropriate finding should be provided to carry out the measures enacted under AB 1363 [from 2006].”

The Judicial Council of California opposes this bill “on the grounds that it significantly impairs the Probate Court’s authority to order or approve actions as needed for the protection of a probate conservatee’s best interests, and because the bill is likely to encourage unnecessary and even frivolous litigation without providing corresponding benefits to the conservatee.”

ASSEMBLY FLOOR: 78-0, 8/12/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Daly, Diep, Eggman, Flora, Fong, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

NO VOTE RECORDED: Frazier

Prepared by: Josh Tosney / JUD. / (916) 651-4113

8/14/19 15:44:24

**** END ****

1. All further statutory references are to the Probate Code unless otherwise specified. ↑

2. Social Security, Social Security Administration website https://www.ssa.gov/oact/cola/RepPayee.html (as of Apr. 24, 2019). ↑

SENATE THIRD READING

STR Bill Id:SB 303

Author:(Wieckowski)

As Amended Ver:July 11, 2019

Majority vote

SUMMARY:

Limits how a conservative's personal residence may be sold and any compensation that can be paid to a guardian, conservator or attorney from the ward's or conservatee's government benefits.

Major Provisions

1. Provides that, in any hearing to determine if removal of a conservatee from their personal residence is appropriate, the presumption that the residence is the least restrictive appropriate residence may only be overcome by clear and convincing evidence.
2. Authorizes the sale of a conservatee's present or former personal residence only if the court finds that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.
3. Prevents a conservator from committing any significant resources to the proposed sale of a conservatee's present or former residence before the conservator notifies the court that the residence of the conservatee is proposed to be sold, unless the conservator can establish that either:
   1. The conservatee has the capacity to consent and unequivocally consents to the sale; or
   2. There are exigent circumstances that require the conservator to commit resources to the sale prior to court approval.
4. No longer exempts a court, when granting a conservator the power to sell a conservatee's personal residence at a public or private sale, from requiring the following:
   1. The conservator must inform the court that the sale has been proposed and that the proposed sale has been discussed with the conservatee; whether the conservatee supports or opposes the sale; why the sale is necessary; whether the conservatee has the ability to live in the home; and why other alternatives, including in-home care services, are not available; and
   2. The court finds, by clear and convincing evidence, that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.
5. Eliminates the ability of a court, when granting a conservator the power to sell the conservatee's personal residence, to waive, for good cause, certain requirements.
6. Adds to the requirement that a conservator, when seeking an order to sell a conservatee's personal residence, demonstrate to the court that the terms of the sale are in the best interest of the conservatee, the requirement to consider the estimated capital gains income and tax consequences, and the impact on access to government benefits.
7. Prohibits compensation to a guardian, conservator, or attorney from any government benefits program funds unless deemed by the court as necessary to sustain the support and maintenance of the ward or conservatee, but in no event may this exceed the amount permitted by federal laws and regulations.

COMMENTS:

In California, if an adult is unable to manage his or her financial matters, a conservator of the estate may be appointed by a court to manage the adult's (or conservatee's) financial matters. If the adult is unable to manage their medical and personal decisions, a conservator of the person may be appointed. A guardian may be appointed to protect a minor, the minor's estate, or both. The appointment process generally requires an investigation by a court investigator and approval by the court. Both conservatorships and guardianships involve a court-appointed third party – the conservator or guardian – making life-changing decisions on behalf of their charge – the conservatee or the ward. This bill seeks to address two issues of concern: 1) where a conservatee lives and what happens to their residence if they are no longer able to live at home, and 2) the funds used to compensate the conservator and guardian for their services.

According to the Author:

SB 303 would provide further protections for two of a conservatee's essential assets, their benefits and their residence, from being used or sold to compensate their conservator or their conservator's attorney fees.

Arguments in Support:

The sponsor of this bill, CEDAR, the Coalition for Elder & Disability Rights, citing anecdotal incidents in which unscrupulous conservators pauperized conservatees, writes that a conservatorship "is the only profession that grants a service provider unfettered access to client assets. Conservators use client assets to fund litigation against the client and against the client's family. Multi-million-dollar estates are depleted by legal fees, while conservatees languish in substandard care facilities."

California Advocates for Nursing Home Reform adds: "Government benefits are meant to ensure conservatees have housing, food, health care, and other necessities of life. We strongly believe that conservatees' benefits should be used to support conservatees, not conservators."

Arguments in Opposition:

The California Judges Association opposes this bill unless previous reforms are funded: "Before further burdens are imposed upon the courts, specific and appropriate finding should be provided to carry out the measures enacted under AB 1363 [from 2006]."

The Judicial Council opposes the bill "on the grounds that it significantly impairs the Probate Court's authority to order or approve actions as needed for the protection of a probate conservatee's best interests, and because the bill is likely to encourage unnecessary and even frivolous litigation without providing corresponding benefits to the conservatee."

FISCAL COMMENTS:

None

VOTES:

SENATE FLOOR: 37-0-1

YES: Allen, Archuleta, Atkins, Bates, Beall, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ABS, ABST OR NV: Borgeas

ASM JUDICIARY: 12-0-0

YES: Mark Stone, Gallagher, Chau, Chiu, Gabriel, Holden, Kalra, Kiley, Maienschein, Obernolte, Petrie-Norris, Reyes

UPDATED:

VERSION: July 11, 2019

CONSULTANT: Leora Gershenzon / JUD. / (916) 319-2334 FN: 0001229

SENATE THIRD READING

STR Bill Id:SB 303

Author:(Wieckowski)

As Amended Ver:June 10, 2019

Majority vote

SUMMARY:

Limits how a conservative's personal residence may be sold and any compensation that can be paid to a guardian, conservator or attorney from the ward's or conservatee's government benefits.

Major Provisions

1. Provides that, in any hearing to determine if removal of a conservatee from their personal residence is appropriate, the presumption that the residence is the least restrictive appropriate residence may only be overcome by clear and convincing evidence.
2. Authorizes the sale of a conservatee's present or former personal residence only if the court finds that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.
3. Prevents a conservator from committing any significant resources to the proposed sale of a conservatee's present or former residence before the conservator notifies the court that the residence of the conservatee is proposed to be sold, unless the conservator can establish that either:
   1. The conservatee has the capacity to consent and unequivocally consents to the sale; or
   2. There are exigent circumstances that require the conservator to commit resources to the sale prior to court approval.
4. No longer exempts a court, when granting a conservator the power to sell a conservatee's personal residence at a public or private sale, from requiring the following:
   1. The conservator must inform the court that the sale has been proposed and that the proposed sale has been discussed with the conservatee; whether the conservatee supports or opposes the sale; why the sale is necessary; whether the conservatee has the ability to live in the home; and why other alternatives, including in-home care services, are not available; and
   2. The court finds, by clear and convincing evidence, that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.
5. Eliminates the ability of a court, when granting a conservator the power to sell the conservatee's personal residence, to waive, for good cause, certain requirements.
6. Adds to the requirement that a conservator, when seeking an order to sell a conservatee's personal residence, demonstrate to the court that the terms of the sale are in the best interest of the conservatee, the requirement to consider the estimated capital gains income and tax consequences, and the impact on access to government benefits.
7. Prohibits compensation to a guardian, conservator, or attorney from any government benefits program funds designated for a ward or conservatee, unless the compensation is authorized pursuant to other provisions of law.

COMMENTS:

In California, if an adult is unable to manage his or her financial matters, a conservator of the estate may be appointed by a court to manage the adult's (or conservatee's) financial matters. If the adult is unable to manage their medical and personal decisions, a conservator of the person may be appointed. A guardian may be appointed to protect a minor, the minor's estate, or both. The appointment process generally requires an investigation by a court investigator and approval by the court. Both conservatorships and guardianships involve a court-appointed third party – the conservator or guardian – making life-changing decisions on behalf of their charge – the conservatee or the ward. This bill seeks to address two issues of concern: 1) where a conservatee lives and what happens to their residence if they are no longer able to live at home, and 2) the funds used to compensate the conservator and guardian for their services.

According to the Author:

SB 303 would provide further protections for two of a conservatee's essential assets, their benefits and their residence, from being used or sold to compensate their conservator or their conservator's attorney fees.

Arguments in Support:

The sponsor of this bill, CEDAR, the Coalition for Elder & Disability Rights, citing anecdotal incidents in which unscrupulous conservators pauperized conservatees, writes that a conservatorship "is the only profession that grants a service provider unfettered access to client assets. Conservators use client assets to fund litigation against the client and against the client's family. Multi-million-dollar estates are depleted by legal fees, while conservatees languish in substandard care facilities."

California Advocates for Nursing Home Reform adds: "Government benefits are meant to ensure conservatees have housing, food, health care, and other necessities of life. We strongly believe that conservatees' benefits should be used to support conservatees, not conservators."

Arguments in Opposition:

The California Judges Association opposes this bill unless previous reforms are funded: "Before further burdens are imposed upon the courts, specific and appropriate finding should be provided to carry out the measures enacted under AB 1363 [from 2006]."

FISCAL COMMENTS:

None

VOTES:

SENATE FLOOR: 37-0-1

YES: Allen, Archuleta, Atkins, Bates, Beall, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ABS, ABST OR NV: Borgeas

ASM JUDICIARY: 12-0-0

YES: Mark Stone, Gallagher, Chau, Chiu, Gabriel, Holden, Kalra, Kiley, Maienschein, Obernolte, Petrie-Norris, Reyes

UPDATED:

VERSION: June 10, 2019

CONSULTANT: Leora Gershenzon / JUD. / (916) 319-2334 FN: 0001098

Date of Hearing: June 18, 2019

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

SBPCA Bill Id:SB 303

Author:(Wieckowski) – As Amended Ver:June 10, 2019

SENATE VOTE: 37-0

SUBJECT: Guardians and conservators: compensation: residence of conservatee

KEY ISSUES:

1. SHOULD THE LAW BE STRENGTHENED TO HELP ENSURE THAT A CONSERVATEE’S PERSONAL RESIDENCE CAN ONLY BE SOLD BY THE CONSERVATOR IF THE SALE IS APPROPRIATE?
2. SHOULD THE LAW BE CLARIFIED TO LIMIT A GUARDIAN’S, CONSERVATOR’S OR ATTORNEY’S ACCESS, FOR PAYMENT OF FEES, TO THE GOVERNMENT BENEFITS RECEIVED BY THEIR WARD OR CONSERVATEE, UNLESS OTHERWISE PERMITTED?

SYNOPSIS

In California, if an adult is unable to manage his or her financial matters, a conservator of the estate may be appointed by a court to manage the adult’s (or conservatee’s) financial matters. If the adult is unable to manage their medical and personal decisions, a conservator of the person may be appointed. A guardian may be appointed to protect a minor, the minor's estate, or both. The appointment process generally requires an investigation by a court investigator and approval by the court. Both conservatorships and guardianships involve a court-appointed third party – the conservator or guardian – making life-changing decisions on behalf of their charge – the conservatee or the ward. Problems with, particularly, conservatorships harming vulnerable conservatees have been extensively reported in the media and legislative reforms have attempted to address the issues, with apparently limited success. This bill seeks to address two issues of long-standing concern: (1) where a conservatee lives and what happens to their residence if they are no longer able to live at home, and (2) the funds used to compensate the conservator and guardian for their services.

Prompted by advocates’ concerns that conservatees are being inappropriately moved out of their personal residences, which are then inappropriately sold to pay conservators fees, and that the ward’s or conservatee’s government benefits are being used to pay their guardian’s or conservator’s fees, this bill seeks to (1) increase the showing necessary for a conservator to move a conservatee out of their personal residence and to sell the residence, and (2) prohibit, unless otherwise permitted, compensation to a guardian, conservator, or attorney from the funds of government programs. The author argues that this bill is necessary to “provide further protections for two of a conservatee’s essential assets, their benefits and their residence, from being used or sold to compensate their conservator or their conservator’s attorney fees.” The bill is sponsored by the Coalition for Elder & Disability Rights (CEDAR) and is supported by organizations that work with the elderly and individuals with disabilities. The California Judges Association opposes the bill unless funded to implement the reforms in the Omnibus Conservatorship and Guardianship Reform Act of 2006.

SUMMARY: Limits how a conservative’s personal residence may be sold and any compensation that can be paid to a guardian, conservator or attorney from the ward’s or conservatee’s government benefits. Specifically, this bill:

1. Provides that, in any hearing to determine if removal of a conservatee from their personal residence is appropriate, the presumption that the residence is the least restrictive appropriate residence may only be overcome by clear and convincing evidence.
2. Authorizes the sale of a conservatee’s present or former personal residence only if the court finds that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.
3. Prevents a conservator from committing any significant resources to the proposed sale of a conservatee’s present or former residence before the conservator notifies the court that the residence of the conservatee is proposed to be sold, unless the conservator can establish that either:
   1. The conservatee has the capacity to consent and unequivocally consents to the sale; or
   2. There are exigent circumstances that require the conservator to commit resources to the sale prior to court approval.
4. No longer exempts a court, when granting a conservator the power to sell a conservatee’s personal residence at a public or private sale, from requiring the following:
   1. The conservator must inform the court that the sale has been proposed and that the proposed sale has been discussed with the conservatee; whether the conservatee supports or opposes the sale; why the sale is necessary; whether the conservatee has the ability to live in the home; and why other alternatives, including in-home care services, are not available; and
   2. The court finds, by clear and convincing evidence, that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.
5. Eliminates the ability of a court, when granting a conservator the power to sell the conservatee’s personal residence, to waive, for good cause, the following requirements:
   1. The conservator must demonstrate to the court that the terms of sale, including the price for which the property is to be sold and the commissions to be paid from the estate, estimated capital gains income and tax consequences, and impact on access to government benefits are, in all respects, in the best interests of the conservatee;
   2. The conservator must, within 15 days of close of escrow (i) serve a copy of the final escrow settlement statement on all persons entitled to notice of the petition for appointment for a conservator and all persons who have filed and served a request for special notice; and (ii) file a copy of the final escrow statement along with a proof of service with the court; and
   3. Have an appraisal of a conservatee’s residence no more than six months before its sale.
6. Adds to the requirement that a conservator, when seeking an order to sell a conservatee’s personal residence, demonstrate to the court that the terms of the sale are in the best interest of the conservatee, the requirement to consider the estimated capital gains income and tax consequences, and the impact on access to government benefits.
7. Prohibits compensation to a guardian, conservator, or attorney from any government benefits program funds designated for a ward or conservatee, unless the compensation is authorized pursuant to other provisions of law.

EXISTING LAW:

1. Allows a court to appoint a guardian of the person, the estate, or both for a child under 18 years of age, or 18 to 21 years of age as specified, taking into consideration the best interest of the proposed ward. (Probate Code Sections 1510, 1510.1. Unless otherwise stated, all further statutory references are to that code.)
2. Permits a court to appoint a conservator of the person for a person who is unable to provide properly for their personal needs for physical health, food, clothing, or shelter, as provided. Permits a court to appoint a conservator of the estate for a person who is substantially unable to manage their own financial resources or resist fraud or undue influence, except as provided. (Section 1801.)
3. Establishes a presumption, applicable in a hearing to determine if removal of a conservatee from their personal residence is appropriate, that the personal residence of a conservatee is the least restrictive appropriate residence of the conservatee. Provides that this presumption may be overcome by a preponderance of evidence. (Section 2352.5 (a).)
4. Provides that before a conservator may sell the conservatee’s present or former personal residence, the conservator must inform the court:
   1. That the sale has been proposed;
   2. That the proposed sale has been discussed with the conservatee, and whether the conservatee supports or opposes the sale;
   3. Why the sale is necessary, including whether the conservatee has the ability to live in the home and why other alternatives, including in-home care services, are not available. (Section 2540 (b).)
5. Allows a court to require an investigator to visit the conservatee to investigate a proposed sale of the conservatee’s home. (Ibid.)
6. Allows a guardian or conservator to sell real or personal property of the estate in any of the following cases:
   1. The income of the estate is insufficient for the comfortable and suitable support, maintenance, and education of the ward or conservatee or of those legally entitled to support, maintenance, or education from the ward or conservatee;
   2. The sale is necessary to pay the debts, as provided; or
   3. The sale is for the advantage, benefit, and best interest of (i) the ward or conservatee, (ii) the estate, or (iii) the ward or conservatee and those legally entitled to support, maintenance, or education from the ward or conservatee. (Section 2541.)
7. Allows the court to grant a conservator specific powers, including the power to sell the personal residence of a conservatee at a public or private sale, provided the power is subject to the provisions in 3) and 6), above. (Sections 2590-2591.)
8. Requires a conservator seeking an order under 7), above, to sell a conservatee’s personal residence to demonstrate to the court that the terms of sale, including the price for which the property is to be sold and the commissions to be paid from the estate, are in all respects in the best interests of the conservatee. Requires the conservator, within 15 days of close of escrow, to serve a copy of the final escrow settlement statement on all persons entitled to notice of the petition for appointment for a conservator and all persons who have filed and served a request for special notice and to file a copy of the final escrow statement along with a proof of service with the court. Requires an appraisal of a conservatee’s residence no more than six months before its sale. Allows a court, for good cause, to waive these requirements. (Section 2591.5.)
9. Authorizes a guardian or conservator of the estate or person to petition the court for an order to compensate services rendered by the guardian or conservator of the estate, the guardian or conservator of the person, or the attorney to the guardian or conservator. Requires the compensation to be reasonable and prohibits compensation to a guardian or conservator for any costs or fees incurred in unsuccessfully opposing a petition, or other request or action, made by or on behalf of the ward or conservatee, except as specified. (Sections 2640 and 2641.)

FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.

COMMENTS: In California, if an adult is unable to manage his or her financial matters, a conservator of the estate may be appointed by a court to manage the adult’s (or conservatee’s) financial matters. If the adult is unable to manage their medical and personal decisions, a conservator of the person may be appointed. A guardian may be appointed to protect a minor, the minor's estate, or both. The appointment process generally requires an investigation by a court investigator and approval by the court. Both conservatorships and guardianships involve a court-appointed third party – the conservator or guardian – making life-changing decisions on behalf of their charge – the conservatee or the ward. This bill seeks to address two issues of concern: (1) where a conservatee lives and what happens to their residence if they are no longer able to live at home, and (2) the funds used to compensate the conservator and guardian for their services. In support of the bill, the author writes:

SB 303 would provide further protections for two of a conservatee’s essential assets, their benefits and their residence, from being used or sold to compensate their conservator or their conservator’s attorney fees.

Government benefits like Social Security and SSI are intended to provide economic security for older or disabled individuals to cover financial, medical, or any other needs. SB 303 clarifies existing law which generally protects a conservatee’s government benefits from being used to pay a conservator’s or their attorney’s fees.

The importance of a home cannot be overstated. While the sale may be necessary if a conservatee’s needs require them to be in a care facility, the sale of such a large share of a person’s estate, and an asset that could almost certainly not be regained once sold, should not be used to compensate a conservator or cover their attorney fees. Such a sale of one’s personal property is only meant to be done if it is [for] the benefit and best interest of the conservatee.

History of conservatorships and guardianships in California. California adopted its first conservatorship statute in 1957. Prior to that time, the court appointed a "guardian" for any person, child or adult, who was deemed "incompetent" to manage his or her daily affairs. After 1957, the law distinguished between a "guardianship," created for a minor, and a "conservatorship," created for an adult. There are also specific types of conservatorships for persons who are considered "gravely disabled" by reason of mental illness or chronic alcoholism and subject to confinement in a locked psychiatric facility under the Lanterman-Petris-Short Act and for developmentally disabled adults. California law provides for the appointment of a Public Guardian for any person "who requires a guardian or conservator and there is no one else who is qualified and willing to act."

Guardians and conservators may be licensed professionals or family or friends. It has been estimated that professional conservators oversee $1.5 billion in assets for at least 4,600 adults. Most conservators are non-professionals, usually family members, such as a spouse or a child. Likewise, guardians are typically family members.

Investigative journalism has previously revealed significant problems with conservatorships in California. In November, 2005, the Los Angeles Times published an in-depth investigatory series, called "Guardians for Profit," which dramatically exposed the failings of California's conservatorship system for elderly and dependent adults. (Robin Fields, Evelyn Larrubia, and Jack Leonard, Guardians for Profit series, Los Angeles Times, November 13-17, 2005.) The Times articles included stories of private conservators who misused the system and got themselves appointed inappropriately and then either stole or mismanaged the money their conservatees spent a lifetime earning; public guardians who did not have the resources to help truly needy individuals, leaving them – poor, alone and at risk of severe harm – to try and fend for themselves; probate courts which did not have sufficient resources to provide adequate oversight to catch the abuses; and a system that provided no place for those in need to turn to for help. The Times editorial which ran at the end of the series, called on both the courts and elected officials to "turn this abusive system into the honest guardianship it was meant to be." (Deserving of Care, Los Angeles Times, November 17, 2005.)

The Times series included scores of examples of the failings of the current conservatorship system, two of which exemplify many of the problems identified. As a child, Helen Jones helped her family survive the Great Depression by collecting coal along railroad tracks in Nebraska and, during World War II, she was a real-life "Rosie the Riveter." At 87, she was controlled by a court-appointed conservator who she never wanted. Her neighbors and her legal services attorney claimed that Helen was alert, responsible, and "self-sufficient." Yet the conservator had reportedly spent $200,000 of Helen's $560,000 estate – at a rate of about $84,000 per year – mostly on things Helen never wanted.

Emmeline Frey was 93 and suffering from dementia by the time that a San Diego probate court appointed a professional conservator to manage her $1 million estate. The court-appointed conservator hired her own son, a former car salesman, as a financial advisor. She gave him $500,000 of Emmeline's estate to invest. He collected his commissions, paid for by the estate, even though his investments squandered $100,000 of Emmeline's money. Although court staff informed the presiding probate judge about the son's questionable investments, the judge reportedly did nothing. When asked later about his inaction, the judge claimed that he did not remember the case given that he handled as many as 100 cases per day.

Unfortunately, problems with some conservators continued. A 2012 Mercury News series exposed a problem that conservatees and wards may have exorbitant fee petitions. The article reported that “a six-month investigation by this newspaper found a small group of [Santa Clara] [C]ounty’s court-appointed personal and estate managers are handing out costly and questionable bills -- and charging even more if they are challenged. The troubling trend is enriching these private professionals -- working as conservators and trustees -- and their attorneys, with eye-popping rates that threaten to force their vulnerable clients onto government assistance to survive.” (Karen de Sá, Santa Clara County’s court-appointed personal and estate managers are handing out costly and questionable bills, Mercury News (June 30, 2012).)

More recently, a 2018 Orange County Register story described advocates’ complaints about the conservatorship system, including concerns raised by the sponsor of this bill:

[C]ritics complain that some of the professionals are out to pad their own fees until the money is gone or substantially drained. They relate incidents of the elderly and disabled being isolated from their families by conservators, paying exorbitant professional fees for substandard care and seeing life savings and real estate holdings disappear while judges do nothing.

“Conservatorships are imposed (by judges) in minutes with nary a nod toward due process,” said Linda Kincaid, co-founder of the Coalition for Elder and Disability Rights, based in Northern California. “Once the conservatorship is in place, there is essentially no court oversight or accountability. Conservators and their agents are free to exploit and abuse with impunity.” (Tony Saavedra, Money-draining probate system “like a plague on our senior citizens,” Orange County Register (September 23, 2018).)

Legislative Response. In response to the shocking reports of abuse in the 2005 Los Angeles Times series, the Legislature passed the Omnibus Conservatorship and Guardianship Reform Act of 2006, a landmark package of bills to overhaul California's troubled conservatorship system. That legislation was designed to remedy alarming deficiencies in California's conservatorship system that had resulted in the abuses of California's elderly and most vulnerable. The package of bills were:

• Of particular relevance for this bill, SB 1116 (Scott), Chap. 490, Stats. 2006, which required stronger reviews and protections before a conservator can sell the personal residence of a conservatee.
• AB 1363 (Jones), Chap. 493, Stats. 2006, which required much stronger review and responsibility by the state's judges of conservators, along with uniform standards of conduct that conservators must follow, brand new and aggressive training rules for all professionals involved in the system, and a new requirement that Public Guardians take the cases of all those at imminent risk of harm.
• SB 1550 (Figueroa), Chap. 491, Stats. 2006, which created the Professional Fiduciaries Bureau within the Department of Consumer Affairs to license and regulate professional fiduciaries, including conservators, guardians, and trustees.
• SB 1716 (Bowen), Chap. 492, Stats. 2006, which allowed the court to take action when it receives informal reports of abuse and neglect from concerned friends or family members; gave the court the ability to order a review of a conservatorship at any time; and required that court investigators more fully examine conservatees.

Unfortunately, while the Professional Fiduciaries Bureau within the Department of Consumer Affairs now licenses and regulates professional fiduciaries, the important new court oversights were never funded and, as a result, are not mandated today. Thus, it is possible that some of the same abuses which took place prior to the 2006 Act could still be occurring today and that courts simply lack the oversight resources to detect these abuses.

After the Mercury News series, the Legislature passed SB 156 (Beall), 2013, which sought to limit the fees that a conservator or guardian could collect. That legislation, however, was vetoed by the Governor who noted that the process could be improved and that he would have signed the bill if amendments taken in this Committee had not been later removed from the bill. As a result, it is possible that many of the concerning stories about financial misuse revealed by the investigative reports are still occurring for vulnerable seniors in California.

Conservators and guardians have a fiduciary duty to protect their conservatees and wards. The conservator-conservatee and the guardian-ward have a fiduciary relationship. (Section 2101.) The duties of conservators and guardians include the obligation to exercise ordinary care and diligence in managing and controlling the conservatee’s or ward’s estate. (Section 2401.) Probate Code Section 2102 provides that “[a] guardian or conservator is subject to the regulation and control of the court in the performance of the duties of the office.” As court-appointed officers, conservators and guardians remain under the control and continuing jurisdiction of the court in the discharge of their duties. (See Guardianship of Davis (1967) 253 Cal.App.2d 754, 760.) “The court may, on its own motion or upon request by any interested person, take appropriate action including, but not limited to, ordering a review of the conservatorship, including at a noticed hearing, and ordering the conservator to present an accounting of the assets of the estate.” (Section 1850 (b); Schwartz v. Labow (2008) 164 Cal.App.4th 417, 427 (court may “intervene to protect abuses” by a fiduciary).)

This bill seeks to protect the conservatee’s personal residence and where they reside. This bill builds on and improves the protections for the conservatee’s home and personal residence created by SB 1116 (Scott), Chap. 490, Stats. 2006. That bill required stronger reviews and protections before a conservator can sell the personal residence of a conservatee. In particular, that bill created a new presumption that the least restrictive appropriate setting at the commencement of the conservatorship is the conservatee’s existing home. (Section 2352.5.) This presumption may be overcome by a preponderance of the evidence that the conservatee's residence is not the least restrictive appropriate setting or that a more appropriate setting is necessary to accommodate the level of care needed by the conservatee.

This bill appropriately increases the required showing to remove a conservatee from their home from a preponderance of the evidence to the clear and convincing standard. This increased showing should help prevent elderly adults from being moved from their homes prematurely, which can have devastating impacts on the health and well-being of the conservatee.

SB 1116 also moderated a conservator's power to sell the conservatee's personal residence. That bill required that the conservator seeking to sell the conservatee's personal residence must demonstrate that the terms of the sale, including the price at which the property is to be sold, and the commissions to be paid from the estate, are in the best interests of the conservatee, and comply with various rules regarding appraisals and minimum offers, and provide interested parties with notice post the sale. However, that bill allowed courts to waive the requirements and did not necessarily apply if the court gave the conservator, up front, the power to sell the personal residence.

Removing a conservatee from their personal residence should be an act of last resort when it is no longer feasible or safe for the conservatee to remain in their home. Additionally, removal is often a prelude to the sale of the residence, which is frequently the primary asset in the conservatee’s estate. A premature or unnecessary sale can have lasting financial consequences for a conservatee and their family. In view of the need to protect these important rights, this bill increases the requirements for conservators to sell a conservatee’s personal residence by:

• Authorizing the sale of a conservatee’s present or former personal residence only if the court finds that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee, increased from just a best interest standard.
• Preventing a conservator from committing any significant resources to the proposed sale of the residence before the conservator notifies the court of the proposed sale, unless the conservator can establish that either there are exigent circumstances that require the conservator to commit resources to the sale prior to court approval, or the conservatee unequivocally consents to the sale. This ensures that the court is allowed to weigh in early before resources are committed to the sale, but also provides exceptions if needed.
• Adding to the requirement that a conservator, when seeking an order to sell a conservatee’s personal residence, demonstrate to the court that the terms of the sale are in the best interest of the conservatee, the requirement to consider estimated capital gains income and tax consequences, and impact on access to government benefits. This small change will ensure that the court considers the impact of the sale on the conservatee’s income and estate. It does not prevent a sale, but simply requires the court to consider the possible financial impacts when making its determination.
• Treating a court’s granting to the conservator of the power to sell a conservatee's residence the same as if the conservator later asks to sell the residence by ensuring the same requirements apply to both sales. As a result, before granting the power to sell the personal residence, the conservator must:
  • Inform the court that the sale has been proposed and that the proposed sale has been discussed with the conservatee; whether the conservatee supports or opposes the sale; why the sale is necessary; whether the conservatee has the ability to live in the home; and why other alternatives, including in-home care services, are not available;
  • Demonstrate to the court that the terms of sale, including the price for which the property is to be sold and the commissions to be paid from the estate, estimated capital gains income and tax consequences, and impact on access to government benefits are, in all respects, in the best interests of the conservatee;
  • Find, by clear and convincing evidence, that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee;
  • Within 15 days of close of escrow (i) serve a copy of the final escrow settlement statement on all persons entitled to notice of the petition for appointment for a conservator and all persons who have filed and served a request for special notice; and (ii) file a copy of the final escrow statement along with a proof of service with the court; and
  • Have an appraisal of a conservatee’s residence no more than six months before its sale.

Treating a sale of the conservatee’s personal residence the same, whether derived from a court-granted power to sell or a conservator-driven request to sell, will ensure that the conservator makes the appropriate showing to the court and the court adequately considers that showing before a conservatee’s personal residence can be sold. Some of these changes address concerns raised in the Senate Judiciary Committee’s analysis of this bill, but not resolved by amendments taken in that Committee.

In support of this part of the bill, Disability Rights California writes:

A person’s home often represents a lifetime of sacrifice and a place of security. It is also the place where a person should be able to live in the least restrictive environment in their community and not in an institution. The disposition of one’s home can forever relegate a person to confinement in an institution, for if there is no home to return to, there is often only institutional care. For that reason, the determination to sell a conservatee’s home should be held to the highest standard. This bill requires that a conservator notify the court of a proposed sale of a residence before a sale. It also makes the determination on whether a conservatee should be removed from their home, and whether the home should be sold, subject to an exacting standard: clear and convincing evidence. This standard provides that only a compelling reason will satisfy losing one’s home.

California Advocates for Nursing Home Reform adds:

SB 303 provides additional protections to conservatees from having their homes sold against their will or against their best interests. Conservatees’ homes are often viewed as a potential source of income for conservators, whose interest in getting paid can conflict with a conservatee’s desire to maintain their home. Frankly, some professional conservators are not interested in taking a conservatorship case unless the conservatee has a home with equity to draw from.

This bill seeks to limits the compensation that a conservator or guardian may collect from public benefits paid for the benefit of the conservatee or ward. A conservator or guardian is authorized to charge the conservatee’s or ward’s estate for services rendered in connection with managing the conservatee’s or ward’s financial or personal matters. Many family members serving in the role do not charge fees, but professionals almost always charge fees. In general, the guardian or conservator, and their attorney, is allowed compensation for fees and expenses, provided the court determines they are “just and reasonable.” (Sections 2623, 2640, and 2641.) Courts have held that a guardian or conservator is entitled to compensation only for services that the guardian or conservator believed in good faith were necessary or appropriate to carry out the purpose of the guardianship or conservatorship, and only if the guardian’s or conservator’s belief in that regard was reasonable. (See Conservatorship of Lefkowitz (1996) 50 Cal.App.4th 1310, 1314.)

As required by statute (Section 2410), the Judicial Council promulgated, in rules of court, a nonexclusive list of factors that a court may consider in determining whether compensation is just and reasonable:

• The size and nature of the conservatee's or ward's estate;
• The benefit to the conservatee or ward, or the estate, of the conservator's or guardian's services;
• The necessity for the services performed;
• The conservatee's or ward's anticipated future needs and income;
• The time spent by the conservator or guardian in the performance of services;
• Whether the services performed were routine or required more than ordinary skill or judgment;
• Any unusual skill, expertise, or experience brought to the performance of services;
• The conservator's or guardian's estimate of the value of the services performed; and
• The compensation customarily allowed by the court in the community where the court is located for the management of conservatorships or guardianships of similar size and complexity. (California Rules of Court, Rule 7.756.)

The rule specifies that no single factor in the above list should be “the exclusive basis for the court's determination of just and reasonable compensation.” (Ibid.) The rule also does not provide authority for the court to set an “inflexible maximum or minimum compensation or a maximum approved hourly rate for compensation.” (Ibid.)

In an effort to better protect the income that a conservatee or ward needs for their own survival, this bill seeks to limit the government benefits that may be used to compensate conservators, guardians, and attorneys, by prohibiting compensation to a guardian, conservator, or attorney from any government benefits program funds designated for a ward or conservatee, unless the compensation is authorized pursuant to other provisions of law.

For social security benefits, federal law limits the availability of old-age, survivor, and disability benefits for the purpose of satisfying debts by providing that the “right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.” (42 U.S.C. Section 407 (a).) However, if a social security beneficiary is “legally incompetent or mentally incapable of managing benefit payments,” Social Security Act regulations provide that a “legal guardian or some other person” may be appointed as a “representative payee” to use the funds for the maintenance, support, and debts of the beneficiary. (20 C.F.R. Section 404.2001 et seq.) That fee is currently the lesser of 10% of the monthly benefit amount or $43 per month. Veterans benefits are subject to similar rules.

This bill seeks to exclude government benefits such as social security benefits from the pool of funds from which a conservator, guardian, or attorney may be compensated. The bill does not completely prohibit the use of government benefits to pay any fees or expenses of a guardian or conservator (or their attorney), but instead limits its use to what is otherwise permitted.

In support of this provision of the bill, California Advocates for Nursing Home Reform writes: “Government benefits are meant to ensure conservatees have housing, food, health care, and other necessities of life. We strongly believe that conservatees’ benefits should be used to support conservatees, not conservators.”

The sponsor of this bill, CEDAR, the Coalition for Elder & Disability Rights, citing anecdotal incidents in which unscrupulous conservators pauperized conservatees, writes that a conservatorship “is the only profession that grants a service provider unfettered access to client assets. Conservators use client assets to fund litigation against the client and against the client’s family. Multi-million-dollar estates are depleted by legal fees, while conservatees languish in substandard care facilities.”

The California Judges Association opposes the bill because of inadequate funding of past reforms. As discussed above, in 2006, the Legislature passed the Omnibus Conservatorship and Guardianship Reform Act, a landmark package of bills to overhaul California's troubled conservatorship system. That legislative package, which included AB 1363 (Jones), Chap. 493, Stats. 2006, SB 1116 (Scott), Chap. 490, Stats. 2006, SB 1550 (Figueroa), Chap. 491, Stats. 2006, and SB 1716 (Bowen), Chap. 492, Stats. 2006, was designed to remedy alarming deficiencies in California's conservatorship system that had resulted in the abuses of California's elderly and most vulnerable. Unfortunately, while the Professional Fiduciaries Bureau within the Department of Consumer Affairs now licenses and regulates professional fiduciaries, the important new court oversights in AB 1363 were never funded and, as a result, are not mandated today.

That failure to fund leads the California Judges Association to oppose the bill unless those earlier reforms are funded. “Before further burdens are imposed upon the courts, specific and appropriate finding should be provided to carry out the measures enacted under AB 1363.” The Legislature originally funded the AB 1363 reforms in the 2007-08, but regrettably Governor Schwarzenegger vetoed the funding when he signed the budget bill that year, and no additional funding has been provided. While this is indeed unfortunate, it would be more unfortunate if the failure to fund past reforms was used to prevent additional measures necessary to protect our most vulnerable seniors from abuse. However, regardless, more funding is needed to enhance court oversight and better protect conservatees throughout California.

REGISTERED SUPPORT / OPPOSITION:

Support

Coalition for Elder & Disability Rights (CEDAR) (sponsor)

California Advocates for Nursing Home Reform

Disability Rights California

National Association of Social Workers, California Chapter

Several individuals

Opposition

California Judges Association (unless funded)

Analysis Prepared by: Leora Gershenzon / JUD. / (916) 319-2334

Date of Hearing: June 18, 2019

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

SBPCA Bill Id:SB 303

Author:(Wieckowski) – As Amended Ver:June 10, 2019

SENATE VOTE: 37-0

SUBJECT: Guardians and conservators: compensation: residence of conservatee

KEY ISSUES:

1. SHOULD THE LAW BE STRENGTHENED TO HELP ENSURE THAT A CONSERVATEE’S PERSONAL RESIDENCE CAN ONLY BE SOLD BY THE CONSERVATOR IF THE SALE IS APPROPRIATE?
2. SHOULD THE LAW BE CLARIFIED TO LIMIT A GUARDIAN’S, CONSERVATOR’S OR ATTORNEY’S ACCESS, FOR PAYMENT OF FEES, TO THE GOVERNMENT BENEFITS RECEIVED BY THEIR WARD OR CONSERVATEE, UNLESS OTHERWISE PERMITTED?

SYNOPSIS

In California, if an adult is unable to manage his or her financial matters, a conservator of the estate may be appointed by a court to manage the adult’s (or conservatee’s) financial matters. If the adult is unable to manage their medical and personal decisions, a conservator of the person may be appointed. A guardian may be appointed to protect a minor, the minor's estate, or both. The appointment process generally requires an investigation by a court investigator and approval by the court. Both conservatorships and guardianships involve a court-appointed third party – the conservator or guardian – making life-changing decisions on behalf of their charge – the conservatee or the ward. Problems with, particularly, conservatorships harming vulnerable conservatees have been extensively reported in the media and legislative reforms have attempted to address the issues, with apparently limited success. This bill seeks to address two issues of long-standing concern: (1) where a conservatee lives and what happens to their residence if they are no longer able to live at home, and (2) the funds used to compensate the conservator and guardian for their services.

Prompted by advocates’ concerns that conservatees are being inappropriately moved out of their personal residences, which are then inappropriately sold to pay conservators fees, and that the ward’s or conservatee’s government benefits are being used to pay their guardian’s or conservator’s fees, this bill seeks to (1) increase the showing necessary for a conservator to move a conservatee out of their personal residence and to sell the residence, and (2) prohibit, unless otherwise permitted, compensation to a guardian, conservator, or attorney from the funds of government programs. The author argues that this bill is necessary to “provide further protections for two of a conservatee’s essential assets, their benefits and their residence, from being used or sold to compensate their conservator or their conservator’s attorney fees.” The bill is sponsored by the Coalition for Elder & Disability Rights (CEDAR) and is supported by organizations that work with the elderly and individuals with disabilities. The California Judges Association opposes the bill unless funded to implement the reforms in the Omnibus Conservatorship and Guardianship Reform Act of 2006.

SUMMARY: Limits how a conservative’s personal residence may be sold and any compensation that can be paid to a guardian, conservator or attorney from the ward’s or conservatee’s government benefits. Specifically, this bill:

1. Provides that, in any hearing to determine if removal of a conservatee from their personal residence is appropriate, the presumption that the residence is the least restrictive appropriate residence may only be overcome by clear and convincing evidence.
2. Authorizes the sale of a conservatee’s present or former personal residence only if the court finds that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.
3. Prevents a conservator from committing any significant resources to the proposed sale of a conservatee’s present or former residence before the conservator notifies the court that the residence of the conservatee is proposed to be sold, unless the conservator can establish that either:
   1. The conservatee has the capacity to consent and unequivocally consents to the sale; or
   2. There are exigent circumstances that require the conservator to commit resources to the sale prior to court approval.
4. No longer exempts a court, when granting a conservator the power to sell a conservatee’s personal residence at a public or private sale, from requiring the following:
   1. The conservator must inform the court that the sale has been proposed and that the proposed sale has been discussed with the conservatee; whether the conservatee supports or opposes the sale; why the sale is necessary; whether the conservatee has the ability to live in the home; and why other alternatives, including in-home care services, are not available; and
   2. The court finds, by clear and convincing evidence, that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.
5. Eliminates the ability of a court, when granting a conservator the power to sell the conservatee’s personal residence, to waive, for good cause, the following requirements:
   1. The conservator must demonstrate to the court that the terms of sale, including the price for which the property is to be sold and the commissions to be paid from the estate, estimated capital gains income and tax consequences, and impact on access to government benefits are, in all respects, in the best interests of the conservatee;
   2. The conservator must, within 15 days of close of escrow (i) serve a copy of the final escrow settlement statement on all persons entitled to notice of the petition for appointment for a conservator and all persons who have filed and served a request for special notice; and (ii) file a copy of the final escrow statement along with a proof of service with the court; and
   3. Have an appraisal of a conservatee’s residence no more than six months before its sale.
6. Adds to the requirement that a conservator, when seeking an order to sell a conservatee’s personal residence, demonstrate to the court that the terms of the sale are in the best interest of the conservatee, the requirement to consider the estimated capital gains income and tax consequences, and the impact on access to government benefits.
7. Prohibits compensation to a guardian, conservator, or attorney from any government benefits program funds designated for a ward or conservatee, unless the compensation is authorized pursuant to other provisions of law.

EXISTING LAW:

1. Allows a court to appoint a guardian of the person, the estate, or both for a child under 18 years of age, or 18 to 21 years of age as specified, taking into consideration the best interest of the proposed ward. (Probate Code Sections 1510, 1510.1. Unless otherwise stated, all further statutory references are to that code.)
2. Permits a court to appoint a conservator of the person for a person who is unable to provide properly for their personal needs for physical health, food, clothing, or shelter, as provided. Permits a court to appoint a conservator of the estate for a person who is substantially unable to manage their own financial resources or resist fraud or undue influence, except as provided. (Section 1801.)
3. Establishes a presumption, applicable in a hearing to determine if removal of a conservatee from their personal residence is appropriate, that the personal residence of a conservatee is the least restrictive appropriate residence of the conservatee. Provides that this presumption may be overcome by a preponderance of evidence. (Section 2352.5 (a).)
4. Provides that before a conservator may sell the conservatee’s present or former personal residence, the conservator must inform the court:
   1. That the sale has been proposed;
   2. That the proposed sale has been discussed with the conservatee, and whether the conservatee supports or opposes the sale;
   3. Why the sale is necessary, including whether the conservatee has the ability to live in the home and why other alternatives, including in-home care services, are not available. (Section 2540 (b).)
5. Allows a court to require an investigator to visit the conservatee to investigate a proposed sale of the conservatee’s home. (Ibid.)
6. Allows a guardian or conservator to sell real or personal property of the estate in any of the following cases:
   1. The income of the estate is insufficient for the comfortable and suitable support, maintenance, and education of the ward or conservatee or of those legally entitled to support, maintenance, or education from the ward or conservatee;
   2. The sale is necessary to pay the debts, as provided; or
   3. The sale is for the advantage, benefit, and best interest of (i) the ward or conservatee, (ii) the estate, or (iii) the ward or conservatee and those legally entitled to support, maintenance, or education from the ward or conservatee. (Section 2541.)
7. Allows the court to grant a conservator specific powers, including the power to sell the personal residence of a conservatee at a public or private sale, provided the power is subject to the provisions in 3) and 6), above. (Sections 2590-2591.)
8. Requires a conservator seeking an order under 7), above, to sell a conservatee’s personal residence to demonstrate to the court that the terms of sale, including the price for which the property is to be sold and the commissions to be paid from the estate, are in all respects in the best interests of the conservatee. Requires the conservator, within 15 days of close of escrow, to serve a copy of the final escrow settlement statement on all persons entitled to notice of the petition for appointment for a conservator and all persons who have filed and served a request for special notice and to file a copy of the final escrow statement along with a proof of service with the court. Requires an appraisal of a conservatee’s residence no more than six months before its sale. Allows a court, for good cause, to waive these requirements. (Section 2591.5.)
9. Authorizes a guardian or conservator of the estate or person to petition the court for an order to compensate services rendered by the guardian or conservator of the estate, the guardian or conservator of the person, or the attorney to the guardian or conservator. Requires the compensation to be reasonable and prohibits compensation to a guardian or conservator for any costs or fees incurred in unsuccessfully opposing a petition, or other request or action, made by or on behalf of the ward or conservatee, except as specified. (Sections 2640 and 2641.)

FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.

COMMENTS: In California, if an adult is unable to manage his or her financial matters, a conservator of the estate may be appointed by a court to manage the adult’s (or conservatee’s) financial matters. If the adult is unable to manage their medical and personal decisions, a conservator of the person may be appointed. A guardian may be appointed to protect a minor, the minor's estate, or both. The appointment process generally requires an investigation by a court investigator and approval by the court. Both conservatorships and guardianships involve a court-appointed third party – the conservator or guardian – making life-changing decisions on behalf of their charge – the conservatee or the ward. This bill seeks to address two issues of concern: (1) where a conservatee lives and what happens to their residence if they are no longer able to live at home, and (2) the funds used to compensate the conservator and guardian for their services. In support of the bill, the author writes:

SB 303 would provide further protections for two of a conservatee’s essential assets, their benefits and their residence, from being used or sold to compensate their conservator or their conservator’s attorney fees.

Government benefits like Social Security and SSI are intended to provide economic security for older or disabled individuals to cover financial, medical, or any other needs. SB 303 clarifies existing law which generally protects a conservatee’s government benefits from being used to pay a conservator’s or their attorney’s fees.

The importance of a home cannot be overstated. While the sale may be necessary if a conservatee’s needs require them to be in a care facility, the sale of such a large share of a person’s estate, and an asset that could almost certainly not be regained once sold, should not be used to compensate a conservator or cover their attorney fees. Such a sale of one’s personal property is only meant to be done if it is [for] the benefit and best interest of the conservatee.

History of conservatorships and guardianships in California. California adopted its first conservatorship statute in 1957. Prior to that time, the court appointed a "guardian" for any person, child or adult, who was deemed "incompetent" to manage his or her daily affairs. After 1957, the law distinguished between a "guardianship," created for a minor, and a "conservatorship," created for an adult. There are also specific types of conservatorships for persons who are considered "gravely disabled" by reason of mental illness or chronic alcoholism and subject to confinement in a locked psychiatric facility under the Lanterman-Petris-Short Act and for developmentally disabled adults. California law provides for the appointment of a Public Guardian for any person "who requires a guardian or conservator and there is no one else who is qualified and willing to act."

Guardians and conservators may be licensed professionals or family or friends. It has been estimated that professional conservators oversee $1.5 billion in assets for at least 4,600 adults. Most conservators are non-professionals, usually family members, such as a spouse or a child. Likewise, guardians are typically family members.

Investigative journalism has previously revealed significant problems with conservatorships in California. In November, 2005, the Los Angeles Times published an in-depth investigatory series, called "Guardians for Profit," which dramatically exposed the failings of California's conservatorship system for elderly and dependent adults. (Robin Fields, Evelyn Larrubia, and Jack Leonard, Guardians for Profit series, Los Angeles Times, November 13-17, 2005.) The Times articles included stories of private conservators who misused the system and got themselves appointed inappropriately and then either stole or mismanaged the money their conservatees spent a lifetime earning; public guardians who did not have the resources to help truly needy individuals, leaving them – poor, alone and at risk of severe harm – to try and fend for themselves; probate courts which did not have sufficient resources to provide adequate oversight to catch the abuses; and a system that provided no place for those in need to turn to for help. The Times editorial which ran at the end of the series, called on both the courts and elected officials to "turn this abusive system into the honest guardianship it was meant to be." (Deserving of Care, Los Angeles Times, November 17, 2005.)

The Times series included scores of examples of the failings of the current conservatorship system, two of which exemplify many of the problems identified. As a child, Helen Jones helped her family survive the Great Depression by collecting coal along railroad tracks in Nebraska and, during World War II, she was a real-life "Rosie the Riveter." At 87, she was controlled by a court-appointed conservator who she never wanted. Her neighbors and her legal services attorney claimed that Helen was alert, responsible, and "self-sufficient." Yet the conservator had reportedly spent $200,000 of Helen's $560,000 estate – at a rate of about $84,000 per year – mostly on things Helen never wanted.

Emmeline Frey was 93 and suffering from dementia by the time that a San Diego probate court appointed a professional conservator to manage her $1 million estate. The court-appointed conservator hired her own son, a former car salesman, as a financial advisor. She gave him $500,000 of Emmeline's estate to invest. He collected his commissions, paid for by the estate, even though his investments squandered $100,000 of Emmeline's money. Although court staff informed the presiding probate judge about the son's questionable investments, the judge reportedly did nothing. When asked later about his inaction, the judge claimed that he did not remember the case given that he handled as many as 100 cases per day.

Unfortunately, problems with some conservators continued. A 2012 Mercury News series exposed a problem that conservatees and wards may have exorbitant fee petitions. The article reported that “a six-month investigation by this newspaper found a small group of [Santa Clara] [C]ounty’s court-appointed personal and estate managers are handing out costly and questionable bills -- and charging even more if they are challenged. The troubling trend is enriching these private professionals -- working as conservators and trustees -- and their attorneys, with eye-popping rates that threaten to force their vulnerable clients onto government assistance to survive.” (Karen de Sá, Santa Clara County’s court-appointed personal and estate managers are handing out costly and questionable bills, Mercury News (June 30, 2012).)

More recently, a 2018 Orange County Register story described advocates’ complaints about the conservatorship system, including concerns raised by the sponsor of this bill:

[C]ritics complain that some of the professionals are out to pad their own fees until the money is gone or substantially drained. They relate incidents of the elderly and disabled being isolated from their families by conservators, paying exorbitant professional fees for substandard care and seeing life savings and real estate holdings disappear while judges do nothing.

“Conservatorships are imposed (by judges) in minutes with nary a nod toward due process,” said Linda Kincaid, co-founder of the Coalition for Elder and Disability Rights, based in Northern California. “Once the conservatorship is in place, there is essentially no court oversight or accountability. Conservators and their agents are free to exploit and abuse with impunity.” (Tony Saavedra, Money-draining probate system “like a plague on our senior citizens,” Orange County Register (September 23, 2018).)

Legislative Response. In response to the shocking reports of abuse in the 2005 Los Angeles Times series, the Legislature passed the Omnibus Conservatorship and Guardianship Reform Act of 2006, a landmark package of bills to overhaul California's troubled conservatorship system. That legislation was designed to remedy alarming deficiencies in California's conservatorship system that had resulted in the abuses of California's elderly and most vulnerable. The package of bills were:

• Of particular relevance for this bill, SB 1116 (Scott), Chap. 490, Stats. 2006, which required stronger reviews and protections before a conservator can sell the personal residence of a conservatee.
• AB 1363 (Jones), Chap. 493, Stats. 2006, which required much stronger review and responsibility by the state's judges of conservators, along with uniform standards of conduct that conservators must follow, brand new and aggressive training rules for all professionals involved in the system, and a new requirement that Public Guardians take the cases of all those at imminent risk of harm.
• SB 1550 (Figueroa), Chap. 491, Stats. 2006, which created the Professional Fiduciaries Bureau within the Department of Consumer Affairs to license and regulate professional fiduciaries, including conservators, guardians, and trustees.
• SB 1716 (Bowen), Chap. 492, Stats. 2006, which allowed the court to take action when it receives informal reports of abuse and neglect from concerned friends or family members; gave the court the ability to order a review of a conservatorship at any time; and required that court investigators more fully examine conservatees.

Unfortunately, while the Professional Fiduciaries Bureau within the Department of Consumer Affairs now licenses and regulates professional fiduciaries, the important new court oversights were never funded and, as a result, are not mandated today. Thus, it is possible that some of the same abuses which took place prior to the 2006 Act could still be occurring today and that courts simply lack the oversight resources to detect these abuses.

After the Mercury News series, the Legislature passed SB 156 (Beall), 2013, which sought to limit the fees that a conservator or guardian could collect. That legislation, however, was vetoed by the Governor who noted that the process could be improved and that he would have signed the bill if amendments taken in this Committee had not been later removed from the bill. As a result, it is possible that many of the concerning stories about financial misuse revealed by the investigative reports are still occurring for vulnerable seniors in California.

Conservators and guardians have a fiduciary duty to protect their conservatees and wards. The conservator-conservatee and the guardian-ward have a fiduciary relationship. (Section 2101.) The duties of conservators and guardians include the obligation to exercise ordinary care and diligence in managing and controlling the conservatee’s or ward’s estate. (Section 2401.) Probate Code Section 2102 provides that “[a] guardian or conservator is subject to the regulation and control of the court in the performance of the duties of the office.” As court-appointed officers, conservators and guardians remain under the control and continuing jurisdiction of the court in the discharge of their duties. (See Guardianship of Davis (1967) 253 Cal.App.2d 754, 760.) “The court may, on its own motion or upon request by any interested person, take appropriate action including, but not limited to, ordering a review of the conservatorship, including at a noticed hearing, and ordering the conservator to present an accounting of the assets of the estate.” (Section 1850 (b); Schwartz v. Labow (2008) 164 Cal.App.4th 417, 427 (court may “intervene to protect abuses” by a fiduciary).)

This bill seeks to protect the conservatee’s personal residence and where they reside. This bill builds on and improves the protections for the conservatee’s home and personal residence created by SB 1116 (Scott), Chap. 490, Stats. 2006. That bill required stronger reviews and protections before a conservator can sell the personal residence of a conservatee. In particular, that bill created a new presumption that the least restrictive appropriate setting at the commencement of the conservatorship is the conservatee’s existing home. (Section 2352.5.) This presumption may be overcome by a preponderance of the evidence that the conservatee's residence is not the least restrictive appropriate setting or that a more appropriate setting is necessary to accommodate the level of care needed by the conservatee.

This bill appropriately increases the required showing to remove a conservatee from their home from a preponderance of the evidence to the clear and convincing standard. This increased showing should help prevent elderly adults from being moved from their homes prematurely, which can have devastating impacts on the health and well-being of the conservatee.

SB 1116 also moderated a conservator's power to sell the conservatee's personal residence. That bill required that the conservator seeking to sell the conservatee's personal residence must demonstrate that the terms of the sale, including the price at which the property is to be sold, and the commissions to be paid from the estate, are in the best interests of the conservatee, and comply with various rules regarding appraisals and minimum offers, and provide interested parties with notice post the sale. However, that bill allowed courts to waive the requirements and did not necessarily apply if the court gave the conservator, up front, the power to sell the personal residence.

Removing a conservatee from their personal residence should be an act of last resort when it is no longer feasible or safe for the conservatee to remain in their home. Additionally, removal is often a prelude to the sale of the residence, which is frequently the primary asset in the conservatee’s estate. A premature or unnecessary sale can have lasting financial consequences for a conservatee and their family. In view of the need to protect these important rights, this bill increases the requirements for conservators to sell a conservatee’s personal residence by:

• Authorizing the sale of a conservatee’s present or former personal residence only if the court finds that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee, increased from just a best interest standard.
• Preventing a conservator from committing any significant resources to the proposed sale of the residence before the conservator notifies the court of the proposed sale, unless the conservator can establish that either there are exigent circumstances that require the conservator to commit resources to the sale prior to court approval, or the conservatee unequivocally consents to the sale. This ensures that the court is allowed to weigh in early before resources are committed to the sale, but also provides exceptions if needed.
• Adding to the requirement that a conservator, when seeking an order to sell a conservatee’s personal residence, demonstrate to the court that the terms of the sale are in the best interest of the conservatee, the requirement to consider estimated capital gains income and tax consequences, and impact on access to government benefits. This small change will ensure that the court considers the impact of the sale on the conservatee’s income and estate. It does not prevent a sale, but simply requires the court to consider the possible financial impacts when making its determination.
• Treating a court’s granting to the conservator of the power to sell a conservatee's residence the same as if the conservator later asks to sell the residence by ensuring the same requirements apply to both sales. As a result, before granting the power to sell the personal residence, the conservator must:
  • Inform the court that the sale has been proposed and that the proposed sale has been discussed with the conservatee; whether the conservatee supports or opposes the sale; why the sale is necessary; whether the conservatee has the ability to live in the home; and why other alternatives, including in-home care services, are not available;
  • Demonstrate to the court that the terms of sale, including the price for which the property is to be sold and the commissions to be paid from the estate, estimated capital gains income and tax consequences, and impact on access to government benefits are, in all respects, in the best interests of the conservatee;
  • Find, by clear and convincing evidence, that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee;
  • Within 15 days of close of escrow (i) serve a copy of the final escrow settlement statement on all persons entitled to notice of the petition for appointment for a conservator and all persons who have filed and served a request for special notice; and (ii) file a copy of the final escrow statement along with a proof of service with the court; and
  • Have an appraisal of a conservatee’s residence no more than six months before its sale.

Treating a sale of the conservatee’s personal residence the same, whether derived from a court-granted power to sell or a conservator-driven request to sell, will ensure that the conservator makes the appropriate showing to the court and the court adequately considers that showing before a conservatee’s personal residence can be sold. Some of these changes address concerns raised in the Senate Judiciary Committee’s analysis of this bill, but not resolved by amendments taken in that Committee.

In support of this part of the bill, Disability Rights California writes:

A person’s home often represents a lifetime of sacrifice and a place of security. It is also the place where a person should be able to live in the least restrictive environment in their community and not in an institution. The disposition of one’s home can forever relegate a person to confinement in an institution, for if there is no home to return to, there is often only institutional care. For that reason, the determination to sell a conservatee’s home should be held to the highest standard. This bill requires that a conservator notify the court of a proposed sale of a residence before a sale. It also makes the determination on whether a conservatee should be removed from their home, and whether the home should be sold, subject to an exacting standard: clear and convincing evidence. This standard provides that only a compelling reason will satisfy losing one’s home.

California Advocates for Nursing Home Reform adds:

SB 303 provides additional protections to conservatees from having their homes sold against their will or against their best interests. Conservatees’ homes are often viewed as a potential source of income for conservators, whose interest in getting paid can conflict with a conservatee’s desire to maintain their home. Frankly, some professional conservators are not interested in taking a conservatorship case unless the conservatee has a home with equity to draw from.

This bill seeks to limits the compensation that a conservator or guardian may collect from public benefits paid for the benefit of the conservatee or ward. A conservator or guardian is authorized to charge the conservatee’s or ward’s estate for services rendered in connection with managing the conservatee’s or ward’s financial or personal matters. Many family members serving in the role do not charge fees, but professionals almost always charge fees. In general, the guardian or conservator, and their attorney, is allowed compensation for fees and expenses, provided the court determines they are “just and reasonable.” (Sections 2623, 2640, and 2641.) Courts have held that a guardian or conservator is entitled to compensation only for services that the guardian or conservator believed in good faith were necessary or appropriate to carry out the purpose of the guardianship or conservatorship, and only if the guardian’s or conservator’s belief in that regard was reasonable. (See Conservatorship of Lefkowitz (1996) 50 Cal.App.4th 1310, 1314.)

As required by statute (Section 2410), the Judicial Council promulgated, in rules of court, a nonexclusive list of factors that a court may consider in determining whether compensation is just and reasonable:

• The size and nature of the conservatee's or ward's estate;
• The benefit to the conservatee or ward, or the estate, of the conservator's or guardian's services;
• The necessity for the services performed;
• The conservatee's or ward's anticipated future needs and income;
• The time spent by the conservator or guardian in the performance of services;
• Whether the services performed were routine or required more than ordinary skill or judgment;
• Any unusual skill, expertise, or experience brought to the performance of services;
• The conservator's or guardian's estimate of the value of the services performed; and
• The compensation customarily allowed by the court in the community where the court is located for the management of conservatorships or guardianships of similar size and complexity. (California Rules of Court, Rule 7.756.)

The rule specifies that no single factor in the above list should be “the exclusive basis for the court's determination of just and reasonable compensation.” (Ibid.) The rule also does not provide authority for the court to set an “inflexible maximum or minimum compensation or a maximum approved hourly rate for compensation.” (Ibid.)

In an effort to better protect the income that a conservatee or ward needs for their own survival, this bill seeks to limit the government benefits that may be used to compensate conservators, guardians, and attorneys, by prohibiting compensation to a guardian, conservator, or attorney from any government benefits program funds designated for a ward or conservatee, unless the compensation is authorized pursuant to other provisions of law.

For social security benefits, federal law limits the availability of old-age, survivor, and disability benefits for the purpose of satisfying debts by providing that the “right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.” (42 U.S.C. Section 407 (a).) However, if a social security beneficiary is “legally incompetent or mentally incapable of managing benefit payments,” Social Security Act regulations provide that a “legal guardian or some other person” may be appointed as a “representative payee” to use the funds for the maintenance, support, and debts of the beneficiary. (20 C.F.R. Section 404.2001 et seq.) That fee is currently the lesser of 10% of the monthly benefit amount or $43 per month. Veterans benefits are subject to similar rules.

This bill seeks to exclude government benefits such as social security benefits from the pool of funds from which a conservator, guardian, or attorney may be compensated. The bill does not completely prohibit the use of government benefits to pay any fees or expenses of a guardian or conservator (or their attorney), but instead limits its use to what is otherwise permitted.

In support of this provision of the bill, California Advocates for Nursing Home Reform writes: “Government benefits are meant to ensure conservatees have housing, food, health care, and other necessities of life. We strongly believe that conservatees’ benefits should be used to support conservatees, not conservators.”

The sponsor of this bill, CEDAR, the Coalition for Elder & Disability Rights, citing anecdotal incidents in which unscrupulous conservators pauperized conservatees, writes that a conservatorship “is the only profession that grants a service provider unfettered access to client assets. Conservators use client assets to fund litigation against the client and against the client’s family. Multi-million-dollar estates are depleted by legal fees, while conservatees languish in substandard care facilities.”

The California Judges Association opposes the bill because of inadequate funding of past reforms. As discussed above, in 2006, the Legislature passed the Omnibus Conservatorship and Guardianship Reform Act, a landmark package of bills to overhaul California's troubled conservatorship system. That legislative package, which included AB 1363 (Jones), Chap. 493, Stats. 2006, SB 1116 (Scott), Chap. 490, Stats. 2006, SB 1550 (Figueroa), Chap. 491, Stats. 2006, and SB 1716 (Bowen), Chap. 492, Stats. 2006, was designed to remedy alarming deficiencies in California's conservatorship system that had resulted in the abuses of California's elderly and most vulnerable. Unfortunately, while the Professional Fiduciaries Bureau within the Department of Consumer Affairs now licenses and regulates professional fiduciaries, the important new court oversights in AB 1363 were never funded and, as a result, are not mandated today.

That failure to fund leads the California Judges Association to oppose the bill unless those earlier reforms are funded. “Before further burdens are imposed upon the courts, specific and appropriate finding should be provided to carry out the measures enacted under AB 1363.” The Legislature originally funded the AB 1363 reforms in the 2017-18, but regrettably Governor Schwarzenegger vetoed the funding when he signed the budget bill that year, and no additional funding has been provided. While this is indeed unfortunate, it would be more unfortunate if the failure to fund past reforms was used to prevent additional measures necessary to protect our most vulnerable seniors from abuse. However, regardless, more funding is needed to enhance court oversight and better protect conservatees throughout California.

REGISTERED SUPPORT / OPPOSITION:

Support

Coalition for Elder & Disability Rights (CEDAR) (sponsor)

California Advocates for Nursing Home Reform

Disability Rights California

National Association of Social Workers, California Chapter

Several individuals

Opposition

California Judges Association (unless funded)

Analysis Prepared by: Leora Gershenzon / JUD. / (916) 319-2334

 THIRD READING  

Bill No: SB 303

Author: Wieckowski (D)

Amended: 5/6/19

Vote: 21

SENATE JUDICIARY COMMITTEE: 9-0, 4/30/19

AYES: Jackson, Borgeas, Allen, Caballero, Jones, Monning, Stern, Umberg, Wieckowski

SUBJECT: Guardians and conservators: compensation: residence of conservatee

SOURCE: Coalition for Elder & Disability Rights

DIGEST:

This bill (1) provides that, in a hearing to determine if removal of a conservatee from their personal residence is appropriate, the presumption that the residence is the least restrictive appropriate residence may be overcome by clear and convincing evidence; (2) authorizes the sale of a conservatee’s present or former personal residence only if the court finds by clear and convincing evidence that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee; and (3) prohibits compensation to a guardian, conservator, or attorney from government program funds designated for a ward or conservatee, unless the compensation is authorized pursuant to specific statutory provisions.

ANALYSIS:

Existing law:

1. Establishes a presumption, applicable in a hearing to determine if removal of a conservatee from their personal residence is appropriate, that the personal residence of a conservatee is the least restrictive appropriate residence of the conservatee. This presumption may be overcome by a preponderance of evidence. (Prob. Code § 2352.5(a).)^[1]
2. Provides that before a conservator may sell the conservatee’s present or former personal residence, the conservator must inform the court of the following:
   1. That the sale has been proposed and that the proposed sale has been discussed with the conservatee;
   2. Whether the conservatee supports or opposes the sale;
   3. Why the sale is necessary;
   4. Whether the conservatee has the ability to live in the home; and
   5. Why other alternatives, including in-home care services, are not available. (§ 2540(b).)
3. Enables a court to require an investigator to visit the conservatee to investigate a proposed sale of the conservatee’s home. (Ibid.)
4. Requires an appraisal of a conservatee’s residence no more than six months before its sale. (§ 2591.5(b).)
5. Authorizes a guardian or conservator of the estate or person to petition the court for an order to compensate services rendered by the guardian or conservator of the estate, the guardian or conservator of the person, or the attorney to the guardian or conservator. Requires the compensation to be reasonable and prohibits compensation to a guardian or conservator for any costs or fees incurred in unsuccessfully opposing a petition, or other request or action, made by or on behalf of the ward or conservatee, except as specified. (§§ 2640 & 2641.)

This bill:

1. Provides that, in a hearing to determine if removal of a conservatee from their personal residence is appropriate, the presumption that the residence is the least restrictive appropriate residence may be overcome by clear and convincing evidence.
2. Authorizes the sale of a conservatee’s present or former personal residence only if the court finds that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.
3. Prohibits compensation to a guardian, conservator, or attorney from government program funds designated for a ward or conservatee, unless the compensation is authorized pursuant to specific statutory provisions.

Comments

1. Fiduciary Duties of Conservators and Guardians

There is a fiduciary relationship between a conservator or guardian and conservatee or ward. (§ 2101.) The duties of conservators and guardians include the obligation to exercise ordinary care and diligence in managing and controlling the conservatee’s or ward’s estate. (§ 2401.) Probate Code Section 2102 provides that “[a] guardian or conservator is subject to the regulation and control of the court in the performance of the duties of the office.” As court-appointed officers, conservators and guardians remain under the control and continuing jurisdiction of the court in the discharge of their duties. (See Guardianship of Davis (1967) 253 Cal.App.2d 754, 760.) “The court may, on its own motion or upon request by any interested person, take appropriate action including, but not limited to, ordering a review of the conservatorship, including at a noticed hearing, and ordering the conservator to present an accounting of the assets of the estate.” (§ 1850, subd. (b); Schwartz v. Labow (2008) 164 Cal.App.4th 417, 427 [court may “intervene to protect abuses” by a fiduciary].)

Furthermore, a court’s failure to diligently scrutinize the actions of the conservator or guardian likely constitutes an abuse of discretion. In Conservatorship of Presha (2018) 26 Cal.App.5th 487, for instance, the Court of Appeal upheld the probate court’s decisions to reduce the conservator’s compensation and order the conservator to reimburse the conservatee’s estate. (Id. at 499-500.) The Court in Presha stated that the probate court would have been remiss in its duties to regulate and control the performance of the conservator had it suspected a breach of fiduciary duty and not examined the conservator’s actions more closely. (Id. at 498.)

1. Protects the Personal Residence of the Conservatee

Existing law requires a conservator, as a condition of selling the present or former personal residence of the conservatee, to notify the court of the proposed sale and that the conservator has discussed the proposed sale with the conservatee. (§ 2540(b).) Existing law requires the conservator to also inform the court whether the conservatee supports or is opposed to the proposed sale and to describe the circumstances that necessitate the proposed sale, including whether the conservatee has the ability to live in their residence and why other alternatives, including, but not limited to, in-home care services, are not available. (Ibid.) Existing law authorizes the court, in its discretion, to require the court investigator to discuss the proposed sale with the conservatee. (Ibid.)

Existing law also provides that a conservator or guardian may sell real or personal property of the estate if (a) the income of the estate is insufficient to support the conservatee or ward, as specified; (b) the sale is necessary to pay debts, as specified; or (c) the sale is for the advantage, benefit, and best interest of the conservatee or ward, the estate, or those legally entitled to support, as specified. (§ 2541.) Finally, the court will also require an appraisal of the residence if the last one was conducted more than six months before the date of the contract for the sale of the property. (§ 2591.5.)

This bill authorizes a sale of a conservatee’s present or former personal residence only if the court finds that the conservator demonstrated, with clear and convincing evidence, a compelling need to sell the residence for the benefit of the conservatee.

Additionally, Probate Code Section 2352.5 establishes a presumption that the personal residence of the conservatee is the most appropriate place for the conservatee, unless rebutted by a preponderance of the evidence. This bill replaces the preponderance standard in that section with the clear and convincing evidence standard.

The California Supreme Court has described the function of standards of proof as follows:

The function of a standard of proof is to instruct the fact finder concerning the degree of confidence our society deems necessary in the correctness of factual conclusions for a particular type of adjudication, to allocate the risk of error between the litigants, and to indicate the relative importance attached to the ultimate decision. [Citations.]  Thus, “the standard of proof may depend upon the 'gravity of the consequences that would result from an erroneous determination of the issue involved.’” [Citation.] The default standard of proof in civil cases is the preponderance of the evidence. (Evid. Code, § 115.) Nevertheless, courts have applied the clear and convincing evidence standard when necessary to protect important rights.

(Conservatorship of Wendland (2001) 26 Cal.4th 519, 546.) The Court stated that the clear and convincing test requires a finding of high probability, based on evidence so clear as to leave no substantial doubt and sufficiently strong to command the unhesitating assent of every reasonable mind. (Id. at 552, quoting In re Angelia P. (1981) 28 Cal. 3d 908, 922.)

Removing a conservatee from their personal residence should be an act of last resort when it is no longer feasible or safe for the conservatee to remain in the personal residence. Additionally, removal is often a prelude to the sale of the residence, which is frequently the primary asset in the conservatee’s estate. A premature or unnecessary sale can have lasting financial consequences for a conservatee and their family. This bill seeks to keep conservatees in their personal residences and to keep those residences in the families of the conservatees.

1. Prohibits Compensation from Public Benefits without Specific Statutory Authorization

Compensation for services rendered by a conservator, guardian, or attorney in a conservatorship proceeding is payable only insofar as the court determines the compensation is “just and reasonable.” (§§ 2623(a)(2), 2640(c) & 2641(b).) Courts have held that a guardian or conservator is entitled to compensation only for services that the guardian or conservator believed in good faith were necessary or appropriate to carry out the purpose of the guardianship or conservatorship, and only if the guardian’s or conservator’s belief in that regard was reasonable. (Conservatorship of Lefkowitz (1996) 50 Cal. App. 4th 1310, 1314.) The California Rules of Court set forth the factors that a court may consider in determining whether compensation is just and reasonable:

• • • • 1. Standards for determining just and reasonable compensation. The court may consider the following nonexclusive factors in determining just and reasonable compensation for a conservator from the estate of the conservatee or a guardian from the estate of the ward:
      1. The size and nature of the conservatee's or ward's estate;
      2. The benefit to the conservatee or ward, or his or her estate, of the conservator's or guardian's services;
      3. The necessity for the services performed;
      4. The conservatee's or ward's anticipated future needs and income;
      5. The time spent by the conservator or guardian in the performance of services;
      6. Whether the services performed were routine or required more than ordinary skill or judgment;
      7. Any unusual skill, expertise, or experience brought to the performance of services;
      8. The conservator's or guardian's estimate of the value of the services performed; and
      9. The compensation customarily allowed by the court in the community where the court is located for the management of conservatorships or guardianships of similar size and complexity.
         1. No single factor determinative. No single factor listed in (a) should be the exclusive basis for the court's determination of just and reasonable compensation.
         2. No inflexible maximum or minimum compensation or maximum approved hourly rate. This rule is not authority for a court to set an inflexible maximum or minimum compensation or a maximum approved hourly rate for compensation.

(Cal. Rules of Court, Rule 7.756.)

With regard to Social Security, federal law limits the availability of old-age, survivor, and disability benefits for the purpose of satisfying debts by providing as follows:

The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

(42 U.S.C. § 407(a).) This section preempts state laws that establish legal processes to recover institutionalized persons’ support costs through deduction of their Social Security benefits, unless they consent to its use for that purpose. (Crawford v. Gould (9th Cir. 1995) 56 F.3d 1162, 1167.) However, if a Social Security beneficiary is “legally incompetent or mentally incapable of managing benefit payments,” Social Security Act regulations provide that a “legal guardian or some other person” may be appointed as a “representative payee” to use the funds for the maintenance, support, and debts of the beneficiary. (20 C.F.R. §§ 404.2001, 404.2010(a)(1), 404.2021(b) & 404.2040.) That fee is currently the lesser of 10 percent of the monthly benefit amount or $43 per month.^[2]

This bill was recently amended to ensure that the provisions limiting compensation from public funds align with existing provisions of law that enable public funds to be used to compensate guardians, conservators, or attorneys for personal services to wards and conservatees. Such a change deters the misuse of these funds without resulting in the unintended consequence of preventing the lawful use of government funds to ensure that individuals in need of basic personal care receive the essential services they need. This amendment caused all opposition to adopt a neutral position.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 5/7/19)

Coalition for Elder & Disability Rights (source)

California Advocates for Nursing Home Reform

Disability Rights California

National Association of Social Workers – California Chapter

Three individuals

OPPOSITION: (Verified 5/7/19)

None received

ARGUMENTS IN SUPPORT: The author writes, “The importance of a home cannot be overstated. While the sale may be necessary in a situation where a conservatee’s needs require them to be in a care facility, the sale of such a large share of a person’s estate, and an asset that could almost certainly not be regained once sold, should not be used to compensate a conservator or cover their attorney fees. SB 303 strengthens the statute in authorizing the sale of a conservatee’s property by making it clear that there must be a compelling reason for why it is in the best interest of the conservatee.”

Prepared by: Josh Tosney / JUD. / (916) 651-4113

5/8/19 10:51:31

**** END ****

1. All further statutory references are to the Probate Code unless otherwise specified. ↑

2. Social Security, Social Security Administration website https://www.ssa.gov/oact/cola/RepPayee.html (as of Apr. 24, 2019). ↑

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2019-2020 Regular Session

Bill No: SB 303 (Author:Wieckowski)

Version: April 22, 2019

Hearing Date: April 30, 2019

Fiscal: No

Urgency: No

Consultant: JDT

SUBJECT

Guardians and conservators: compensation

DIGEST

This bill (1) authorizes the sale of a conservatee’s present or former personal residence only if the court finds that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee, and (2) prohibits compensation to a guardian, conservator, or attorney from government program funds designated for a ward or conservatee.

EXECUTIVE SUMMARY

In California, if an adult is unable to manage their financial matters, a conservator of the estate may be appointed by a court to manage the adult’s financial matters. If the adult is unable to manage their medical and personal decisions, a conservator of the person may be appointed. Similarly, a guardian of the estate or person may be appointed for a minor child. A conservator or guardian is authorized to charge the conservatee’s or ward’s estate for services rendered in connection with managing the conservatee’s or ward’s financial or personal matters. Additionally, a conservatee’s or ward’s estate may be charged for the costs of an attorney in conservatorship or guardianship proceedings.

Prompted by the concern that these costs can rapidly deplete the assets of a conservatee’s or ward’s estate, this bill would (1) require that a conservator demonstrate a compelling need for the benefit of the conservatee in order to sell the conservatee’s personal residence and (2) prohibit compensation to guardians, conservators, or attorneys from the funds of government programs. The bill is sponsored by the Coalition for Elder & Disability Rights (CEDAR) and is supported by organizations that work with the elderly and individuals with disabilities. The bill is opposed by the Professional Fiduciary Association of California and the California State Association of Public Administrators, Public Guardians, and Public Conservators (PAPGPC).

PROPOSED CHANGES TO THE LAW

Existing law:

1. Provides that before a conservator may sell the conservatee’s present or former personal residence, the conservator must inform the court of the following:
   1. that the sale has been proposed and that the proposed sale has been discussed with the conservatee;
   2. whether the conservatee supports or opposes the sale;
   3. why the sale is necessary;
   4. whether the conservatee has the ability to live in the home; and
   5. why other alternatives, including in-home care services, are not available. (Prob. Code § 2540(b).)^[1]
2. Enables a court to require an investigator to visit the conservatee to investigate a proposed sale of the conservatee’s home. (Ibid.)
3. Requires an appraisal of a conservatee’s residence no more than six months before its sale. (§ 2591.5(b).)
4. Authorizes a guardian or conservator of the estate or person to petition the court for an order to compensate services rendered by the guardian or conservator of the estate, the guardian or conservator of the person, or the attorney to the guardian or conservator. Requires the compensation to be reasonable and prohibits compensation to a guardian or conservator for any costs or fees incurred in unsuccessfully opposing a petition, or other request or action, made by or on behalf of the ward or conservatee, except as specified. (§§ 2640 & 2641.)

This bill:

1. Authorizes the sale of a conservatee’s present or former personal residence only if the court finds that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.
2. Prohibits compensation to a guardian, conservator, or attorney from government program funds designated for a ward or conservatee.

COMMENTS

1. Fiduciary duties of conservators and guardians

There is a fiduciary relationship between a conservator or guardian and conservatee or ward. (§ 2101.) The duties of conservators and guardians include the obligation to exercise ordinary care and diligence in managing and controlling the conservatee’s or ward’s estate. (§ 2401.) Probate Code section 2102 provides that “[a] guardian or conservator is subject to the regulation and control of the court in the performance of the duties of the office.” As court-appointed officers, conservators and guardians remain under the control and continuing jurisdiction of the court in the discharge of their duties. (See Guardianship of Davis (1967) 253 Cal.App.2d 754, 760.) “The court may, on its own motion or upon request by any interested person, take appropriate action including, but not limited to, ordering a review of the conservatorship, including at a noticed hearing, and ordering the conservator to present an accounting of the assets of the estate.” (§ 1850, subd. (b); Schwartz v. Labow (2008) 164 Cal.App.4th 417, 427 [court may “intervene to protect abuses” by a fiduciary].)

Furthermore, a court’s failure to diligently scrutinize the actions of the conservator or guardian likely constitutes an abuse of discretion. In Conservatorship of Presha (2018) 26 Cal.App.5th 487, for instance, the Court of Appeal upheld the probate court’s decisions to reduce the conservator’s compensation and order the conservator to reimburse the conservatee’s estate. (Id. at 499-500.) The court in Presha stated that the probate court would have been remiss in its duties to regulate and control the performance of the conservator had it suspected a breach of fiduciary duty and not examined the conservator’s actions more closely. (Id. at 498.)

2. Protecting the personal residence of the conservatee

1. Sale of present or former personal residence only if there is a compelling need

Existing law requires a conservator, as a condition of selling the present or former personal residence of the conservatee, to notify the court of the proposed sale and that the conservator has discussed the proposed sale with the conservatee. (§ 2540(b).) Existing law requires the conservator to also inform the court whether the conservatee supports or is opposed to the proposed sale and to describe the circumstances that necessitate the proposed sale, including whether the conservatee has the ability to live in their residence and why other alternatives, including, but not limited to, in-home care services, are not available. (Ibid.) Existing law authorizes the court, in its discretion, to require the court investigator to discuss the proposed sale with the conservatee. (Ibid.)

Existing law also provides that a conservator or guardian may sell real or personal property of the estate if (1) the income of the estate is insufficient to support the conservatee or ward, as specified; (2) the sale is necessary to pay debts, as specified; or (3) the sale is for the advantage, benefit, and best interest of the conservatee or ward, the estate, or those legally entitled to support, as specified. (§ 2541.) Finally, the court will also require an appraisal of the residence if the last one was conducted more than six months before the date of the contract for the sale of the property. (§ 2591.5.)

This bill would authorize a sale of a conservatee’s present or former personal residence only if the court finds that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee. The author writes as follows:

The importance of a home cannot be overstated. While the sale may be necessary in a situation where a conservatee’s needs require them to be in a care facility, the sale of such a large share of a person’s estate, and an asset that could almost certainly not be regained once sold, should not be used to compensate a conservator or cover their attorney fees. SB 303 strengthens the statute in authorizing the sale of a conservatee’s property by making it clear that there must be a compelling reason for why it is in the best interest of the conservatee.

1. Amendments requiring clear and convincing evidence for the need to remove the conservatee from, and subsequently sell, their personal residence

Section 2352.5 establishes a presumption that the personal residence of the conservatee is the most appropriate place for the conservatee, unless rebutted by a preponderance of the evidence. The California Supreme Court has described the function of standards of proof as follows:

The function of a standard of proof is to instruct the fact finder concerning the degree of confidence our society deems necessary in the correctness of factual conclusions for a particular type of adjudication, to allocate the risk of error between the litigants, and to indicate the relative importance attached to the ultimate decision. [Citations.]  Thus, “the standard of proof may depend upon the 'gravity of the consequences that would result from an erroneous determination of the issue involved.’” [Citation.] The default standard of proof in civil cases is the preponderance of the evidence. (Evid. Code, § 115.) Nevertheless, courts have applied the clear and convincing evidence standard when necessary to protect important rights.

(Conservatorship of Wendland (2001) 26 Cal.4th 519, 546.) The court stated that the clear and convincing test requires a finding of high probability, based on evidence so clear as to leave no substantial doubt and sufficiently strong to command the unhesitating assent of every reasonable mind. (Id. at 552, quoting In re Angelia P. (1981) 28 Cal. 3d 908, 922.)

Removing a conservatee from their personal residence should be an act of last resort when it is no longer feasible or safe for the conservatee to remain in the personal residence. Additionally, removal is often a prelude to the sale of the residence, which is frequently the primary asset in the conservatee’s estate. A premature or unnecessary sale can have lasting financial consequences for a conservatee and their family. In view of the need to protect these important rights, the author has proposed to amend the bill to import the clear and convincing evidence standard into section 2352.5 and the section this bill would add, section 2541.5. Those amendments would be made as follows:

Amendments

Amend section 2352.5(a) as follows:

2352.5.   (a) It shall be presumed that the personal residence of the conservatee at the time of commencement of the proceeding is the least restrictive appropriate residence for the conservatee. In any hearing to determine if removal of the conservatee from his or her the conservatee’s personal residence is appropriate, that presumption may be overcome by a preponderance of the clear and convincing evidence.

[…]

Amend section 2541.5 as follows:

2541.5.   Notwithstanding Section 2541, the court may authorize a conservator to sell a conservatee’s present or former personal residence only if the court finds by clear and convincing evidence that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee.

Going forward, the author may wish to add additional protections to ensure that a conservatee’s personal residence is not sold without proper oversight. As described above, section 2540 requires a conservator, as a condition of selling the present or former personal residence of the conservatee, to notify the court of the proposed sale and that the conservator has discussed the proposed sale with the conservatee. However, that provision does not clearly require the conservator to do so before deciding to sell the house. Additionally, section 2590 provides that a court may make an order granting a guardian or conservator certain powers if it finds that it would be to the advantage, benefit, and best interest of the estate, as specified. Under section 2591, these powers include, among other things, the power to sell at public or private sale the personal residence of the conservatee without confirmation of the court of the sale, as specified. (Id. at (c)(2).) Section 2591.5 additionally provides that a conservator seeking an order under Section 2590 authorizing a sale of the conservatee’s personal residence must demonstrate to the court that the terms of sale, including the price for which the property is to be sold and the commissions to be paid from the estate, are in all respects in the best interests of the conservatee. It is arguable that these provisions do not provide for adequate oversight of the sale of a conservatee’s personal residence. The author could consider including the clear and convincing standard in these provisions. Additionally, the author could consider limiting these provisions to instances such as those in which the conservatee unequivocally consents to the sale or has an urgent health condition that will require hospitalization for an indefinite period of time and that cannot be funded by other means.

3. Prohibits compensation from public benefits

Compensation for services rendered by a conservator, guardian, or attorney in a conservatorship proceeding is payable only insofar as the court determines the compensation is “just and reasonable.” (§§ 2623(a)(2), 2640(c) & 2641(b).) Courts have held that a guardian or conservator is entitled to compensation only for services that the guardian or conservator believed in good faith were necessary or appropriate to carry out the purpose of the guardianship or conservatorship, and only if the guardian’s or conservator’s belief in that regard was reasonable. (Conservatorship of Lefkowitz (1996) 50 Cal. App. 4th 1310, 1314.) The California Rules of Court set forth the factors that a court may consider in determining whether compensation is just and reasonable:

(a) Standards for determining just and reasonable compensation. The court may consider the following nonexclusive factors in determining just and reasonable compensation for a conservator from the estate of the conservatee or a guardian from the estate of the ward:

(1) The size and nature of the conservatee's or ward's estate;

(2) The benefit to the conservatee or ward, or his or her estate, of the conservator's or guardian's services;

(3) The necessity for the services performed;

(4) The conservatee's or ward's anticipated future needs and income;

(5) The time spent by the conservator or guardian in the performance of services;

(6) Whether the services performed were routine or required more than ordinary skill or judgment;

(7) Any unusual skill, expertise, or experience brought to the performance of services;

(8) The conservator's or guardian's estimate of the value of the services performed; and

(9) The compensation customarily allowed by the court in the community where the court is located for the management of conservatorships or guardianships of similar size and complexity.

(b) No single factor determinative. No single factor listed in (a) should be the exclusive basis for the court's determination of just and reasonable compensation.

(c) No inflexible maximum or minimum compensation or maximum approved hourly rate. This rule is not authority for a court to set an inflexible maximum or minimum compensation or a maximum approved hourly rate for compensation.

(Cal. Rules of Court, Rule 7.756.)

This bill seeks to remove government benefits from the scope of funds that may be used to award compensation to conservators, guardians, and attorneys in conservatorship proceedings. With regard to Social Security, federal law limits the availability of old-age, survivor, and disability benefits for the purpose of satisfying debts by providing as follows:

The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

(42 U.S.C. § 407(a).) This section preempts state laws that establish legal processes to recover institutionalized persons’ support costs through deduction of their Social Security benefits, unless they consent to its use for that purpose. (Crawford v. Gould (9th Cir. 1995) 56 F.3d 1162, 1167.) However, if a Social Security beneficiary is “legally incompetent or mentally incapable of managing benefit payments,” Social Security Act regulations provide that a “legal guardian or some other person” may be appointed as a “representative payee” to use the funds for the maintenance, support, and debts of the beneficiary. (20 C.F.R. §§ 404.2001, 404.2010(a)(1), 404.2021(b) & 404.2040.) That fee is currently the lesser of 10 percent of the monthly benefit amount or $43 per month.^[2] This bill seeks to exclude government benefits such as social security benefits from the pool of funds from which a conservator, guardian, or attorney may be compensated.

Echoing a sentiment common to the organizations that support this bill, California Advocates for Nursing Home Reform states that “[s]uch income is presumably meant to ensure the conservatee has housing, food, health care, and other necessities of life. We strongly believe that a conservatee’s benefit should be used to support conservatees, not conservators.” The sponsor of this bill, CEDAR, citing anecdotal incidents in which the depredations of unscrupulous conservators pauperized conservatees, writes that a conservatorship “is the only profession that grants a service provider unfettered access to client assets. Conservators use client assets to fund litigation against the client and against the client’s family. Multi-million-dollar estates are depleted by legal fees, while conservatees languish in substandard care facilities.”

However, this provision has drawn the opposition of both private and public conservators and guardians. The Professional Fiduciary Association of California, asserting that adequate protections exist to prevent conservatees’ estates from being totally depleted, warns that SB 303 “could also lead to situations where a conservator is not compensated for services that are essential to the conservator, which in turn, may have the unintended consequence of discouraging professionals and others from serving as much-needed conservators.” Echoing these concerns, PAPGPC states, with regard to the aforementioned fee from social security benefits, that:

While seemingly a small amount of money said fees are keystone in the ongoing provision of PAPGPC direct services. A recent survey of county PAPGPC programs revealed that California counties are currently spending approximately $194 [million] in county general funds to sustain PAPGPC direct services across the state and are unable to dedicate more general funds. The survey revealed that on average county PAPGPC programs are spending approximately $4,500 of general funds per case, that county PAPGPC programs are currently under staffed by 20% and will fall an additional 36% behind over the next five years. This additional backlog does not include the effects of SB 303 being passed. On average, loss of these fees represents an approximate 5% cut to a PAPGPC program’s budget; passage of SB 303 will by necessity result in a reduction of direct services PAPGPC staff across the state.

In view of the possibility that these provisions could result in a significant funding shortfall for public conservators, the Committee may wish to amend the bill to ensure that the provisions limiting compensation from public funds align with existing provisions of law that enable public funds to be used to compensate guardians, conservators, or attorneys for personal services to wards and conservatees. Such a change would deter the misuse of these funds without resulting in the unintended consequence of preventing the lawful use of government funds to ensure that individuals in need of basic personal care receive the essential services they need. These amendments could be made as follows:

Amendments

In Section 2 of the bill, amend section 2640(e) as follows:

(e) Notwithstanding subdivision (c), the guardian, conservator, or attorney shall not be compensated with funds paid to and for the benefit of the ward or conservatee from any government program, including, but not limited to, state disability insurance, federal Social Security payments, Medicare, or Medi-Cal. any government program moneys designated for the benefit of the ward or conservatee, unless specifically authorized pursuant to other provisions of law.

In section 3 of the bill, amend section 2641(d) as follows:

(d) Notwithstanding subdivision (b), the guardian or conservator of the person shall not be compensated with funds paid to and for the benefit of the ward or conservatee from any government program, including, but not limited to, state disability insurance, federal Social Security payments, Medicare, or Medi-Cal. any government program moneys designated for the benefit of the ward or conservatee, unless specifically authorized pursuant to other provisions of law.

SUPPORT

Coalition for Elder & Disability Rights (sponsor)
California Advocates for Nursing Home Reform

Disability Rights Coalition

National Association of Social Workers – California Chapter

2 individuals

OPPOSITION

California State Association of Public Administrators, Public Guardians, and Public Conservators

Professional Fiduciary Association of California

RELATED LEGISLATION

Pending Legislation: None known

Prior Legislation:

SB 156 (Beall, 2013) would have prohibited a guardian or conservator from being compensated from the estate for any costs or fees, including attorney’s fees, incurred in defending the compensation in the petition, if the court reduces or denies the compensation requested in the petition. Governor Brown’s veto message stated “I believe that judges exercise their discretion under existing law governing compensation for defense costs in a fair and balanced way. Nevertheless, the bill could have improved the process had the last amendment to the bill not eliminated the three qualifying criteria under which a judge could award some or all of the defense costs. I cannot sign this bill without them.”

AB 1363 (Jones, Ch. 493, Stats. 2006), among other things, prohibited, in conservator/guardian fee petition litigation, the conservator/guardian from receiving compensation from the estate for any costs or fees incurred in unsuccessfully opposing an objection to the fee petition, as specified.

1. All further statutory references are to the Probate Code unless otherwise specified. ↑

2. Social Security, Social Security Administration website https://www.ssa.gov/oact/cola/RepPayee.html (as of Apr. 24, 2019). ↑