AB 586: Professional fiduciaries.

6501.

As used in this chapter, the following terms have the following meanings:

(a) “Act” means this chapter.

(b) “Bureau” means the Professional Fiduciaries Bureau within the Department of Consumer Affairs, established pursuant to Section 6510.

(c) “Client” means an individual who is served by a professional fiduciary.

(d) “Department” means the Department of Consumer Affairs.

(e) “Licensee” means a person who is licensed under this chapter as a professional fiduciary.

(f) (1) “Professional fiduciary” means any of the following:

(A) A person who acts as a guardian or conservator of the person, the estate, or the person and estate, for two or more individuals at the same time who are not related to the professional fiduciary or to each other.

(B) A personal representative of a decedent’s estate, as defined in Section 58 of the Probate Code, for two or more individuals at the same time who are not related to the professional fiduciary or to each other.

(C) A person who acts as a trustee, agent under a durable power of attorney for health care, or agent under a durable power of attorney for finances, for four or more individuals, at the same time.

(D) “Professional fiduciary” also includes a A person acting as a professional fiduciary practice administrator, appointed pursuant to Section 2469 or 9765 of the Probate Code.

(2) In counting individuals under paragraph (1) to determine whether a person is a professional fiduciary:

(A) Individuals who are related to the fiduciary shall not be counted.

(B) All individuals who are related to each other shall be counted as one individual.

(C) All trustors who are related to each other shall be counted as one individual, and neither the number of trusts nor the number of beneficiaries of those trusts shall be counted.

(3) For purposes of this subdivision, “related” means related by blood, adoption, marriage, or registered domestic partnership.

(4) “Professional fiduciary” does not include any of the following:

(A) A trust company, as defined in Section 83 of the Probate Code.

(B) An FDIC-insured institution, or its holding companies, subsidiaries, or affiliates. For the purposes of this subparagraph, “affiliate” means an entity that shares an ownership interest with, or that is under the common control of, the FDIC-insured institution.

(C) A public agency, including the public guardian, public conservator, or other agency of the State of California or of a county of California or a regional center for persons with developmental disabilities, as defined in Section 4620 of the Welfare and Institutions Code.

(D) A nonprofit corporation or charitable trust that is described in Section 501(c)(3) of the Internal Revenue Code and that satisfies all of the following requirements:

(i) Is an organization described in Section 509(a)(1), Section 509(a)(2), or Section 509(a)(3) of the Internal Revenue Code.

(ii) Has been in existence for at least five years.

(iii) Has total institutional funds as described in subdivision (e) of Section 18502 of the Probate Code according to its most recent audited financial statement with a value of at least two million dollars ($2,000,000) net of encumbrances.

(iv) Is acting as a trustee, incidental to the purposes for which it was organized, of a trust that meets at least one of the following conditions:

(I) It is a trust from which annual distributions are limited to income, a sum certain, or a fixed percentage of the net fair market value of the trust assets as described in Section 664(d) of the Internal Revenue Code governing charitable remainder trusts.

(II) It is a trust from which annual distributions are limited to a guaranteed annuity or a fixed percentage of the fair market value of the property as described in Section 2055(e)(2)(B) or Section 2522(c)(2)(B) of the Internal Revenue Code.

(III) It is a trust from which annual distributions are limited to income, including a pooled income fund from which annual distributions are limited to income as described in Section 642(c)(5) of the Internal Revenue Code governing pooled income funds.

(IV) It is a trust as to which the value of the charitable interest was presently ascertainable upon creation of the trust and deductible for federal gift, estate, or income tax purposes under the Internal Revenue Code as in effect prior to enactment of the federal Tax Reform Act of 1969 (Public Law 91-172).

(E) A person employed by, or acting as an agent on behalf of, an entity or agency described in subparagraph (A), (B), (C), or (D) who is acting within the course and scope of that employment or agency, and a public officer of an agency described in subparagraph (C) acting in the course and scope of official duties.

(F) A person whose sole activity as a professional fiduciary is as a broker-dealer, broker-dealer agent, investment adviser, or investment adviser representative registered and regulated under the Corporate Securities Law of 1968 (Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code), the Investment Advisers Act of 1940 (15 U.S.C. Sec. 80b-1 et seq.), or the Securities Exchange Act of 1934 (15 U.S.C. Sec. 78a et seq.), or involves serving as a trustee to a company regulated by the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.).

(g) “Committee” means the Professional Fiduciaries Advisory Committee, as established pursuant to Section 6511.

6534.

(a) The bureau shall maintain the following information in each licensee’s file, shall make this information available to a court for any purpose, including the determination of the appropriateness of appointing, continuing the appointment of, or removing, the licensee as a conservator, guardian, trustee, personal representative of decedent’s estate, agent under a durable power of attorney for health care, agent under a durable power of attorney for finances, or a position arising from an appointment as a professional fiduciary practice administrator, and shall otherwise keep this information confidential, except as provided in subdivisions (b) and (c) of this section:

(1) The names of the licensee’s current conservatees, wards, principals under a durable power of attorney for health care, or principals under a durable power of attorney for finances, and the names of the trusts or estates currently administered by the licensee, whether the case is court supervised or noncourt supervised or whether the licensee is appointed with or serving under a professional fiduciary professional corporation.

(2) The aggregate dollar value of both of the following:

(A) All assets currently under the licensee’s supervision as a professional fiduciary.

(B) All assets currently under the licensee’s supervision for which the licensee is appointed with or serving under a professional fiduciary professional corporation.

(3) The licensee’s current addresses and telephone numbers for their place of business and place of residence.

(4) Whether the licensee has ever been removed for cause as a conservator, guardian, trustee, personal representative of a decedent’s estate, agent under a durable power of attorney for health care, or agent under a durable power of attorney for finances, or has ever resigned or settled a matter in which a complaint against the licensee has been filed with the court as a conservator, guardian, trustee, personal representative of a decedent’s estate, agent under a durable power of attorney for health care, or agent under a durable power of attorney for finances, or a position arising from an appointment as a professional fiduciary practice administrator, in a specific case.

(5) Whether a professional fiduciary professional corporation for which the licensee is appointed with or serving under, has ever been removed for cause or has ever resigned or settled a matter for which a complaint against the professional fiduciary professional corporation or the licensee has been filed with the court and the circumstances for the removal, resignation, or settlement and the case names, court locations, and case numbers associated with the removal or resignation.

(6) The circumstances causing a removal or resignation described in paragraph (4) and the case names, court locations, and case numbers associated with the removal or resignation.

(7) The case names, court locations, and case numbers of all conservatorship, guardianship, trust, or other estate administration cases, including cases for which the licensee is appointed with or serving under a professional fiduciary professional corporation, that are closed for which the licensee served as the conservator, guardian, trustee, agent under a durable power of attorney for finance or health care, personal representative of a decedent’s estate, or professional fiduciary practice administrator, whether the case is court supervised or noncourt supervised.

(8) Information regarding any discipline imposed upon the licensee by the bureau.

(9) Whether the licensee has filed for bankruptcy or held a controlling financial interest in a business that filed for bankruptcy in the last 10 years.

(10) Whether the licensee is appointed with or serving under a professional fiduciary professional corporation, and the name of the professional fiduciary professional corporation.

(b) The bureau shall make the information in paragraphs (2), (4), (5), (8), (9), and (10) of subdivision (a) available to the public.

(c) The bureau shall also publish information regarding licensees on the internet as specified in Section 27. The information shall include, but shall not be limited to, information regarding license status and the information specified under subdivision (b).

6561.

(a) A licensee shall initially, and annually thereafter, file with the bureau a statement under penalty of perjury containing the following:

(1) The licensee’s business address, telephone number, and facsimile number.

(2) Whether or not the licensee has been removed for cause as a conservator, guardian, trustee, personal representative of a decedent’s estate, agent under a durable power of attorney for health care, agent under a durable power of attorney for finances, or a position arising from appointment as a professional fiduciary practice administrator. The licensee may file an additional statement of the issues and facts pertaining to the case.

(3) Whether or not a professional fiduciary professional corporation, for which the licensee is appointed with or serving under, has been removed for cause. The licensee shall report removals and file an additional statement of issues and facts pertaining to the case.

(4) The names of the licensee’s current cases, including cases for which the licensee is appointed with or serving under a professional fiduciary professional corporation, administered by the licensee, whether the cases are court supervised or noncourt supervised, and including court names, court locations, and case numbers where applicable.

(5) The case names, court locations, and case numbers of all conservatorship, guardianship, trust and other estate administration cases, including cases for which the licensee is appointed with or serving under a professional fiduciary professional corporation, that are closed for which the licensee served as the conservator, guardian, trustee, agent under a durable power of attorney for finance or health care, and personal representative of a decedent’s estate, whether the case is court supervised or noncourt supervised.

(6) Whether the licensee or the professional fiduciary professional corporation for which the licensee is appointed with or serving under has been found by a court to have breached a fiduciary duty.

(7) Whether the licensee or the professional fiduciary professional corporation for which the licensee is appointed with or serving under has resigned or settled a matter in which a complaint against the licensee or the professional fiduciary professional corporation for which the licensee is appointed with or serving under has been filed with the court. The licensee shall provide the case number and a statement of the issues and facts pertaining to the allegations.

(8) Any licenses or professional certificates held by the licensee.

(9) Any ownership or beneficial interests in businesses or other enterprises held by the licensee or by a family member that receives or has received payments from a client of the licensee.

(10) Whether the licensee has filed for bankruptcy or held a controlling financial interest in a business that filed for bankruptcy in the last ten years.

(11) The name of any persons or entities that have an interest in the licensee’s professional fiduciary business.

(12) Whether the licensee has been convicted of a crime.

(13) Indicate on each case, whether the licensee is serving with or under a professional fiduciary professional corporation and include the name of the corporation.

(b) The statement by the licensee required by this section may be filed electronically with the bureau, in a form approved by the bureau. However, any additional statement filed under paragraph (2) of subdivision (a) shall be filed in writing.

6584.

A license issued under this chapter may be suspended, revoked, denied, or denied or other disciplinary action may be imposed for one or more of the following causes:

(a) Conviction of any felony or any misdemeanor, if the misdemeanor is substantially related to the functions and duties of a professional fiduciary. The record of conviction, or a certified copy thereof, is conclusive evidence of the conviction.

(b) Failure to notify the bureau of a conviction as required by paragraph (10) of subdivision (a) of Section 6561.

(c) Fraud or misrepresentation in obtaining a license.

(d) Fraud, dishonesty, corruption, willful violation of duty, gross negligence or incompetence in practice, or unprofessional conduct in, or related to, the practice of a professional fiduciary. For purposes of this section, unprofessional conduct includes, but is not limited to, acts contrary to professional standards concerning any provision of law substantially related to the duties of a professional fiduciary.

(e) Failure to comply with, or to pay a monetary sanction imposed by, a court for failure to provide timely reports. The record of the court order, or a certified copy thereof, is conclusive evidence that the sanction was imposed.

(f) Failure to pay a civil penalty relating to the licensee’s professional fiduciary duties.

(g) The revocation of, suspension of, or other disciplinary action against, any other professional license by the State of California or by another state. A certified copy of the revocation, suspension, or disciplinary action is conclusive evidence of that action.

(h) Violation of this chapter or of the applicable provisions of Division 4 (commencing with Section 1400), Division 4.5 (commencing with Section 4000), Division 4.7 (commencing with Section 4600), or Division 5 (commencing with Section 5000) of the Probate Code or of any of the statutes, rules, or regulations pertaining to duties or functions of a professional fiduciary.

(i) Failure of a licensee to, in a timely manner, respond to inquiries or produce documents requested by the bureau, including inquiries and documents related to a professional fiduciary professional corporation. For a professional fiduciary professional corporation, the failure of an agent of the corporation to, in a timely manner, respond to inquiries or produce documents requested by the bureau may be referred to the Secretary of State for enforcement action.

6593.

(a) One or more licensees may organize a professional fiduciary professional corporation to provide professional fiduciary services that require licensure under this chapter.

(b) With respect to a professional fiduciary professional corporation, the governmental agency referred to in the Moscone-Knox Professional Corporation Act (Part 4 (commencing with Section 13400) of Division 3 of Title 1 of the Corporations Code) is the Professional Fiduciaries Bureau.

(c) The bureau may adopt, repeal, or amend regulations for professional fiduciary professional corporations in accordance with the provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

6593.1.

A professional fiduciary professional corporation is a corporation that is authorized to render professional services, as defined in Section 13401 of the Corporations Code, if that corporation and its shareholders, officers, directors, and employees rendering professional services who are licensed professional fiduciaries are in compliance with the Moscone-Knox Professional Corporation Act (Part 4 (commencing with Section 13400) of Division 3 of Title 1 of the Corporations Code), this article, and all other statutes and regulations pertaining to the corporation and the conduct of its affairs.

6593.2.

Each of the following requirements apply to a professional fiduciary professional corporation:

(a) A professional fiduciary professional corporation shall register with the Secretary of State in accordance with the Corporations Code.

(b) The professional fiduciary professional corporation, its officers, directors, shareholders, and employees rendering professional fiduciary services shall comply with the Moscone-Knox Professional Corporation Act (Part 4 (commencing with Section 13400) of Division 3 of Title 1 of the Corporations Code).

(c) Any individual providing professional fiduciary services on behalf of the corporation shall be a licensee actively licensed with the bureau to be considered a qualified person for the purposes of Section 13408 of the Corporations Code.

(d) A licensee serving as an officer, director, shareholder, or employee of the corporation shall not be exempt from individual discipline for violations of this act, bureau regulations, or other applicable laws and regulations.

(e) Any income of the corporation attributable to professional services rendered while a shareholder is a disqualified person, as defined in Section 13401 of the Corporations Code, shall not accrue to the benefit of that shareholder or their shares in the corporation.

(f) The professional fiduciary professional corporation shall not permit an unqualified person to serve as an officer, director, or shareholder.

(g) A professional fiduciary professional corporation name shall contain the last name of at least one current or former qualified member. person.

(h) The named licensee or licensees shall serve as the primary contact for the bureau.

(i) A professional fiduciary professional corporation or agent of a fiduciary corporation shall not bill or impose any costs or fees to a client for incorporation or corporation name changes with the Secretary of State or on appointing documents or other records.

6593.3.

(a) Upon request, each professional fiduciary professional corporation shall provide to the bureau a corporation-wide report consisting of all of the following information:

(1) The full name, license number, address, and telephone number for any licensee contained in the name of the corporation.

(2) The full names and license numbers of all officers, directors, shareholders, and licensed employees of the corporation.

(3) The corporation entity number as issued by the Secretary of State and current statement of information filed with the Secretary of State.

(4) A client log containing all of the following:

(A) A list of all case names, whether the cases are court supervised or noncourt supervised, the date the corporation was appointed, and the responsible licensed professional fiduciary on the case.

(B) The court location and case number for each case that is supervised by a court.

(C) The aggregate managed asset value of all matters under the management of the corporation.

(b) The corporation-wide report required by subdivision (a) is an investigatory or security file that is compiled for licensing purposes, as described in Section 7923.600 of the Government Code, that shall not be disclosed to the public pursuant to the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), except in any of the following circumstances:

(1) In the course of any disciplinary proceeding by the bureau after the filing of a formal accusation.

(2) In the course of any legal action to which the bureau is a party.

(3) In response to an official inquiry from a city, county, state, or federal agency.

(4) In response to a subpoena or summons enforceable by order of a court.

(5) When otherwise specifically required by law.

(c) The failure of a professional fiduciary professional corporation to submit the corporation-wide report required by subdivision (a) within 60 days of the request, or to respond to an inquiry from the bureau related to the corporation within 60 days of the request, shall be considered unprofessional conduct as a violation of this section and pursuant to Section 6584.

6593.4.

(a) If a professional fiduciary professional corporation is appointed in a matter in violation of paragraph (2) of subdivision (c) of Section 310 of the Probate Code, then both of the following shall apply:

(1) The appointment of a professional fiduciary professional corporation for these matters in that matter shall be considered void and treated by the relevant jurisdiction as if no appointment was made.

(2) The professional fiduciary professional corporation shall do all of the following:

(A) Immediately resign the appointment.

(B) Notify the court or party that appointed the professional fiduciary professional corporation of the resignation.

(C) Cooperate with all efforts to have a successor appointed.

(D) Waive compensation for any services related to the resignation and the appointment of a successor.

(b) A professional fiduciary professional corporation or agent of the professional fiduciary professional corporation is prohibited from billing or imposing any costs or fees for any services performed or appointment changes while the professional fiduciary professional corporation is improperly named.

(c) Failure of the professional fiduciary corporation to resign pursuant to this section shall subject all officers, directors, shareholders, and licensed employees to discipline for unprofessional conduct under this section. Further, the bureau shall submit to the Secretary of State notice that the professional fiduciary professional corporation is violating provisions of law mandatory to maintain a professional corporation and shall request the fiduciary corporation’s suspension or revocation. as a violation of this section and pursuant to Section 6584.

13401.

As used in this part:

(a) “Professional services” means any type of professional services that may be lawfully rendered only pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act.

(b) “Professional corporation” means a corporation organized under the General Corporation Law or pursuant to subdivision (b) of Section 13406 that is engaged in rendering professional services in a single profession, except as otherwise authorized in Section 13401.5, pursuant to a certificate of registration issued by the governmental agency regulating the profession as herein provided and that in its practice or business designates itself as a professional or other corporation as may be required by statute. However, any professional corporation or foreign professional corporation rendering professional services by persons duly licensed by the Medical Board of California or any examining committee under the jurisdiction of the board, the Podiatric Medical Board of California, the Osteopathic Medical Board of California, the Dental Board of California, the Dental Hygiene Board of California, the California State Board of Pharmacy, the Veterinary Medical Board, the California Architects Board, the Court Reporters Board of California, the Board of Behavioral Sciences, the Speech-Language Pathology and Audiology and Hearing Aid Dispensers Board, the Board of Registered Nursing, the State Board of Optometry, the Professional Fiduciaries Bureau, or the California Board of Occupational Therapy shall not be required to obtain a certificate of registration in order to render those professional services.

(c) “Foreign professional corporation” means a corporation organized under the laws of a state of the United States other than this state that is engaged in a profession of a type for which there is authorization in the Business and Professions Code for the performance of professional services by a foreign professional corporation.

(d) “Licensed person” means any natural person who is duly licensed under the provisions of the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act to render the same professional services as are or will be rendered by the professional corporation or foreign professional corporation of which the person is, or intends to become, an officer, director, shareholder, or employee.

(e) “Disqualified person” means a licensed person who for any reason becomes legally disqualified (temporarily or permanently) to render the professional services that the particular professional corporation or foreign professional corporation of which they are an officer, director, shareholder, or employee is or was rendering.

60.1.

“Professional fiduciary” means either of the following:

(a) A person who is a professional fiduciary as defined in subdivision (f) of Section 6501 of the Business and Professions Code.

(b) A professional fiduciary professional corporation, as provided for in Article 7 (commencing with Section 6593) of Chapter 6 of Division 3 of the Business and Professions Code, organized under the Moscone-Knox Professional Corporation Act (Part 4 (commencing with Section 13400) of Division 3 of Title 1 of the Corporations Code).

310.

A superior court shall not appoint a professional fiduciary, as defined in Section 6501 of the Business and Professions Code, or a professional fiduciary professional corporation, as provided for in Article 7 (commencing with Section 6593) of Chapter 6 of Division 3 of the Business and Professions Code, as a guardian, conservator, personal representative, or trustee, or permit a professional fiduciary or a professional fiduciary professional corporation to continue in any of those offices, unless the professional fiduciary or the professional fiduciary professional corporation satisfies any of the following:

(a) Holds a current, unsuspended license issued pursuant to Section 6535 of the Business and Professions Code to act or hold themselves out to the public as a professional fiduciary.

(b) Is exempt from the licensing requirements in Article 3 (commencing with Section 6530) of Chapter 6 of Division 3 of the Business and Professions Code.

(c) (1) Except as provided in paragraph (2), is a professional fiduciary professional corporation, organized as a professional corporation under the Moscone-Knox Professional Corporation Act (Part 4 (commencing with Section 13400) of Division 3 of Title 1 of the Corporations Code) and as provided for in Article 7 (commencing with Section 6593) of Chapter 6 of Division 3 of the Business and Professions Code. When making an appointment pursuant to this paragraph, the petition and appointment shall specify the corporate member having primary responsibility for the matter.

(2) Notwithstanding paragraph (1), a professional fiduciary professional corporation shall not be appointed as any of the following:

(A) Guardian of the person of a ward under Part 2 (commencing with Section 1500) of Division 4.

(B) Conservator of the person of a conservatee under Part 3 (commencing with Section 1800) of Division 4.

(C) Any office under Division 4.7 (commencing with Section 4600).

311.

A person shall not act or hold themselves out to the public as a professional fiduciary unless they are licensed as a professional fiduciary under Chapter 6 (commencing with Section 6500) of Division 3 of the Business and Professions Code.