Conservatorship of Joanetta Hanson

Case Number

21PR00490

Case Type

Hearing Date / Time

Tue, 02/27/2024 - 08:30

Nature of Proceedings

First Accounting and Report

Tentative Ruling

Probate Notes:

Appearances required.  The following is noted for the Court:

Discrepancy no. 1 – Schedule F (Changes in Form of Assets) does not reflect any actual changes in assets.  This Schedule is for reporting when the form of an asset has changed (usually) from or to cash, without a loss or gain.  “For example, when cash is exchanged for other property (a purchase), that transaction is reported on the schedule.”  (Fiduciary Accounting Handbook, (C.E.B. 2023), §11.11.)

The Schedule F of this accounting does not show how the listed securities changed, but consists solely of a list of securities and bonds that appear to generate dividends.  Dividends should be recorded and accounted for in the Receipts Schedule A, not in changes in form of assets, unless the dividends were sold without loss or gain, and then used to purchase new shares. (Fiduciary Accounting Handbook, (C.E.B. 2023), §1.8.)

Updated note for 2/26/24 hearing: 

Supplement fails to resolve.  As stated in the previous notes, the fundamental reason for this schedule is to track what happens to cash.  In practice, this means that transfers between conservatorship cash accounts need not be reported (Prob. Code, § 1063, subd. (b)), neither do any changes that trigger a gain or loss. (See Fiduciary Accounting Handbook (Cont. Ed. Of the Bar 2022) §11.11-13.) 

As stated above, Schedule F of this petition merely contains a list of securities accounts showing total dividends in those accounts.  The schedule is additionally not even properly formatted in a manner that could communicate what the change in form of asset was, let alone how it changed.  In other words, a mere list of dividends is not sufficient.

As pointed out in the Fiduciary Accounting Handbook, the following is, in general, how the schedule should appear in reporting these changes:

Date             Description           Cash            Carry Value

Any deviance from this reporting method fails to track what is actually happening to the cash held by the estate.  Petitioner must amend the Schedule F to contain an adequate description of the transaction, the cash value and carry value of that transaction, and the date of the transaction.  If, for example, a dividend was paid and then reinvested, the transaction should appear as follows:

Date             Shares            Description                                    Cash           Carry Value

1/23/23       32      Reinvestment in [name of security] (345.23)        345.23

(See Fiduciary Accounting Handbook (Cont. Ed. Of the Bar 2023) §6.60.)

It is recommended Petitioner’s continued refusal to present this schedule in a proper manner be subject to surcharge.

Discrepancy no. 2 – There is only one disbursement during the accounting period: a bond premium.  This raises the question: How are the Conservatee’s needs being met?  This is an issue, because there are literally no disbursements from the conservatorship estate to pay for basic care and maintenance of the Conservatee.  This means the Conservatee’s trust is paying those expenses, which should be accounted for to the Court and the Conservatee.  It is therefore recommended the Court order the attorney for the Conservatee to request an annual accounting from the trust.

Updated note for 2/26/24 hearing: 

Supplement fails to resolve.  The minute order of the last hearing does not reflect any resolution to this matter, nor contain an order that the trustee account for the trust to show how the conservatee’s needs are being met.  It is recommended the Court order the conservator to require the trustee to submit accountings biennially with the conservatorship accountings.

Discrepancy no. 3 – Resolved by supplement.

Discrepancy no. 4 – Account statements do not support balance reported to be on hand at the end of the accounting period, and are not supported by schedule of detailed reconciliation.  (See Local Rule 1744.)  The petition/accounting shows the Fidelity Investment account ending in 1748 was valued at $103,489.76 at the end of the period, but the account statement shows a value of $107,288.65.

Updated note for 2/26/24 hearing: 

Supplement fails to resolve.  Petitioner claims the valuations of the investment accounts listed in Schedule E do not match the account statements because the date the accounting period ended differs from the date the statement period ended.  To reconcile this, Petitioner submits estate valuation totals at Exhibit B based on the date of the end of the accounting period.  While this resolves two of the five accounts listed on Schedule E, it does not resolve three of the accounts in that schedule, and even includes one account that is not listed in the schedule…which raises the question of whether that account was included in the accounting.  Because Petitioner failed to include account numbers for all accounts in schedule E, reconciliation is also complicated. 

For example, the accounting shows the ending valuation of an account labeled FPA Crescent Fund (IRA) as $88,020.27, but the Exhibit B documents show what appears to be the same account labeled FPA FD TR ending 759 valued at $88,984.73, a difference of $964.  The account labeled “Fidelity Total Market Index Fund” listed in schedule E as $163,594.84 is nowhere to be found on the Exhibit B document.

Petitioner must list every account by name and at least the last 4 digits of the account number, and try to keep those descriptions as close to those in the account statements as possible so the court does not have to waste value resources hunting for information that is Petitioner’s burden to present clearly.  If this is not resolved by the next hearing, it is recommended the court surcharge the Petitioner’s fee request.

Discrepancy no. 5 – Sufficiency of the bond must be addressed. (See Local Rule 1742 (a) & (b).) Conservator’s request to “transfer excess funds” to the Conservatee’s trust does not adequately address what amount would remain in the Conservatorship estate, and whether the current bond would be sufficient to cover that amount.

Updated note for 2/26/24 hearing: 

It is recommended the Court accept the Petitioner’s proposal in the supplement, but only if the Court orders the conservator to demand an accounting from the trustee on the same biennial schedule as the conservatorship.