Conservatorship of Joanetta Hanson

Case Number

21PR00490

Case Type

Hearing Date / Time

Mon, 03/11/2024 - 08:30

Nature of Proceedings

First Accounting and Report

Tentative Ruling

Probate Notes:

Appearances required. 

After review of the Second Supplement filed in this matter, the following is noted for the Court:

The Court should suspend or remove Conservator for failure to submit a Code Compliant Accounting re: Changes in the form of Assets.  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.) 

Accountings in conservatorships must be submitted in a format conforming to Probate Code section 1060 et seq. in a manner that makes the information contained within the accounting readily discernable by the Court.  Petitioner, and attorney for same, have outright refused to make the necessary changes to Schedule F, despite painstaking efforts to guide them through the correct formatting required by Probate Code section 1063(b) and the Fiduciary Accounting Handbook, which informs practitioners how to present accountings in a manner best suited to communicate the information necessary.  

In its current form, Schedule F of this petition merely contains a list of securities and dividends (presumably) from those securities.  The schedule confuses review by failing to label what was cash and what the cash changed in form to, as well as appearing to list the dividends as receipts.  Thus, the Court is left with as much information as a consultant of oracle bones on how the assets changed form. This is a material error that subjects the conservator to removal:

Each accounting is subject to random or discretionary, full or partial review by the court. The review may include consideration of any information necessary to determine the accuracy of the accounting. If the accounting has any material error, the court shall make an express finding as to the severity of the error and what further action is appropriate in response to the error, if any. Among the actions available to the court is immediate suspension of the guardian or conservator without further notice or proceedings and appointment of a temporary guardian or conservator or removal of the guardian or conservator pursuant to Section 2650 and appointment of a temporary guardian or conservator.

(Prob. Code, §2620(d) [emphasis added].)

The Court should order the Conservator to demand the trustee file a Biennial Petition for Approval of Accounting of the trust estate – 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, including conservator’s fees and attorney’s fees, which should be accounted for to the Court and the Conservatee.

A conservator has the authority to petition this Court to order an accounting from a trustee with a fiduciary duty to a trust holding funds belonging to the conservatee:

On petition of the guardian or conservator, the court may issue a citation to a person who has possession or control of property in the estate of the ward or conservatee to appear before the court and make an account under oath of the property and the person’s actions with respect to the property.

Disobedience of a citation issued pursuant to this section may be punished as a contempt of the court issuing the citation.

(Prob. Code, §2619, subds. (a-b).)

Because this Court has authority to order the Conservator to demand an accounting pursuant to Probate Code section 2620 (Prob. Code, §1850(b) [“At any time, 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 at a noticed hearing or ordering the conservator to submit an accounting pursuant to Section 2620.”]), this Court also has the authority to order the conservator to demand the trustee submit an accounting of a conservatee’s trust for approval to this Court, by virtue of the conservator’s authority to do so pursuant to section 2619, cited above.

It is therefore recommended the Court order the Conservator to demand the trustee of the Conservatee’s trust to submit a biennial accounting from the trust within 60 days, for an accounting period beginning with the date the conservatee was conserved, to the date of this hearing.

Surcharge the Conservator for failure to reconcile 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.)  Schedule E of the accounting shows that the conservator had on hand at the end of the account FIVE securities that appear from their labels to be mutual funds held in two accounts. 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.

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. 

The valuation contains a list of SIX securities, whose value only reconciles two of the five securities listed on Schedule E.  It does not resolve three of the securities in Schedule E, and even includes one security that is not listed in the schedule…which raises the question of whether that security was included in the accounting.  Because the valuation does not group the securities into their respective accounts (as was listed in Schedule E), the Court cannot reconcile the values of the accounts listed on hand in Schedule E.

The failed reconciliation is as follows:

• Schedule E of the accounting shows the ending valuation of a security labeled “Fidelity Total Market Index Fund” (i.e. FSKAX) is listed twice as $163,594.84 and $15,469.49 (total of $179,064.33), but is listed on the Supplement, Exhibit B documents at values of $15,469.49 and $14,815.83 (total of $30,285.32); which comes nowhere close to the $179,064.33 total value of both FSKAX funds in Schedule E, resulting in ($148,779.01) unaccounted for value.

• Schedule E of the accounting shows the ending valuation of a security labeled Fidelity U.S. Bond Index Fund (i.e. FXNAX) as $37,335.36, but the Supplement, Exhibit B documents show the same security valued at $36,875.58, a difference of ($459.78). 

• Schedule E of the accounting shows the ending valuation of a security labeled FPA Crescent Fund (IRA) (i.e FPACX) as $88,020.27, but the Supplement, Exhibit B documents show the same security listed twice at values of $88,984.73 and $83,292.72, a difference of $172,277.45. 

• The accounting shows the ending valuation of a security labeled Fidelity International Index Fund (i.e. FSPSX) as $18,915.66, and the Supplement, Exhibit B documents show the same value.

Even if Petitioner mislabeled the securities in Schedule E and the missing $148,779.01 value of the FSKAX securities was subtracted from $172,277.45 overage in the FPACX securities, there would still be a ($23,498.44) and ($459.78) unaccounted for value in the estate.

Bond Should be Increased – 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.  Further problematic is that the transfer of funds from the conservatorship estate to the trust presumes the conservatee’s intent to do so, which the Court cannot confirm without a review of the trust instrument to determine that the conservatee’s estate plan contemplated such a circumstance.