Conservatorship of Linda Dial (UPDATED 3/18/24)

Case Number

22PR00503

Case Type

Hearing Date / Time

Tue, 03/19/2024 - 09:00

Nature of Proceedings

First Accounting and Report of Conservator

Tentative Ruling

Probate Notes:

Appearances required. After supplement, the following is noted for the Court:

Surcharge recommended.  Six major discrepancies were noted to this very poorly drafted accounting.  Instead of simply addressing the discrepancies in the notes and following the detailed instruction on how to correct the defects, attorney for the petitioner used the supplement to protest well established, simple rules and procedures for presenting an accounting.  Not one of the discrepancies was resolved by the supplement, and two hours of court resources were spent educating the attorney as to why the supplement responses were inappropriate.  This belligerence is surchargeable conduct.

It is recommended the Court order the attorney for petitioner to amend the accounting to resolve the defects noted below, and order a surcharge of $100 per day until the amendment is filed with the court.  (Conservatorship of Farrant (2021) 67 Cal.App.5th 370, 374.)

Discrepancy no. 1 – Accounting period does not begin on the date of appointment (Dec. 14, 2022), but begins over one month later.  Petitioner must file an amended accounting beginning at the date of appointment, file supporting account statements from that date, and re-serve the accounting pursuant to CRC, rule 7.53.

Not resolved by supplement.  The supplement claims that assets are valued from the date the conservator is issued letters, not the date of appointment. This is false.  The only citation to any authority in support of this proposition was to specific language in Probate Code section 1061(a)(1), without discussion.  It is unclear why attorney for petitioner believes this statute’s language supports the position that the start date of “appointment” is when letters issue.

To the contrary, this position is so legally incorrect and contrary to widely accepted probate practice (and treatises related to that practice), that a refusal to make the requisite changes in this accounting could be considered sanctionable conduct:

The guardian's and the conservator's first account must begin on the date the fiduciary is appointed (i.e., the date of the court's order), although there may be a gap between this date and the date the fiduciary's letters are issued and the court's order is otherwise effective.

NOTE:  The date of appointment is the date used to inventory the guardianship and conservatorship estates. Prob C §2610(a).

There may be a gap between the date of appointment and the date that appointment becomes effective because conservators and guardians must take an oath, post a bond, and have letters issued before the appointment becomes effective. Prob C §§2300, 2310.

(Fiduciary Accounting Handbook (CEB 2024), §4.4 “Step One: Identify the Beginning Date” [emphasis added].) 

When one takes even a moment to ponder the practicality of this position, it becomes clear that a fiduciary takes possession/control of an estate the moment that fiduciary is appointed over the estate.  (CRC, Rule 7.1059 [“Undertake as soon as possible after appointment and qualification to secure the real and personal property of the estate, insuring it at appropriate levels, and protecting it against damage, destruction, or loss”.)

Therefore, Petitioner must file an amended accounting beginning at the date of appointment, file supporting account statements from that date, and re-serve the accounting pursuant to CRC, rule 7.53.

Discrepancy no. 2 – Estate on hand at beginning of account does not match the amount listed in the Final Inventory and Appraisal filed May 4, 2023. (Prob. Code, §1061(a).) The Final Inventory and Appraisal shows a total estate value of $423,793, which is the starting point of the property on hand of a first accounting.  The property on hand here shows $417,273.55, a difference of (roughly) $4,500.  The property on hand should have reflected the amount in the Final Inventory and Appraisal. (Prob. Code, § 1061(a)(1).)

Further, future expected Social Security Benefits and Pension payments are not “on hand” as they have not yet been received.  Petitioner must amend accounting to remove these figures and recalculate the totals.

Not resolved by supplement.  Although the explanation for this issue in the supplement is nonsensical, it appears from what is written that the Attorney for petitioner believes that since the carry value of the SSI and Pension benefits are listed at a carry value of zero, it does not throw off the accounting.  This is false. 

As stated in the note, the monthly value of the SSI and pension benefits were erroneously included in the Final Inventory and Appraisal. This wrongful inclusion resulted in the total appraisal figure being $423,793.  Not only does the Final I&A need to be corrected and resubmitted to cure this very real defect, but the accounting must be amended to reflect the change in the I&A. 

SSI and pension payments are receipts, not property on hand at the beginning of an account.  If the payments were received before the accounting period, they would just be listed as cash on hand in a total balance of a bank account.  Future expected payments are not inventoried as “on hand”, and not accounted for until received.

Therefore, Petitioner must file an amended accounting complying with the notes.

Discrepancy no. 3 – The Final Inventory and Appraisal incorrectly includes future income from Social Security and a Pension.  A Final I & A must only contain currently owned/held property, not future expectations.  Those payments are properly listed as receipts in Schedule A of the accounting.  Petitioner must file a Corrected Final I & A, remove the future income expected figures, and match the recalculated total with the income on hand at the beginning of the accounting period…starting on the date of appointment.

Not resolved by supplement.  For the same reasons discussed in Discrepancy no. 2 above.

Discrepancy no. 4 – Conservator may not use credit cards without disclosing the billing statements to the court. Use of credit cards without court approval violates CRC, Rule 7.1059, subdivisions (b)(1-3, and 8).  Please submit all credit card statements for review for purchases made during the accounting period.

Not resolved by supplement.  Attorney for petitioner argues “Conservatee did not have any credit cards,” but does not address the fact that there are seven payments to a credit card company in the disbursements schedule C.  Attorney appears to believe that these credit card payments do not have to be explained, because the credit card belongs to the spouse of conservatee, who manages the joint household (i.e. community property) account.  This raises the question as to 1) why the credit card payments are then reported in the account; and 2) whether this entire estate should not be considered community property managed by the conservatee’s spouse?

If the conservator managed the conservatorship account from the same account with the spouse of the conservatee, this would be an admitted breach of fiduciary duty not to commingle funds.  (Prob. Code, §16009.)

Therefore, when petitioner amends the accounting, the commingled funds should not be reported, and the amendment must address whether any conservatorship estate should be accounted for, since it appears all funds may be community property.

Discrepancy no. 5 – Account statements are not original account statements separately lodged with the court. (Prob. Code, § 2620)

Not resolved by supplement.  Attorney is belligerently arguing against obvious requirements in Local Rules 1743 and 1012, which were not followed.  The documents supporting the amended accounting must follow these rules.

Discrepancy no. 6 – Original residential care facility or long term care facility bills are not on file. (Prob. Code, § 2620(b)(5))

Not resolved by supplement.  Attorney admits statements are unavailable at this time.

Bond inadequate and improper to dispense with at this time.  Sufficiency of the bond must be addressed. (See Local Rule 1742 (a) & (b).) The bond is currently over $180,000 inadequate, and cannot be discharged until the conservatee 1) files a stub account to track the funds from the date of death to the date conservator distributes the estate to the Decedent’s personal representative; ; and 2) delivers those funds to the personal representative.

The amount of the bond given by an admitted surety insurer must be the sum of the following (Prob C §2320(c); Cal Rules of Ct 7.204(c)):

The value of the personal property of the estate;

The probable annual gross income of all estate property;

The sum of the probable annual gross payments from specified county, state, and federal public welfare programs;

A reasonable amount for the cost of recovery to collect on the bond, including attorney fees and costs (see §9.4A for rules for determining this amount); and

The value of any real property for which the conservator holds an independent power of sale (Prob C §2591(c)).

The court may increase or decrease that amount on a showing of good cause. Prob C §2320(c).

Not resolved by supplement.  Attorney is belligerently arguing against statutory requirements to provide stub accounting from date of death to date estate is delivered to the personal representative for the conservatee’s estate.  As stated in Fiduciary Accounting Handbook:

If the ward or conservatee dies, the guardian or conservator must file a "final court accounting" that ends on the date of death. Prob C §2620(b). The guardian or conservator must also file a "separate accounting for the period subsequent to the date of death." Prob C §2620(b). This truly final account is often referred to as the "stub account."

PRACTICE TIP:  To facilitate preparation of the stub accounting, the guardian or conservator should deliver assets to the successor fiduciary as soon as possible. In any case, after the ward's or conservatee's death, the guardian or conservator has almost no power to administer the assets. Prob C §§1600(b), 1860(a). (The fiduciary has ongoing duties of custody and conservation, but only such powers as are necessary for the performance of these duties. Prob C §2467.) Postponing this transfer is of benefit to no one.

(Fiduciary Accounting Handbook (CEB 2024), §2.15 “Final Account on Death of Ward or Conservatee” [emphasis added].)