Estate of Patricia Evelyn Jones

Case Number

22PR00596

Case Type

Hearing Date / Time

Wed, 06/11/2025 - 08:30

Nature of Proceedings

Final Distribution

Tentative Ruling

Probate Notes:

Appearances are required.

After review of the Supplement filed by Probate Advance, the two declarations filed on April 28, 2025, and the Second Supplement filed by Angela Grove on May 23, 2025, the following is noted for the Court at the hearing:

Approve Unequal Distribution of “Holiday Recreational Vehicle Park Owner’s Association”.  The Final Inventory and Appraisal filed on December 7, 2023, shows two different ownership interests in the “Holiday Recreational Vehicle Park Owner’s Association.” One is a 100% interest in “Locker #325” and the other a 50% interest in “Locker 655.” Decedent executed a codicil to the will that left “1 share of Holiday RV Park” to Angela Maria Baumbach, without identifying which interest the Decedent desired to gift. 

Because the heirs all submitted agreements, it is recommended the Court approve of the proposed unequal distribution.

Reduce Extraordinary Fees.  The $2,229.50 of extraordinary compensation requested to be paid to the attorney for the personal representative is not supported by facts warranting the award of those fees according to the discretion of this Court outlined in Probate Code section 10811 and CRC, Rule 7.703.

Payment of extraordinary fees is not guaranteed, and the Court has wide discretion to decide whether to allow extra compensation, even when services of an extraordinary nature are rendered.  (CRC, Rule 7.703(a). See also In re Fulcher's Estate (1965) 234 Cal.App.2d 710, 718 [“The general rule is that the probate court has a large discretion in the allowance of fees for extraordinary services rendered on behalf of the estate.”)  “[T]he burden of proving the necessity for the services is on the representative claiming extraordinary fees for himself and his attorney.”  (Ibid.)

The sale of real property is an ordinary and usual occurrence in the administration of a decedent’s estate, thus does not automatically warrant extraordinary fees.  Unless circumstances during the sale of real property require the estate to incur “legal services” not normally needed during the sale and escrow process, the high value of real estate in this state generates a statutory fee award that is usually sufficient to compensate the personal representative and the attorney.  This is especially true when a real estate agent is used to effectuate the sale, as was used in this case. The standard courts use is “legal services in connection with the sale of property held in the estate.” (CRC, Rule 7.703(c)(1).)

In this case, the Court may consider that the statutory fee is reasonable and sufficient compensation when calculated on an estate where the decedent's personal residence was sold for $529,900, because no “legal services” were required to effectuate the sale of the property, other than brief contract review and associated tasks.  The policy behind statutory fee awards includes strong consideration of the complication of larger estates than that of smaller estates.  (In re Buchman's Estate (1955) 138 Cal.App.2d 228, 235. See also Estate of Getty (1983) 143 Cal.App.3d 455 [discussing in dicta that massive statutory compensation can be sufficient to cover unexpected intricacies in estate administration]; and Estate of Hilton (1996) 44 Cal.App.4th 890, 912-16 [citing In re Walker's Estate (1963) 221 Cal.App.2d 792, 795] for the proposition that probate courts can disallow all extraordinary fees claims if they find statutory compensation sufficient, keeping in mind the legislature’s policy of subsidizing fees in more complicated estates with those easily earned in less complicated estate [“The Legislature merely determined, in substance, that any undercompensation involved in handling small estates would be equitably adjusted in the long run by overcompensation in handling larger estates.”].)

Petitioner’s attorney submitted evidence showing some legal analysis of the sales contract on the real property was required to ensure a sale of the that property did not result in problems the attorney spotted during document review. This is sufficient to justify a small extraordinary fee, but does not rise to extraordinary work on the sale of the property past what normal document review would warrant.

Therefore, it is recommended the Court only approve of $450 in extraordinary fees.

Deny high reserve request, and allow $500 at most.  Petitioner requests $5,000 for a reserve amount.  Petitioner must explain in supplement why such a high reserve is required.  The following is from a well-respected treatise on this issue:

Although not required, it is advisable to include an estimate of closing expenses. Examples of estimated closing expenses include any estate taxes, interest, and penalties that will be paid after distribution; the cost of preparing final income tax returns for the estate; the cost of transferring securities to the distributees; the cost of reasonable storage, delivery, and shipping for distribution of tangible personal property to the distributees; and the cost of certifying and recording copies of the decree of distribution of real property. See Prob C §§11642, 11750, 11753–11754. Some courts require more detailed information about the nature and amount of the anticipated closing expenses. See, e.g., San Francisco Ct R 14.35(I)(3).

The personal representative may also wish to retain funds for any undisclosed or unknown liabilities, especially tax deficiencies later assessed against the decedent or the estate. Apart from the reserve for estate taxes, there are some drawbacks to setting the reserve aside specifically for possible future tax deficiencies. Such action indicates—especially if the reserve is a substantial one—misgivings about the validity of the estate's position. The reserve might also be considered a trust fund for payment of the taxes, thus extending the statutory period for assessment. See U.S. v Rose (3d Cir 1965) 346 F2d 985, 989.

In addition, if the personal representative requests that the court allow for a substantial reserve (or even a reserve of more than $5,000), some courts will refuse to characterize the distribution as "final" and will require additional accounts (or waivers) before permitting distribution of any balance of the reserve. For example, in Contra Costa County, the court will not characterize the distribution as final if the personal representative requests more than a nominal reserve. If the entire estate will be distributed to a single beneficiary, such as a trust established during the decedent's lifetime, a reserve may not be necessary.

(Cal. Dec. Est. Pract. (CEB 2023), §31.66.)

As a result of the above authority, it is recommended the Court deny the request for reserve of $5,000, and only allow $500 as a reserve.

Find Proposed Distribution to Probate Advance Grossly Unreasonable. 

The advances are loans.

Petitioner requests distribution to Probate Advance for three assignments made by three heirs of the estate.  According to the contracts on file, Probate Advance claims a right to $20,000 of the $31,507.51 to be each distributed to James, Michael and Tiffany Jones, due to $10,000 given to each of the Jones’ on May, June, and August of 2023. Probate Advance argues these transactions are not loans, because the transactions (and language in the contract governing said transactions) evince an assignment of the heirs’ beneficial interest in the estate.  This argument is unsupported by both facts and law.

To simplify the transaction so Probate Advance can understand, party A (here, Probate Advance) gave a sum of money (here, $10,000) to party B (here, three of the heirs) for a promise to in the future repay party A the equivalent sum given, plus an additional sum of money (here, $20,000).  That description is the literal definition of a loan that Probate Advance itself gives this Court in its own brief: “A loan of money is the delivery of a sum of money to another under a contract to return at some future time an equivalent amount.” (Supp. Brf., at p. 2, ln. 28 to p. 3, ln. 2. [Citing Southwest Concrete Products v. Gosh Construction Corp. (1990) 51 Cal.3d 701, 706.].)  This is confirmed by the Civil Code: “A loan of money is a contract by which one delivers a sum of money to another, and the latter agrees to return at a future time a sum equivalent to that which he borrowed.”  (Civ. Code, § 1912.) 

But there is more. Not only does the return of funds to Probate Advance constitute a loan, but the additional funds due to Probate Advance constitute realized interest. No matter how hard Probate Advance strains to avoid that categorization, it does not even matter, because “[a] loan of money may or may not provide for interest payments.”  (Great American Ins. Co. v. National Health Services, Inc. (1976) 62 Cal.App.3d 785, 792.)  Specifically in this case, the transactions at issue equate to $30,000 in realized interest for a 659-day loan (at the latest), or $45.53 in interest a day, or $16,572.92 a year, which is a realized interest rate of 55.24%.  This rate exceeds the usury laws of this state by 45.24 percentage points.

Probate Advance claims that the transaction was equivalent to a sale, but the totality of the circumstances cries out against such a categorization.  This is confirmed by caselaw cited by Probate Advance in their own brief (though conspicuously not also cited in their citation to the case): 

In all such [i.e., usury] cases the issue is whether or not the bargain of the parties, assessed in light of all the circumstances and with a view to substance rather than form, has as its true object the hire of money at an excessive rate of interest.

(Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799–800.)

The loans are grossly unreasonable

Probate Code section 11604.5(h)(1) uses the term “grossly unreasonable” without definition. Our Supreme Court tackled an argument against the breadth of discretion the term grants trial courts in a case involving the predecessor statute of Probate Code section 11604, which was incorporated into 11604 when passed by the legislature:

“Wiley next contends that section 1020.1 is unconstitutional because it is too indefinite in that the words ‘grossly unreasonable’ therein contained are not defined. He argues that those words are so indefinite as to make the application of the statute in violation of due process. Questions of negligence, unreasonable restraint of trade, probable cause, reasonable doubt, and preponderance of evidence and the like are usually questions of fact. The term ‘grossly unreasonable’ would seem to fall within the same category, and as here applied presents a question of fact. The section is therefore not so indefinite as to make its application a violation of due process.”  (Burchell v. Strube (1955) 43 Cal.2d 828, 837.)

Since “grossly unreasonable” is the legal standard necessary to rescind or modify the parties’ agreement, and since that term has been held to be purposely broad, trial courts can look for guidance in cases where agreements have been found to be grossly unreasonable, but need not rely upon them as long as a factual determination shows substantial evidence of objectively unequal terms in the agreement, or unequal circumstances leading up to the agreement (i.e. completely one-sided bargaining power). 

Because the realized interest is so high and violates state usury laws, the Court should find these loans grossly unreasonable pursuant to Probate code section 11604.5.  Therefore the Court should order distribution to Probate Advance of only the principle amount loaned, plus ten percent interest per annum.

Appearances:

The court is open to the public for court business. The court is also conducting hearings via Zoom videoconference.

Meeting ID: 161 956 1423

Passcode: 137305