Estate of Anita Louise Lee

Case Number

24PR00169

Case Type

Hearing Date / Time

Mon, 05/19/2025 - 08:30

Nature of Proceedings

1. Petition for Final Distribution; 2. Motion for Trial Preference

Tentative Ruling

Probate Notes:

Appearances required.

The following is noted for the Court at the hearing:

Evidentiary Hearing.  The petition filed by Patricia A. Johnson on March 26, 2025, received written objection by Don Harold Lee on May 8, 2025, which places this matter at issue requiring Evidentiary Hearing to resolve. (In re Estate of Lensch (2009) 177 Cal.App.4th 667, 676; Conservatorship of Farrant (2021) 67 Cal.App.5th 370, 377.)

Unreasonable request for reimbursement.  According to the allegations in the petition, disbursement schedule in the accounting, and the list of expenses paid by the Personal Representative in Exhibit G to the petition, it appears the Petitioner/Personal Representative not only employed her family members to do much of the work preparing the real property for sale, but fed those family members and herself during the process.  Meals are not “necessary expenses in the care, management, and preservation of the estate. (Prob. Code, §11004.)

Unreasonable Extraordinary Fees for Attorney.  Both Personal Representative and her attorney request extraordinary fees.  From the billing statements submitted in support of attorney’s request, it is plain that the attorney is requesting the fees for hours spent on the sale of the real property, and (surprisingly) for the preparation of the Final Account. These are not extraordinary tasks.

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. The standard courts use is “legal services in connection with the sale of property held in the estate.” (CRC, Rule 7.703(c)(1).)

For example, the Court may consider that the statutory fee calculated on an estate where the decedent's personal residence that was sold for $650,000 (the statutory fee would be $16,000) is reasonable compensation, because no “legal services” were required to effectuate the sale of the property, other than brief contract review and associated tasks, and 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.”].)

Unreasonable Extraordinary Fees for Personal Representative.  The bulk of the fee request for the personal representative appears to be for driving back and forth from her home to the real property in this estate, and for hours spent cleaning up the real property readying it for sale. This amounts to a request for the Court to pay for travel to and from a job the Personal Representative volunteered for, and then paid others to perform (at least in part).

Ordinary services by a representative include services performed in locating and assembling estate assets, paying claims, collecting rents, leasing property, accounting, and making payments necessary to complete the administration. If the representative chooses to employ an agent to perform services that are attributable to carrying out the representative’s ordinary duties, the fees for those services will be charged against the representative’s ordinary compensation. For example, preparing the final accounting is considered part of the representative’s duties; therefore, if the representative hires an accountant to prepare the accounting, the accountant’s fees will be paid from the representative’s ordinary compensation. (Estate of Billings (1991) 228 Cal.App.3d 426, 432.)

While the court could allow some extraordinary fees for the time it took the Personal Representative to drive from such a far distance to the estate property, the request should be weighed against the fact that the Personal Representative employed several persons (family members at that) to do the job she is now requesting extraordinary fees for, and has also submitted a bill for the mileage driven on top of the hours spent. It is recommended the court deny all extraordinary fees as a result of that balancing.

Extreme, unexplained reserve request.  Petitioner requests $20,000 for a reserve amount despite the allegation that no taxes are owing and all debts paid.

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.)

Accordingly, if any remaining liability of the estate is so high as to require the requested amount in reserve, it is recommended the Court deem this estate not to be in a condition to be closed. 

Order a Proposed Order on Local Form.  A proposed order must be submitted with relief that matches that requested in the petition. (Local Rule 1724(b), subd.(d).)  Order must list every beneficiary and detail the shares to each, and must expressly state limitations or conditions on distribution (Prob. Code, § 11603), and must include all findings of fact necessary to close out an estate.  It is recommended the Court order petitioner use Local Form SC-6029.

Appearances:

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

Meeting ID: 161 797 5412

Passcode: 8749009