BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1550 
                                                                  Page  1

          Date of Hearing:   August 16, 2006

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                   Judy Chu, Chair

                  SB 1550 (Figueroa) - As Amended:  August 7, 2006 

          Policy Committee:                              JudiciaryVote:6-3
                        Business and Professions              7-1

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill establishes the Board of Professional Fiduciaries  
          (Board) within the Department of Consumer Affairs (DCA) for the  
          purpose of licensing and regulating professional fiduciaries.  
          Specifically, this bill:

          1)Establishes a licensing and disciplinary scheme for  
            "professional fiduciaries" and defines the term as a person  
            who acts as a conservator, guardian, trustee, personal  
            representative, agent under a durable power of attorney for  
            health care, or agent under a durable power of attorney for  
            finances, for two or more persons at the same time who are not  
            related to the professional fiduciary by blood, adoption,  
            marriage, or registered domestic partnership.  

          2)Exempts from the licensing requirements financial institutions  
            and their employees, public agencies and their employees,  
            attorneys licensed with the State Bar, and certified public  
            accountants.

          3)Establishes the Board (located in DCA), and its membership,  
            administration and funding.  

          4)Allows the Board to adopt regulations pursuant to the  
            Administrative Procedures Act, as specified, and requires the  
            Board, by regulation, to adopt a Professional Fiduciaries'  
            Code of Ethics, which shall comply with all statutory  
            requirements, as well as requirements developed by the  
            Judicial Council and the courts.

          5)Establishes qualifications for licensure, including submitting  








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            to a criminal background check, passing a licensing  
            examination administered by the Board, having specified  
            experience, and completing pre-licensing education (and  
            continuing education for license renewals), as specified.  

          6)Requires that licensees file a $100,000 to $1 million surety  
            bond with the Board, which shall be payable to any person  
            damaged by the fiduciary.

          7)Prohibits, on and after January 1, 2008, a person from holding  
            himself or herself out to the public as a professional  
            fiduciary unless he or she is licensed as a professional  
            fiduciary under the Professional Fiduciary Act (Act).

          8)Sunsets the Statewide Registry and the local court registry  
            for professional fiduciaries on January 1, 2008, and sunsets  
            the Board on January 1, 2011 unless otherwise extended.

          9)Makes enactment of the bill contingent on enactment of AB  
            1363, SB 1116, and SB 1716.

           FISCAL EFFECT  

          The DCA estimates the following costs and revenues to support  
          the operations of the new Board:

          1)Costs: $550,000 (including $40,000 in start-up costs) in  
            2006-07; $750,000 in 2007-08; and $650,000 in 2008-09 and  
            thereafter. Costs cover an executive director and four support  
            positions and all other costs associated with board meetings,  
            facilities, and examinations, and enforcement.

          2)Revenues: $715,000 in 2006-07 (assumes 1,300 licensees and an  
            initial fee of $550); $789,000 in 2007-08; and $731,000 in  
            2008-09 and thereafter.

           COMMENTS  

           1)Background  . An in-depth investigatory series published in  
            November 2005 by the Los Angeles Times, "Guardians for  
            Profit," exposed the many failings of California's  
            conservatorship system for elderly and dependent adults. The  
            Times' articles included stories of private conservators who  
            misuse the system and get themselves appointed inappropriately  
            and then either steal or mismanage the money their  








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            conservatees spent a lifetime earning; public guardians who do  
            not have the resources to help truly needy individuals;  
            probate courts which do not have sufficient resources to  
            provide adequate oversight to catch the abuses; and a system  
            that provides no place for those in need to turn to for help.   
            A Times editorial, which ran at the end of the series, called  
            on both the courts and elected officials to "turn this abusive  
            system into the honest guardianship it was meant to be."

           2)Purpose  . According to the author, "conservators serve one of  
            the most vulnerable and rapidly growing segments of the  
            state's population:  the elderly.  Professional fiduciaries  
            must make a broad range of complex decisions that seriously  
            affect conservatees, including where he or she lives, home  
            care arrangements, major medical decisions, and control of all  
            of the conservatee's financial matters from bank accounts to  
            investment and tax decisions.  The conservatee or their family  
            or friends may be unable to evaluate the competency or honesty  
            of the conservator, the quality of the care received, or  
            articulate concerns regarding his or her care."  The author  
            indicates that this bill will "bring greater accountability  
            and oversight by licensing and regulating conservators,  
            guardians and trustees (professional fiduciaries) by a  
            regulatory board within DCA."

           3)Sunrise Review  .  This bill underwent "sunrise review" by the  
            Joint Committee on Boards, Commissions, and Consumer  
            Protection (Joint Committee) in December 2005.  The Joint  
            Committee reviewed the need for the Board and the problems  
            surrounding the existing system for conservatorships.  In  
            April 2006, the Joint Committee concluded that the proposal to  
            create a Board met the threshold for licensure ("the potential  
            for serious injury or death, or severe financial harm") and  
            recommended that the Board be established to protect  
            California consumers. 

           4)Related Legislation  . SB 1116 is part of a package of four  
            bills intended to address deficiencies with the  
            conservatorship system. 

             a)   SB 1116 (Scott), pending in the Assembly, creates a  
               presumption that the least restrictive, appropriate setting  
               for a conservatee is their personal residence and increases  
               requirements for the sale of a conservatee's residence. 









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             b)   SB 1716 (Bowen), pending on this committee's Suspense  
               file, expands court review of conservatorships and allows  
               for ex parte communications in cases involving fiduciaries  
               and conservatees.

             c)   AB 1363 (Jones), pending in the Senate Appropriations  
               Committee, includes several provisions to expand and  
               improve court oversight of conservatorships.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081