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PFAC Advocating for its Members as the Legislature Considers the Future of the Professional Fiduciaries Bureau
By Jerry Desmond, PFAC Legislative Advocate, Desmond & Desmond LLC
March 6, 2018

Your association continues to work pro-actively on behalf of its members as the State Legislature considers whether the Professional Fiduciaries Bureau will continue past its statutory sunset on January 1, 2019 [as set forth in Section 6510 of the Business and Professions Code], and whether any revisions will be made to the licensure act.

Most recently, PFAC Legislative Committee co-chair Meredith Taylor attended and presented the association’s position in the March 5 joint hearing of the Senate Committee on Business, Professions and Economic Development and the Assembly Committee on Business and Professions.

Her testimony emphasized the association’s strong support for the continuation of the Bureau, noting PFAC’s co-sponsorship of the legislation that established the Act and the Bureau in state law [SB 1550 – Figueroa, Chapter 491, Statutes of 2006].

Ms. Taylor also confirmed the position adopted by the PFAC board of directors that the Act should be amended to:

  • Require licensure and state oversight of personal representatives of decedents’ estates, so that the protection of consumers would be enhanced;
  • Clarify that the limited exception for enrolled agents applies – as intended – when only when the person is acting within the scope of his or her practice before the Internal Revenue Service; and
  • Provide for the opportunity for the licensure of entities, so that the consumer would not have the additional cost and inconvenience of returning to an attorney to amend estate planning documents to name replacement successor trustees or successor agents under durable powers of attorney for finance upon the death or incapacity of the first-named.

Two official documents set the table for the March 5 hearing in the State Capitol:

  • The Bureau’s Sunset Review Report to the Legislature – for the 320-page report: click here
  • The legislative committees’ background paper – for the 18-page paper: click here
  • The introduction of legislation to extend the statutory life of the Bureau – for AB 3144: click here

The key issues that were identified by the Senate and Assembly Committees, the outcomes following the March 5 hearing, and the anticipated next steps where pertinent:

Bureau Fund Condition

The committees agreed with the recommendation in the background paper:

“The Bureau should reconsider taking a look at licensing fees to ensure a proper reserve.”

We do not anticipate a push to raise the licensure fees at this time. The questions and answers between committee members and staff focused on the desire to further increase the number of licensees. The number of active licensees has increased fifteen percent since 2014.

Licensure of Personal Representatives of a Decedent’s Estate

The committees agreed with the recommendation in the background paper:

Business and Professions Code Section 6501 should be reviewed by the Bureau to determine if consideration should be given to require licensure of a personal representative of a decedent’s estate as defined in Section 58 of the Probate Code, for two or more individuals at the same time who are not related to the professional fiduciary or to each other. This should be accompanied by a reasonable timeframe for these personal representatives to come into compliance.”

We anticipate further meetings and discussions with the legislative committees, the Department of Consumer Affairs and the Bureau to further review this issue and to determine if this will be included in the measure that would extend the sunset on the Bureau [AB 3144].

Enrolled Agents

The committees agreed with the recommendation in the background paper:

“In regards to enrolled agents, consideration should be given, by the Bureau, to amend Business and Professions Code Section 6530 to clarify that the exemption from the Act applies to a person enrolled as an agent to practice before the Internal Revenue Service who is only acting within the scope of practice pursuant to Part 10 of Title 31 of the Code of Federal Regulations.”

We anticipate another meeting with the committees, the Department of Consumer Affairs and the Bureau to further review this issue and to determine if this will be included in the measure that would extend the sunset on the Bureau [AB 3144].

Status of the BreEZe Implementation

Consistent with the recommendation in the hearing’s background paper, the Bureau updated the Committees about the current status of its implementation of BreEZe. The bureau and department explained that the Bureau would be making a decision on whether the BreEZe system or some other IT system would be utilized for an update. The committees appeared to be comfortable with this approach.

Licensure of Entities

The committees agreed with the recommendation in the background paper:

“As an initial step, the Bureau obtain [sic] information on the forms of the business entities of current licensees, as well as the types of business entity they would desire if it were to be allowed. The Bureau should conduct an informal survey of licenses to obtain information on the forms of the business entities of current licensees, as well as the types of business entity they would desire if it were to be allowed.”

The Bureau noted to the committees that it is open to conducting this survey if the committees desires for it to do so and, appreciates the desire to provide for continuity of care, and at the same time, notes:

  1. The importance of the one-on-one relationship between the licensed professional fiduciary and his or her client;
  2. The necessity of mitigating any risks that would be presented by licensure of entities including a requirement that the entities maintain insurance;
  3. The necessity of ensuring that the Bureau would have sufficient enforcement authority; and
  4. The necessity of ensuring that any new costs to the Bureau would be addressed.

We anticipate further discussions and meetings with the committees, Bureau and Department to confirm whether a survey will be conducted, as well as the contents and structure of the survey.

Continuation of the Bureau

The committee agreed with the recommendation in the background paper:

“Recommend that the licensing and regulation of Professional Fiduciaries continue to be regulated by the Bureau in order to protect the interests of the public, and be reviewed again in four years.”

Additional Issues

PFAC is also considering the additional issues that the Bureau indicated in the hearing that it is considering as amendments to the Act. They are:

  1. To prohibit a licensed professional fiduciary from charging clients for his or her contacts with the Bureau;
  2. To mandate that a licensed professional fiduciary inform the Bureau when he or she is removed from a case, or resigns; and
  3. To provide a pathway to licensure [and remove a barrier to licensure that could increase the number of licensees] by authorizing relevant experience to be sufficient without an educational degree.

Next Steps

Now that the legislative Sunset Review Hearing has been held, the focus will shift towards AB 3144 as the legislation that would extend the life of the Bureau and perhaps enact one or more revisions to the Act.

AB 3144 should be considered first in the Assembly Committee on Business and Professions by mid-May of this year.

PFAC’s leadership and its legislative committee will continue to be engaged as the measure is considered and developed through the legislative process in the State Capitol.

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