Recently, the Legislature changed the law to attempt to make things smoother, and easier on the heirs of estates by passing a law known as the Independent Administration of Estates Act (“IAEA”). The purpose of this guide is to provide an introduction to that law, and share information that will be helpful to those attempting to navigate estate issues.
What is the Independent Administration of Estates Act
The Independent Administration of Estates Act (“IAEA”) is a probate law that can speed up “estate” administration. Put simply, probate is focused on administering the estate of the person who has passed away, called the “decedent.” But this process can famously take ages, especially for larger estates.
This is because most decisions that the administrator has to make require court approval. The administrator in charge of the estate needs to petition the court, notice all interested persons, and obtain a court order before, for instance, selling a piece of estate property.
However, the IAEA changes this so that the administrator can operate without court supervision for most actions. Instead of asking for court permission, the administrator need only give notice to interested parties, and sometimes they do not need to give notice at all.
That said, the law surrounding these petitions is still dense and unwieldy for inexperienced litigants. As such, securing the right attorney in these situations can make all the difference. At Underwood Law Firm, our attorneys are well-versed in these matters and are ready to assist.
How does Estate Administration Typically Operate?
Understanding the purpose and effect of the IAEA requires some knowledge of ordinary probate procedures in California.
In California, whether someone dies with or without a will, an “interested person” can file a petition to probate the decedent’s estate. (Prob. Code § 8000.) Usually, the interested person is a beneficiary or heir, i.e., someone who believes they will be entitled to some portion of the decedent’s estate.
Once the petition is properly filed, and notice given to all interested parties, the court will appoint a personal representative of the estate. (Prob. Code § 8400.) These administrators come in various forms depending on whether or not the decedent left a will. But regardless, each is ultimately responsible for “administering” the decedent’s estate.
This involves collecting all the estate assets, paying off claims against the estate, including taxes and charges of administration, and then distributing what remains to those persons who are entitled to it (e.g., those named in a will). (Estate of Casserly (2018) 22 Cal.App.5th 824, 839, fn. 1.)
However, this process can be quite time-consuming because “administering” the estate means operating under court supervision. For example, suppose a will directs the representative to sell a certain asset, like a house. However, the housing market at that time would render that decision objectively poor, at least financially speaking.
The representative cannot just not obey the instructions in the will. Instead, they need to petition the court first, with notice given to all parties, and obtain a court order allowing the representative to disobey the will. (Prob. Code § 10002.) In other words, the administrator must usually ask for court permission before taking most actions.
How does Estate Administration Work Under the IAEA?
With the basics of normal estate administration out of the way, the function of the IAEA now makes more sense. Rather than forcing the administrator to constantly ask the court to take certain actions, the administrator is instead free to administer the estate on their own, without court supervision.
For example, an IAEA administrator can simply sell the estate’s real property, provided they give only notice of their decision to do so. (Prob. Code § 10511.) Some actions don’t even require notice at all. For example, the administrator can enter into contracts with a length of less than two years or make repairs and improvements without giving notice. (Prob. Code §§ 10532, 10562.)
Overall, though, the IAEA is designed to speed up the process at which a probate estate is administered. By removing court supervision from most actions, the administrator can operate at a rapid pace.
How does a Litigant Invoke the IAEA?
Given the benefits of the IAEA, some litigants may wonder how its provisions can be invoked or “turned on” for a particular probate case.
Here, there are two options. IAEA can be requested when the initial probate petition is filed, or an IAEA request can be filed separately once estate administration is already underway. (Prob. Code § 10450.)
In this request, the petitioner must request “full authority” or “limited authority” under the IAEA. The main difference between these two is that limited authority administrators still need court supervision for a few, critical actions, like selling real property or encumbering real property. (Prob. Code § 10403.)
Regardless, once the petition is filed, the court has to decide whether to allow the IAEA administration to proceed. Under the Probate Code, the court has to allow administration under the IAEA, unless there’s an objection. (Prob. Code § 10452.)
The objection can be from any “interested person,” but it will only be sustained (e.g., upheld by the court) if there’s “good cause” for not allowing administration under the IAEA. What constitutes good cause will vary from case to case, but a classic example is if the will itself provides that the estate should not be administered under the IAEA. (Prob. Code § 10404.)
When Must There Be Court Supervision Under the IAEA?
Even though the IAEA is designed to reduce the amount of court supervision over administrator actions, there are still a few decisions that require petitioning the court, even if the estate is being administered under the IAEA.
Those actions are set out in Probate Code section 10501. But all of them have a common theme of falling into the “conflict of interest” category. For example, the first action listed is “allowance of the person representative’s compensation.”
This makes sense. While personal representatives are entitled to compensation, especially where the estate is large and has multiple creditor claims and pending litigation, the personal representative is not allowed to sign off on an egregious sum for compensation from estate funds without court approval.
Another such example is for the sale of estate property to the personal representative themselves, or their attorney. Again, the justification for this decision is that there is simply too great a conflict of interest to abdicate court supervision.
How the Lawyers at Underwood Law Firm Can Help
Real property disputes are complicated enough on their own. Adding the element of probate makes things even more difficult, as emotions run high and tempers can flare between family members. For potential litigants, this specter can be quite the barrier to entry for asserting their rights.
As each case is unique, potential probate petitioners would be well-served to seek experienced counsel familiar with the intricacies of both partition and probate law, especially as they relate to co-ownership disputes. At Underwood Law Firm, our knowledgeable attorneys are here to help. If you have found yourself in one of these situations, please do not hesitate to contact our office.