Some recent changes in the Probate Code have made it more onerous to sell a conservatee’s current or former personal residence in a conservatorship of the estate. The intent of the legislature was to protect the conservatee regarding making sure that the conservatee’s placement is the least restrictive. The presumption is that the conservatee’s personal residence is the least restrictive placement and there is a desire to preserve it for the conservatee. While I recognize the importance of protecting the conservatee and their assets, the addition of more steps make a conservatorship process just that more expensive and causes additional delays. It just reinforces the importance of having a complete estate plan with a trust and powers of attorney!
A recent conservatorship matter that I handled forced me to quickly dive into the newer requirements regarding the sale of the conservatee’s personal residence. In my matter, the conservatee was residing in a care facility and he was going to remain there for the rest of his life. He owned his residence but had minimal other assets or income to pay for the maintenance of the house or pay for in-home care. And the monthly fee for the care facility exceeded his income. I represented a child of the conservatee and the entire family was on board with the need for the conservatorship and to have my client appointed as conservator of the person and estate. It is important to note that the conservatee had not executed any estate planning documents.
We requested independent powers in the initial petition to sell the personal residence and I included all the allegations required by the code, but the court denied the request as being premature. It is noted in treatises like CEB’s California Conservatorship Practice that it is unlikely that a court will grant a conservator the authority to sell the personal residence in the initial petition. After my client was appointed conservator of the estate, I then prepared an ex parte petition which complied with the requirements of Probate Code Section 2540(b), requesting authority under Probate Code Section 2541.5 to sell the residence, and requesting authority under Probate Code Section 2591 to sell the real property without court confirmation.
The requirements of Probate Code Section 2540(b) are that the court be notified that a sale is proposed, and it has been discussed with the conservatee. The notice must state whether the conservatee supports or opposes the sale, why the sale is necessary, whether the conservatee can live in the home, and whether other alternatives, including in-home care services, are available. The court may order that the probate court investigator report back to the court what the wishes are of the conservatee. The conservator must not commit any conservatorship resources towards the sale of the residence until this notice has been provided. In my case, there was an urgent need to sell the personal residence, so I included this notice to the court in my ex parte petition requesting the other authority. Arguably the requirements of Probate Code Section 2540(b) were met in my initial petition, but I decided to address them anyway in my second filing to cover all basis.
The next step was to request authority under Probate Code Section 2541.5 to sell the conservatee’s residence. The court must find that there is clear and convincing evidence that the conservator demonstrated a compelling need to sell the residence for the benefit of the conservatee. I reiterated the arguments I made as to why the sale is necessary when addressing Probate Code Section 2540. In my matter, there were no other assets to pay for the conservatee’s care, his house, or the costs of administration of the conservatorship. The conservatee’s income only covered a portion of the care facilities costs. The use of the real property as a rental would have been burdensome on the conservator and the conservatee could potentially lose out on the capital gains tax exclusion if the house was rented for several years before it was sold.
My last request was for authority to sell the personal residence at a private or public sale without court confirmation under Probate Code Section 2591. I included this request so that the sale could attract more buyers since they would be no concern about an extended escrow period and risk of being outbid at a court confirmation. In this request I had to show the court that Probate Code Sections 2352.5, 2540, 2541, and 2541.5 were addressed by the conservator. My client had filed a Determination of Conservatee’s Appropriate Level of Care showing that the current placement was appropriate for the conservatee. The probate court investigator in their report, the court appointed attorney in their report, and the conservatee’s doctor in the Capacity Declaration all agreed that the current placement of the conservatee was the most appropriate. In fact, the court appointed attorney’s report stated that the conservatee agreed with the sale of his residence. These documents all showed compliance with Probate Code Section 2352.5. The other code sections were already previously addressed in my petition. The other required showings under Probate Code Section 2591 were that the sale was in the best interest of the conservatee (already addressed), that the listing price is at least 90% of the appraised value of the real property (I attached a completed Inventory and Appraisal showing the value), and an assurance that my client would file the final escrow statement within 15 days of the close of escrow.
A petition containing the request to sell the conservative’s personal residence and to sell it without court confirmation must be served on all the same individuals that an initial Petition for Probate Conservator must be served on. Since I was requesting these powers ex parte, I needed to comply with all the ex parte notice requirements as well. My request for approval ex parte was bolstered by the fact that everyone had already received notice of the request to sell the property in the initial filing and no one objected at the hearing appointing the conservator.
The county that I was in set a hearing and I waited to see if the court was going to require oral arguments. It didn’t and the ex parte petition was approved. We were able to receive an order granting all our requests. I believe the filing of a report of non-opposition by the court appointed counsel helped with the approval of the petition.
If you need help selling a conservatee’s residence in a conservatorship proceeding, give us a call and we can help.