AB586 - Professional fiduciaries.

Amended IN Senate August 18, 2025 Amended IN Senate July 09, 2025 Amended IN Senate June 26, 2025 Amended IN Assembly April 21, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 586 Introduced by Assembly Member Flora February 12, 2025 An act to amend Sections 6501, 6534, 6561, and 6584 of, and to add Article 7 (commencing with Section 6593) to Chapter 6 of Division 3 of, the Business and Professions Code, to amend Section 13401 of the Corporations Code, and to amend Section 60.1 of, to add Part 9.5 (commencing with Section 310) to Division 2 of, and to repeal Section 2340 of, the Probate Code, relating to professional fiduciaries. LEGISLATIVE COUNSEL'S DIGEST AB 586, as amended, Flora. Professional fiduciaries. Existing law, the Professional Fiduciaries Act, establishes, until January 1, 2028, the Professional Fiduciaries Bureau, and requires the bureau to license and regulate professional fiduciaries. The act defines various terms for these purposes. The act requires the bureau to maintain specified information in each licensee’s file, and requires a licensee to annually file with the bureau a statement under penalty of perjury containing specified information, including among other things, any licenses or professional certificates held by the licensee. Existing law, the Moscone-Knox Professional Corporation Act, defines and regulates professional corporations. The act provides that a professional organization renders professional services that may be lawfully rendered only pursuant to a license, certification, or registration authorized by, among others, the Business and Professions Code pursuant to a certificate of registration issued by the governmental agency regulating the profession, as specified. This bill would authorize licensees to organize professional fiduciary professional corporations to provide professional fiduciary services, and would prescribe requirements and regulations for those professional corporations to provide fiduciary services. The bill would require a professional fiduciary professional corporation to register with the Secretary of State, as provided, and would require the corporation, its officers, directors, shareholders, and employees rendering professional fiduciary services to be in compliance with the Moscone-Knox Professional Corporation Act. The bill would require the information maintained by the bureau in each licensee’s file, and the annual statement filed by a licensee, to include additional information, including information related to whether the licensee is serving with or under a professional fiduciary corporation. By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program. Existing law provides that authorizes the bureau to suspend, revoke, deny, or impose other disciplinary action on a professional fiduciary license may be suspended, revoked, denied, or other disciplinary action may be imposed for specified causes, including, among other things, violating specified laws, rules, or regulations pertaining to duties or functions of a professional fiduciary. This bill would add to that list of causes the failure of a licensee to, in a timely manner, respond to inquiries or produce documents requested by the bureau, including inquiries and documents related to a professional fiduciary professional corporation. Existing law generally regulates probate, guardianship, conservatorship, and other protective proceedings. Existing law defines “professional fiduciary” for these purposes. This bill would include a professional fiduciary professional corporation, described above, in that definition of “professional fiduciary.” Existing law prohibits a superior court from appointing a person to carry out the duties of a professional fiduciary unless that person holds a valid, unexpired, and unsuspended license as a professional fiduciary or is exempt from those licensing requirements, as specified. This bill would repeal those provisions and would instead prohibit a superior court from appointing a professional fiduciary as, or permitting a professional fiduciary to continue as, a guardian, conservator, personal representative, or trustee, unless the professional fiduciary satisfies one of specified requirements. Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. Section 6501 of the Business and Professions Code is amended to read: 6501. As used in this chapter, the following terms have the following meanings: (a) “Act” means this chapter. (b) “Bureau” means the Professional Fiduciaries Bureau within the Department of Consumer Affairs, established pursuant to Section 6510. (c) “Client” means an individual who is served by a professional fiduciary. (d) “Department” means the Department of Consumer Affairs. (e) “Licensee” means a person who is licensed under this chapter as a professional fiduciary. (f) (1) “Professional fiduciary” means any of the following: (A) A person who acts as a guardian or conservator of the person, the estate, or the person and estate, for two or more individuals at the same time who are not related to the professional fiduciary or to each other. (B) 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. (C) A person who acts as a trustee, agent under a durable power of attorney for health care, or agent under a durable power of attorney for finances, for four or more individuals, at the same time. (D) “Professional fiduciary” also includes a A person acting as a professional fiduciary practice administrator, appointed pursuant to Section 2469 or 9765 of the Probate Code. (2) In counting individuals under paragraph (1) to determine whether a person is a professional fiduciary: (A) Individuals who are related to the fiduciary shall not be counted. (B) All individuals who are related to each other shall be counted as one individual. (C) All trustors who are related to each other shall be counted as one individual, and neither the number of trusts nor the number of beneficiaries of those trusts shall be counted. (3) For purposes of this subdivision, “related” means related by blood, adoption, marriage, or registered domestic partnership. (4) “Professional fiduciary” does not include any of the following: (A) A trust company, as defined in Section 83 of the Probate Code. (B) An FDIC-insured institution, or its holding companies, subsidiaries, or affiliates. For the purposes of this subparagraph, “affiliate” means an entity that shares an ownership interest with, or that is under the common control of, the FDIC-insured institution. (C) A public agency, including the public guardian, public conservator, or other agency of the State of California or of a county of California or a regional center for persons with developmental disabilities, as defined in Section 4620 of the Welfare and Institutions Code. (D) A nonprofit corporation or charitable trust that is described in Section 501(c)(3) of the Internal Revenue Code and that satisfies all of the following requirements: (i) Is an organization described in Section 509(a)(1), Section 509(a)(2), or Section 509(a)(3) of the Internal Revenue Code. (ii) Has been in existence for at least five years. (iii) Has total institutional funds as described in subdivision (e) of Section 18502 of the Probate Code according to its most recent audited financial statement with a value of at least two million dollars ($2,000,000) net of encumbrances. (iv) Is acting as a trustee, incidental to the purposes for which it was organized, of a trust that meets at least one of the following conditions: (I) It is a trust from which annual distributions are limited to income, a sum certain, or a fixed percentage of the net fair market value of the trust assets as described in Section 664(d) of the Internal Revenue Code governing charitable remainder trusts. (II) It is a trust from which annual distributions are limited to a guaranteed annuity or a fixed percentage of the fair market value of the property as described in Section 2055(e)(2)(B) or Section 2522(c)(2)(B) of the Internal Revenue Code. (III) It is a trust from which annual distributions are limited to income, including a pooled income fund from which annual distributions are limited to income as described in Section 642(c)(5) of the Internal Revenue Code governing pooled income funds. (IV) It is a trust as to which the value of the charitable interest was presently ascertainable upon creation of the trust and deductible for federal gift, estate, or income tax purposes under the Internal Revenue Code as in effect prior to enactment of the federal Tax Reform Act of 1969 (Public Law 91-172). (E) A person employed by, or acting as an agent on behalf of, an entity or agency described in subparagraph (A), (B), (C), or (D) who is acting within the course and scope of that employment or agency, and a public officer of an agency described in subparagraph (C) acting in the course and scope of official duties. (F) A person whose sole activity as a professional fiduciary is as a broker-dealer, broker-dealer agent, investment adviser, or investment adviser representative registered and regulated under the Corporate Securities Law of 1968 (Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code), the Investment Advisers Act of 1940 (15 U.S.C. Sec. 80b-1 et seq.), or the Securities Exchange Act of 1934 (15 U.S.C. Sec. 78a et seq.), or involves serving as a trustee to a company regulated by the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.). (g) “Committee” means the Professional Fiduciaries Advisory Committee, as established pursuant to Section 6511. SEC. 2. Section 6534 of the Business and Professions Code is amended to read: 6534. (a) The bureau shall maintain the following information in each licensee’s file, shall make this information available to a court for any purpose, including the determination of the appropriateness of appointing, continuing the appointment of, or removing, the licensee as a conservator, guardian, trustee, personal representative of decedent’s estate, agent under a durable power of attorney for health care, agent under a durable power of attorney for finances, or a position arising from an appointment as a professional fiduciary practice administrator, and shall otherwise keep this information confidential, except as provided in subdivisions (b) and (c) of this section: (1) The names of the licensee’s current conservatees, wards, principals under a durable power of attorney for health care, or principals under a durable power of attorney for finances, and the names of the trusts or estates currently administered by the licensee, whether the case is court supervised or noncourt supervised or whether the licensee is appointed with or serving under a professional fiduciary professional corporation. (2) The aggregate dollar value of both of the following: (A) All assets currently under the licensee’s supervision as a professional fiduciary. (B) All assets currently under the licensee’s supervision for which the licensee is appointed with or serving under a professional fiduciary professional corporation. (3) The licensee’s current addresses and telephone numbers for their place of business and place of residence. (4) Whether the licensee has ever been removed for cause as a conservator, guardian, trustee, personal representative of a decedent’s estate, agent under a durable power of attorney for health care, or agent under a durable power of attorney for finances, or has ever resigned or settled a matter in which a complaint against the licensee has been filed with the court as a conservator, guardian, trustee, personal representative of a decedent’s estate, agent under a durable power of attorney for health care, or agent under a durable power of attorney for finances, or a position arising from an appointment as a professional fiduciary practice administrator, in a specific case. (5) Whether a professional fiduciary professional corporation for which the licensee is appointed with or serving under, has ever been removed for cause or has ever resigned or settled a matter for which a complaint against the professional fiduciary professional corporation or the licensee has been filed with the court and the circumstances for the removal, resignation, or settlement and the case names, court locations, and case numbers associated with the removal or resignation. (6) The circumstances causing a removal or resignation described in paragraph (4) and the case names, court locations, and case numbers associated with the removal or resignation. (7) The case names, court locations, and case numbers of all conservatorship, guardianship, trust, or other estate administration cases, including cases for which the licensee is appointed with or serving under a professional fiduciary professional corporation, that are closed for which the licensee served as the conservator, guardian, trustee, agent under a durable power of attorney for finance or health care, personal representative of a decedent’s estate, or professional fiduciary practice administrator, whether the case is court supervised or noncourt supervised. (8) Information regarding any discipline imposed upon the licensee by the bureau. (9) Whether the licensee has filed for bankruptcy or held a controlling financial interest in a business that filed for bankruptcy in the last 10 years. (10) Whether the licensee is appointed with or serving under a professional fiduciary professional corporation, and the name of the professional fiduciary professional corporation. (b) The bureau shall make the information in paragraphs (2), (4), (5), (8), (9), and (10) of subdivision (a) available to the public. (c) The bureau shall also publish information regarding licensees on the internet as specified in Section 27. The information shall include, but shall not be limited to, information regarding license status and the information specified under subdivision (b). SEC. 3. Section 6561 of the [Text truncated for display. Full text available on Congress.gov.]