Operation Of Decedent’s Business - Estate Management - Probate - CA

Section § 9760

This section defines the rules for continuing a deceased person's unincorporated business after their death. If it's beneficial for the estate, the personal representative can keep the business running for up to six months without court approval. For extensions beyond six months, court permission is required.

To get a court order to continue or stop the business, the personal representative or any interested person can file a petition, explaining the benefits to the estate and those involved. The court will decide whether to allow the business to keep operating under certain conditions or to stop it within a set time frame.

(a) As used in this section, “decedent’s business” means an unincorporated business or venture in which the decedent was engaged or which was wholly or partly owned by the decedent at the time of the decedent’s death, but does not include a business operated by a partnership in which the decedent was a partner.

(b) If it is to the advantage of the estate and in the best interest of the interested persons, the personal representative, with or without court authorization, may continue the operation of the decedent’s business; but the personal representative may not continue the operation of the decedent’s business for a period of more than six months from the date letters are first issued to a personal representative unless a court order has been obtained under this section authorizing the personal representative to continue the operation of the business.

(c) The personal representative or any interested person may file a petition requesting an order (1) authorizing the personal representative to continue the operation of the decedent’s business or (2) directing the personal representative to discontinue the operation of the decedent’s business. The petition shall show the advantage to the estate and the benefit to the interested persons of the order requested. Notice of the hearing on the petition shall be given as provided in Section 1220.

(d) If a petition is filed under this section, the court may make an order that either:

(1) Authorizes the personal representative to continue the operation of the decedent’s business to such an extent and subject to such restrictions as the court determines to be to the advantage of the estate and in the best interest of the interested persons.

(2) Directs the personal representative to discontinue the operation of the decedent’s business within the time specified in, and in accordance with the provisions of, the order.

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Section § 9761

If someone who was part of a business partnership passes away, the court can require the remaining business partner to provide a financial report. This request is made by the person managing the deceased's estate, and the court can enforce this order by holding the partner in contempt if they don't comply.

If a partnership existed between the decedent and another person at the time of the decedent’s death, on application of the personal representative, the court may order any surviving partner to render an account pursuant to Section 15510, 15634, or 16807 of the Corporations Code. An order under this section may be enforced by the court’s power to punish for contempt.

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Section § 9762

If someone dies and was part of a business partnership, their personal representative (like an executor) can step into their role as a partner, but only if the court thinks it benefits the deceased's estate and their beneficiaries. This can continue whether the deceased was a general or limited partner, but the court might set conditions.

If there’s already a legal document (like a partnership agreement) allowing this, the personal representative has to follow those rules—unless the court decides otherwise. Without such an agreement, the court will decide what powers and responsibilities the representative has.

To get the court's approval, a petition must be filed showing it's good for the estate and beneficiaries, and everyone involved, especially surviving partners, need to be notified about the hearing.

(a) After authorization by order of court upon a showing that it would be to the advantage of the estate and in the best interest of the interested persons, the personal representative may continue as a general or a limited partner in any partnership in which the decedent was a general partner at the time of death. In its order, the court may specify any terms and conditions of the personal representative’s participation as a partner that the court determines are to the advantage of the estate and in the best interest of the interested persons, but any terms and conditions that are inconsistent with the terms of any written partnership agreement are subject to the written consent of all of the surviving partners.

(b) If there is a written partnership agreement permitting the decedent’s personal representative to participate as a partner, the personal representative has all the rights, powers, duties, and obligations provided in the written partnership agreement, except as otherwise ordered by the court pursuant to subdivision (a).

(c) If there is not a written partnership agreement, the personal representative has the rights, powers, duties, and obligations that the court specifies in its order pursuant to subdivision (a).

(d) To obtain an order under this section, the personal representative or any interested person shall file a petition showing that the order requested would be to the advantage of the estate and in the best interest of the interested persons. Notice of the hearing on the petition shall be given as provided in Section 1220. In addition, unless the court otherwise orders, the petitioner, not less than 15 days before the hearing, shall cause notice of hearing and a copy of the petition to be delivered pursuant to Section 1215 to each of the surviving general partners at his or her last known address.

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Section § 9763

This law allows the personal representative of a deceased person who was a general partner in a business to start or continue any legal action against the surviving partner that the deceased could have pursued. Additionally, if the deceased was a limited partner, their personal representative can act on their behalf according to specific rules outlined in another section of the Corporations Code.

(a) If the decedent was a general partner, the personal representative may commence and maintain any action against the surviving partner that the decedent could have commenced and maintained.

(b) The personal representative may exercise the decedent’s rights as a limited partner as provided in Section 15675 of the Corporations Code.

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Section § 9764

If an attorney dies while still practicing law, the personal representative of their estate, or anyone with an interest in the estate, can ask the court to appoint another attorney to manage the deceased’s legal practice. This new attorney is known as a 'practice administrator,' and they must be an active member of the State Bar of California.

The court decides how much notice needs to be given for the petition, but in urgent cases, notice might be skipped if the personal representative is involved. The petition must list the powers that the practice administrator will have and estimate the value of the assets they'll be overseeing, including any bank accounts.

The appointed practice administrator cannot be the attorney for the personal representative and may receive compensation from the law practice, or if those funds are insufficient, from the estate. Once their duties are finished, the practice administrator must report to the court to get their work approved and be officially released from their duties.

(a) The personal representative of the estate of a deceased attorney who was engaged in a practice of law at the time of his or her death or other person interested in the estate may bring a petition for appointment of an active member of the State Bar of California to take control of the files and assets of the practice of the deceased member.

(b) The petition may be filed and heard on such notice that the court determines is in the best interests of the estate of the deceased member. If the petition alleges that the immediate appointment of a practice administrator is required to safeguard the interests of the estate, the court may dispense with notice only if the personal representative is the petitioner or has joined in the petition or has otherwise waived notice of hearing on the petition.

(c) The petition shall indicate the powers sought for the practice administrator from the list of powers set forth in Section 6185 of the Business and Professions Code. These powers shall be specifically listed in the order appointing the practice administrator.

(d) The petition shall allege the value of the assets that are to come under the control of the practice administrator, including, but not limited by the amount of funds in all accounts used by the deceased member. The court shall require the filing of a surety bond in the amount of the value of the personal property to be filed with the court by the practice administrator. No action may be taken by the practice administrator unless a bond has been fully filed with the court.

(e) The practice administrator shall not be the attorney representing the personal representative.

(f) The court shall appoint the attorney nominated by the deceased member in a writing, including, but not limited to, the deceased member’s will, unless the court concludes that the appointment of the nominated person would be contrary to the best interests of the estate or would create a conflict of interest with any of the clients of the deceased member.

(g) The practice administrator shall be compensated only upon order of the court making the appointment for his or her reasonable and necessary services. The law practice shall be the source of the compensation for the practice administrator unless the assets are insufficient in which case, the compensation of the practice administrator shall be charged against the assets of the estate as a cost of administration. The practice administrator shall also be entitled to reimbursement of his or her costs.

(h) Upon conclusion of the services of the practice administrator, the practice administrator shall render an accounting and petition for its approval by the superior court making the appointment. Upon settlement of the accounting, the practice administrator shall be discharged and the surety on his or her bond exonerated.

(i) For the purposes of this section, the person appointed to take control of the practice of the deceased member shall be referred to as the “practice administrator” and the decedent shall be referred to as the “deceased member.”

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Section § 9765

Starting January 1, 2024, if a professional fiduciary (someone who manages another person's financial affairs or estate) dies and leaves no successor, the deceased's representative can ask the court to appoint a temporary administrator. This individual will handle the deceased fiduciary's files and responsibilities until a permanent replacement is found.

The court-appointed temporary successor, called a professional fiduciary practice administrator, manages guardianships, conservatorships, estates, and trusts the deceased was responsible for. A bond must be filed to secure their appointment, and they serve up to 45 days or until a permanent successor is appointed.

Notice of this petition and hearing must be shared with involved parties, unless an immediate appointment is needed for protection. The temporary fiduciary must report their actions and request compensation as per the deceased fiduciary’s rates, while fulfilling statutory obligations.

If appointed, it is crucial for the temporary fiduciary to notify interested parties about finding a permanent successor, either by their nomination or through court intervention if no one acts promptly. The court can extend time limits if beneficial to those involved.

(a) Commencing January 1, 2024, when a professional fiduciary is deceased and a vacancy exists, the deceased fiduciary’s personal representative, trustee, or interested person may petition for the appointment of one or more individuals, qualified to act as a professional fiduciary under the Professional Fiduciaries Act (Chapter 6 (commencing with Section 6500) of Division 3 of the Business and Professions Code), as a professional fiduciary practice administrator, to take control of the deceased professional fiduciary’s files and to be appointed as temporary successor as to those matters for which a vacancy exists as a result of the professional fiduciary’s death.

(b) The petition shall request an order appointing a professional fiduciary practice administrator as temporary successor, with all of the powers and duties held by the deceased fiduciary, in each matter in which the deceased fiduciary was acting in a representative capacity, including guardianships of the estate, conservatorships of the person and estate, decedent’s estates, court-supervised trusts, and non-court-supervised trusts.

(c) The court shall require the professional fiduciary practice administrator to file a surety bond in each matter in which the professional fiduciary practice administrator is appointed temporary successor, in the amount currently required of the deceased fiduciary or in another amount as the court deems appropriate.

(d) The court may appoint as the professional fiduciary practice administrator the professional fiduciary nominated by the deceased professional fiduciary in a writing, including, but not limited to, the decedent’s will or trust, or in the absence thereof, the person nominated by the person having legal standing to act on behalf of the deceased professional fiduciary. The court shall not make the appointment if the court concludes that the appointment of the nominated person would be contrary to the best interests of, or would create a conflict of interest with, any interested party in a matter in which the deceased fiduciary was acting in a fiduciary capacity.

(e) The appointment of the professional fiduciary practice administrator as temporary successor shall terminate, in each of the matters in which the professional fiduciary practice administrator was appointed as temporary successor, 45 days after the entry of the order appointing the professional fiduciary practice administrator, or earlier if another person is appointed.

(f) Notice of the hearing on the petition for appointment of a professional fiduciary practice administrator as temporary successor shall be given to all persons entitled to notice in each of the matters that are the subject of the petition. The court may dispense with notice if the court determines that the immediate appointment of a professional fiduciary practice administrator is required to safeguard the interests of an individual or an asset in a matter in which the deceased fiduciary was acting in a representative capacity.

(g) The professional fiduciary practice administrator shall be compensated for services provided and reimbursement of costs incurred in each matter solely from the assets of that matter subject to the provisions of the applicable document or as determined by the court, and in no event more than the incapacitated fiduciary would have been paid.

(h) The professional fiduciary practice administrator shall do all of the following:

(1) File a copy of the order appointing the professional fiduciary practice administrator as temporary successor in each of the matters in which the court appoints the professional fiduciary practice administrator as temporary successor.

(2) Take control and review all files and writings maintained by the deceased fiduciary for matters in which the deceased fiduciary was acting in a representative capacity.

(3) Within 15 days after the entry of the order appointing the professional fiduciary practice administrator as temporary successor, provide written notice to all interested parties as to each matter in which the deceased fiduciary was acting in a representative capacity who can be reasonably ascertained and located to inform those parties of the appointment of the professional fiduciary practice administrator as temporary successor. The notice shall advise the parties of the need for the appointment for a permanent successor, which shall include the following:

(A) The right of the parties to petition the court for the appointment of a permanent successor.

(B) The right of any interested party to nominate an individual to act as permanent successor, and then the obligation of the professional fiduciary practice administrator to petition for the appointment of the individual nominated, provided an interested party provides the professional fiduciary practice administrator with the name of their nominee within 15 days after the date notice was given.

(C) The ability of the professional fiduciary practice administrator, in the event that none of the interested parties act within the time prescribed above, under subparagraph (A) or (B), to petition the court for appointment of a permanent successor.

(4) Upon the court’s appointment of a permanent successor, the professional fiduciary practice administrator shall file an account and report on behalf of the deceased fiduciary for any period of time the deceased fiduciary would have been required to account, as well as for the period of time the professional fiduciary practice administrator served as temporary successor. As part of that account and report, the professional fiduciary practice administrator may request compensation both on behalf of the deceased fiduciary, for services rendered prior to their death, and on their own behalf for services rendered after the deceased fiduciary’s death as temporary successor, subject to any limitation on fees and costs that existed for the deceased fiduciary, and may request discharge and exoneration of bond. The account filed for the period during which the matter was administered by the now deceased fiduciary may be verified on information and belief.

(5) Comply with any other obligations imposed by the court.

(i) Each of the time periods prescribed in this section may be extended by the court if the court determines that good cause exists, and if the court determines that the extension is in the best interest of the minor, the conservatee, the decedent’s estate, or the current income beneficiaries under a trust, as applicable.

(j) For purposes of this section, the following definitions apply:

(1) “Professional fiduciary practice administrator” means the person appointed pursuant to this section to take over the responsibilities from the deceased fiduciary.

(2) “Vacancy” means that the instrument under which the deceased fiduciary was acting does not name a successor to fill the vacancy, the instrument under which the deceased fiduciary was acting does not provide a nonjudicial method to fill the vacancy, or a cofiduciary, authorized to act solely, was not acting with the deceased fiduciary.

(k) This section does not limit the authority granted to the court under subdivision (j) of Section 2250, Section 8523, and subdivision (e) of Section 15642.

(l) The Judicial Council shall create or revise any forms or rules necessary to implement this section no later than January 1, 2024.

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