Confusion in Fiduciary Laws Signals a Need for Reform

by Ralph E. Hughes

California law long had a relatively simple approach to identifying the entities and the individuals that could be permitted to conduct the business of acting as trustees, executors, administrators, guardians, and conservators of estates. The rule for entities was that the only entities that could serve in those positions were corporations and the only corporations that could do so were banks and trust companies.¹ There was an absence of rules for individuals. Any individual could conduct the business of acting as trustee of trusts, or as executor, administrator, guardian, or conservator of any number of estates.

The historic approach reflected the state’s interest in protecting wards and beneficiaries. A bank or a trust company—a limited liability entity with an unlimited lifespan—was empowered to exercise extensive fiduciary powers over estates in probate court and trusts only if it was subject to statutes and regulations that protected beneficiaries.² At the same time, individuals—often but not always attorneys or Certified Public Accountants (“CPAs”)—were permitted to act as trustees, executors, administrators, guardians, and conservators of estates in any number of cases without being subject to any specific statute or regulation directed at their general ability to act as a fiduciary or their financial ability to make wronged beneficiaries whole. However, their lifespans were limited and their individual liability to beneficiaries was unlimited.

The historic approach changed with respect to individuals in 2006 when the legislature adopted the Professional Fiduciaries Act,³ which defined a “professional fiduciary” as a person who acts as trustee or agent “for more than three individuals, at the same time,”⁴ or acts as executor, administrator, conservator of an estate, or guardian of an estate for more than two or three non-family members (depending on the situation) at the same time.⁵ The Act also required most professional fiduciaries (but not attorneys, CPAs, or enrolled agents acting within the scope of their licenses) to have specific qualifications and to be licensed, regulated, and subject to continuing educational obligations.⁶ Once the Act came into effect, the only individuals who could conduct the business of acting as a trustee or as an appointed fiduciary in the Probate Court for more than a few people were licensed individual professional fiduciaries, attorneys, and, with some limitations, CPAs and enrolled agents.⁷

The historic approach changed with respect to entities in 2011, when the Legislature adopted Financial Code section 1553, subdivision (b), authorizing law and accountancy corporations to act as trustees of trusts “established by them for their respective clients” if no “member” of the corporation engages in “advertising for trust business in this state.”⁸ With the enactment of this provision, California law for the first time authorized an entity with an unlimited lifespan to act as a trustee without also being subject to regulation directed specifically to the entity’s qualifications to act as a trustee or to make wronged beneficiaries whole, such as the regulations that govern banks and trust companies.⁹

This article examines the laws governing which ind/Users/Allie/Desktop/TEQ Issue 31-2.pdfividuals or entities are authorized to conduct the business of acting as trustees or as executors, administrators, guardians, or conservators of estates.¹⁰ It discusses how the laws have developed over time, sometimes without reference to—and in conflict with—existing laws and how conflicting laws appear to lead to confusion in their application. It illustrates how the web of laws can generate confusion. For example, individuals and entities seeking to act as fiduciaries of trusts and estates might find themselves subject to rules found in the Financial Code,¹¹ the Probate Code,¹² the Business and Professions Code,¹³ and the California Code of Regulations.¹⁴

Without seeking to resolve the several areas of conflict and confusion, the article examines risks that the conflict and confusion generate, ranging from a fiduciary’s loss of fees or liability exposure to attorney malpractice to the expense of litigation required to determine how inconsistent laws will be applied. The risks are not hypothetical and can be seen in cases drawn from the records of the superior court which show that fiduciaries, lawyers, and judges appear to be applying existing laws incorrectly.

The article does not advocate regulation of individuals and entities that act as fiduciaries of estates. It argues, rather, that—since the California Legislature has determined to regulate these entities and individuals—its statutes should be drafted carefully to minimize exceptions and ambiguities and should be even-handed. Statutes that have been adopted separately in various codes over time should be reviewed together with the goal that both the citizens of California and the individuals and entities that wish to act as professional fiduciaries for those citizens are protected by a clear set of laws.

This discussion grows out of a seminar presented to the Professional Fiduciary Association of California (“PFAC”) in 2021. During the seminar, the presenters did their best to explain to the assembled professional fiduciaries their unified opinion, that while professional fiduciaries have legitimate reasons to conduct their fiduciary businesses through limited liability entities with unlimited lifespans, the law simply does not permit them to do so.

When the presentation concluded, more than one member of the audience informed the presenters that they were wrong, that professional fiduciaries could legally conduct their fiduciary businesses through entities, that they (the professional fiduciaries) were already functioning as fiduciaries through entities, and that their own attorneys had informed them this practice was proper. The author has since been made aware of several cases in which courts appear to have made rulings contrary to law by appointing or recognizing a limited liability entity formed by a professional fiduciary as an administrator or a trustee. These cases are discussed in Section V, below.

The California Professional Fiduciaries Bureau, which licenses and regulates professional fiduciaries,¹⁵ agrees with the seminar presenters that business entities cannot function as professional fiduciaries — “The Bureau requires the licensure of individuals providing fiduciary services but does not allow for the licensure of business entities.”¹⁶ The Bureau is, though, aware that individually licensed professional fiduciaries “desire to provide their clients with cost-effective succession planning of the named licensed professional fiduciary,” and are pressing for the ability to practice through a business entity.¹⁷

In the 2023-2024 legislative session, PFAC-supported Assembly Bill No. 2148 (“AB 2148”), which would have authorized the formation of a professional “fiduciary corporation” was approved by several legislative committees even though it did not address the historic rule limiting corporate fiduciary activity to banks and trust companies.¹⁸ In spite of this omission, AB 2148 appeared to be on the way to enactment before being sidetracked due to budgetary concerns.¹⁹ Given that licensed professional fiduciaries desire the ability to practice through a business entity, it is likely that PFAC will seek legislation authorizing the creation of a professional fiduciary corporation sometime in the future, including through the PFAC-supported Assembly Bill No. 586 in the 2025-2026 legislative session.²⁰

Given the foregoing developments, exploration of the situation is warranted.

Since at least 1951, Financial Code section 115²¹ has defined “trust business,” as follows:

“Trust business” means the business of acting as executor, administrator, guardian or conservator of estates, assignee, receiver, depositary or trustee under the appointment of any court, or by authority of any law of this or any other state of the United States, or as trustee for any purpose permitted by law.

Throughout most of the same period, Financial Code sections 115, 1550, and 1100 together provided that the only corporations that could conduct “trust business” were banks and trust companies.²²

The historic rule reflects a key difference between banks and trust companies and general business corporations. Both sorts of corporations provide limited liability to their shareholders, but banks and trust companies are subject to an array of laws and regulations designed to safeguard trust and estate beneficiaries that do not apply to general business corporations. For example, in order to provide a fund to protect their beneficiaries,²³ banks and trust companies must deposit funds or securities with the State Treasurer in amounts depending on the size of the city in which they operate and the amount of property they hold in trust.²⁴ When banks and trust companies receive new trust assets, they must deposit additional security with the State Treasurer.²⁵ In addition, the Commissioner of Financial Protection and Innovation²⁶ is required to examine the “court trust business” of every trust company “at least once every 24 months” and the “private trust business” of every bank or trust company when deemed “necessary or advisable.”²⁷ None of these requirements apply to general business corporations. Joe’s Used Cars, Inc. cannot do business as a trustee.

California law began permitting the formation of professional corporations in 1968.²⁸ Pursuant to Corporations Code section 13401, subdivisions (a) and (b), a professional corporation can be formed to engage in rendering “professional services [lawfully rendered only pursuant to a license. . . authorized by the Business and Professions Code] in a single profession.”

When professional corporations were authorized in 1968, they could not conduct “trust business” because Financial Code sections 115, 1550, and 1100 together provided that the only corporations that could conduct “trust business” were banks and trust companies.

In the 1980s and 1990s, the legislature authorized the creation of new limited liability entities. Consistent with the public policy of providing protection to the beneficiaries of trusts and estates, the statutes creating new limited liability entities provided expressly that they could not act as banks or trust companies.

1. California Limited Partnerships Cannot Conduct “Trust Business”

The California Revised Limited Partnership Act was adopted in 1984.²⁹ From the beginning, the act specified that a California Limited Partnership could not engage in the banking business or in the trust company business.³⁰ This rule is continued under current law.³¹

2. California Limited Liability Companies Cannot Conduct “Trust Business”

The Beverly-Killea Limited Liability Company Act, adopted in 1994,³² authorized the creation of limited liability companies in California. From the beginning, the Act specified that a California Limited Liability Company could not engage in the banking business or in the trust company business.³³ This rule is continued under current law.³⁴

3. California Limited Liability Partnerships Cannot Conduct “Trust Business”

California recognized the Limited Liability Partnership (“LLP”) in 1995, when the governor signed urgency legislation “permitting the registration of domestic and foreign LLPs in California.”³⁵ A limited liability partnership may not engage in the banking business or the trust company business.³⁶

In the latter half of the 20th century, the number of individuals marketing themselves to the public as providers of “trust business” expanded beyond the attorneys and accountants who had traditionally acted as executors, administrators, and trustees and, perhaps less often, as guardians or conservators of estates.

There were several reasons for this expansion. First, during the 1970s, the use of the revocable trust to avoid probate exploded.³⁷ Second, in the latter half of the 1900s, banks and trust companies began a process of consolidation resulting in fewer banks and trust companies.³⁸ The resulting larger entities tended to impose significant minimum requirements for new clients, creating opportunities for individuals willing to handle smaller cases. Third, a smaller number of banks and trust companies employed fewer trust officers, thrusting knowledgeable individuals into the job market. Finally, the last decades of the 20th century were a time when marital dissolutions grew in number, causing an increase in the number of mixed families who perceived that they would need a neutral fiduciary to oversee anticipated family disputes.³⁹

In 2005, the Los Angeles Times reported on the growing number of individuals conducting “trust business” in a four-part front-page series entitled “Guardians for Profit.”⁴⁰ The authors of the series called for regulation of the growing private fiduciary business which, they charged, was harming seniors. Taking aim at this “new breed of entrepreneur,”⁴¹ they noted:

Conservatorships began as a way to help families protect enfeebled relatives from predators and self-neglect…. But lawmakers and judges did not foresee that professionals would turn what had been a family matter into a business. In the hands of this new breed of entrepreneur, a system meant to safeguard the elderly and infirm often fails them.⁴²

Then, calling for regulation, the paper noted:

There are about 500 professional conservators in California, overseeing $1.5 billion in assets. They hold legal authority over at least 4,000 of California’s most vulnerable adults. Yet they are subject to less state regulation than hairdressers or guide-dog trainers. No agency licenses conservators or investigates complaints against them. Probate courts are supposed to supervise their work. Yet oversight is erratic and superficial. Even when questionable conduct is brought to their attention, judges rarely take action against conservators. Three of the past four governors have vetoed legislation that would have provided tougher oversight. This deeply flawed system is about to be hit by a demographic wave. By 2030, the number of Americans older than 65 is expected to double. Experts predict that as many of 10% of them will suffer from Alzheimer’s disease.⁴³

Not surprisingly, in 2006, the year after the Los Angeles Times series, the Legislature passed the Professional Fiduciaries Act (“Act”),⁴⁴ taking aim at this “new breed of entrepreneur.”⁴⁵ It defined the “professional fiduciary”⁴⁶ and created a Professional Fiduciaries Bureau (“Bureau”) to begin regulating professional fiduciaries.⁴⁷ The Bureau was designed “to establish licensing standards and regulations for individuals acting as conservators, guardians, trustees, personal representatives, and others, as specified.”⁴⁸ It has since published regulations ranging from “Licensing” and “Continuing Education” to a “Code of Ethics” with provisions for enforcement.⁴⁹

When it deals with court-appointed fiduciary roles (personal representatives and guardians or conservators of estates), the Act clearly focuses on individuals, not entities.⁵⁰ It defines persons acting in court-appointed fiduciary roles with respect to their human relationships to their wards, heirs, or beneficiaries.⁵¹

The Act’s focus on individuals is less clear when it comes to trustees. It defines a “trustee” as “a person who acts as a trustee . . . for more than three individuals, at the same time,”⁵² without reference to any human relationship between trustee and beneficiary. However, the Bureau’s regulations refine this definition to focus on individual trustees by providing that, “[a] person acting as a trustee under the Act is an individual who meets the requirement of paragraph (1) and (2) [regarding human relationships] ….”⁵³

The Act specifies requirements for licensure that are specific to the business of an individual acting as a fiduciary for another person. For example, licensees must undertake pre-licensing education and continuing education.”⁵⁴ Among other requirements, applicants for professional fiduciary licenses “consent to the Bureau conducting a credit check on the applicant”⁵⁵ and “[a]gree to adhere to the Professional Fiduciaries Code of Ethics and to all statutes and regulations.”⁵⁶ Separately, the Bureau maintains records on licensees dealing directly with the fiduciary services that they provide, including and not limited to: the names of the trusts and estates they administer, the names of their wards, “the aggregate dollar value of all assets currently under the licensee’s supervision as a professional fiduciary,” records of court discipline or removal of the fiduciary, and records of bankruptcies of the fiduciary, some of which records may be made public.⁵⁷

1. The Background of Senate Bill 664 (2011)

Before it was signed in 2006, Senate Bill No. 1550, the Professional Fiduciaries Act, was heard several times, amended seven times, subject to debate, and never passed unanimously before it was signed.⁵⁸ Throughout this process, there is no record that the legislators who defined “professional fiduciary”⁵⁹ and required the licensing of individual professional fiduciaries excepting attorneys, CPAs, and enrolled agents⁶⁰ even began to consider whether law or accountancy corporations should be permitted to act as fiduciaries or to conduct “trust business.”⁶¹

Just two years later, in 2008, the California Department of Financial Institutions (“DFI”) “commenced a multi-year effort to update and reorganize the laws over which it has jurisdiction.”⁶² Also in 2008, the United States experienced a severe banking crisis⁶³ and, in 2010, as a result of the banking crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, affecting banking operations in the states (“Dodd-Frank”).⁶⁴ Between 2008 and 2010, DFI sponsored three different bills designed to update and reorganize the banking laws generally and to respond to Dodd-Frank.⁶⁵

One of these bills, Senate Bill No. 664 (“SB 664”)—the Financial Institutions Law⁶⁶—passed by the Legislature in 2011, finalized “the reorganization process, by renumbering code sections amended by earlier bills.”⁶⁷ SB 664 also updated the Financial Code to conform to Dodd-Frank, allowing “state and federal banks to branch into any state, as if the state or national bank is organized under the laws of the state into which it branches.”⁶⁸

When SB 664 was introduced, nothing in it concerned Financial Code Division 1.1 Chapter 16 (Financial Code sections 1550-1557) governing corporate conduct of “trust business” in California.⁶⁹ The Legislative Counsel’s Digest describing the bill as introduced stated, “This bill would amend and renumber various provisions of the Financial Code applicable to financial institutions and financial services regulated by [DFI] and would make other conforming changes.”⁷⁰

2. Financial Code Section 1553 Was Inserted into SB 664 and Passed into Law without Debate

SB 664 was amended twice.⁷¹ The Legislative Counsel’s Digest describing the amended bill stated that it would “revise and recast various provisions of the Financial Code applicable to financial institutions and financial services regulated by [DFI] and make other conforming changes.”⁷² In spite of this limited description, SB 664 as amended proposed a new Financial Code section 1553, subdivision (b), which would—for the first time—authorize law and accounting professional corporations to act as trustees and to conduct “trust business,” as follows:

The following persons are exempt from section 1550 [the Financial Code section restricting corporate conduct of “trust business” to banks and trust companies]:

(b) Any member of the State Bar, as specified in Section 6002 of the Business and Professions Code, any certified public accountant, as defined in Section 5033 of the Business and Professions Code, and any professional corporation of one or more members of the State Bar or certified public accountants, where these professionals are acting as trustee of a trust established by them for their respective clients, provided that the member of the State Bar, certified public accountant, or professional corporation engages in no advertising for trust business in this state. (Emphasis added.)⁷³

Proposed Financial Code section 1553, subdivision (b), radically changed the corporate conduct of “trust business” by permitting private law and accountancy corporations to conduct “trust business” as long as they limited their activity to acting as trustee for their “respective clients” using documents that they “established.”

Financial Code section 1553 passed unanimously, and it appears that it was never considered or debated in any legislative proceeding.⁷⁴ The Senate Banking Committee held a hearing regarding SB 664 on April 27, 2011. The record of the hearing includes no reference to “trust business” or the conduct of “trust business” by a law corporation or an accountancy corporation.⁷⁵ The record states, “[t]he contents of the Financial Code sections would remain unchanged, only the code numbers would be revised, and the code sections reorganized.”⁷⁶ (Emphasis added.) The Assembly Committee on Banking and Finance considered SB 664 on June 27, 2011.⁷⁷ The record of the hearing states, “[t]his bill finalizes the reorganization process, by renumbering code sections amended by the earlier bills. This reorganization makes no substantive changes. . . .”⁷⁸ (Emphasis added.) The Assembly Committee on Appropriations heard SB 664 on July 13, 2011.⁷⁹ The record of the hearing states, “[t]his bill finalizes the reorganization process, by renumbering code sections amended by the earlier bills. This reorganization makes no substantive changes, it merely orders the code sections more logically, and is intended to be easier for licensees to follow and for DFI to administer.”⁸⁰(Emphasis added.)

As of January 1, 2012, when Financial Code section 1553 went into effect⁸¹ — apparently without legislative consideration — law and accountancy corporations appear to have the power to join banks and trust companies to act as corporate trustees, at least in certain situations. However, unlike banks and trust companies, law and accountancy corporations that act as trustees are not required to deposit security with the State Treasurer based on the amounts they hold in trust, and their finances are not subject to routine scrutiny by any governmental examiner. In addition, since the Professional Fiduciaries Act has been interpreted to apply only to individuals, these corporations—unlike individual professional fiduciaries—may not be required to be licensed as professional fiduciaries, are not subject to credit checks, do not report their fiduciary activities to any agency, and their discipline records regarding their fiduciary activities are not maintained or made public.⁸²

A check of the internet under “fiduciary services San Diego,” “fiduciary services Los Angeles,” or “fiduciary services San Francisco” reveals that many professional fiduciaries are already operating with fictitious business names.

A random comparison of the names of fiduciary entities with the rosters of corporations and limited liability companies doing business in California reveals that a significant number of professional fiduciaries are conducting some or all of their business activities through entities such as corporations or limited liability companies.⁸³

If fiduciaries operating business entities can maintain clear lines between the fiduciary’s trust business and the fiduciary’s non-trust business, it appears that no law prevents a fiduciary from conducting non-fiduciary business through an entity. For example, a fiduciary’s entity could own computers or lease real property. However, since it is not always easy to keep the lines clear, and since clients, courts, and others can easily begin to identify a professional fiduciary with the fiduciary’s business name, it can be difficult for a professional fiduciary to ensure that “trust business” is always conducted individually. If or to the extent fiduciaries operating entities find themselves using their entities to conduct “trust business” they may find themselves and their entities in violation of the law.

What follows is an analysis of actual cases illustrating the difficulties that fiduciaries, attorneys, and courts have when applying the laws governing the appointment of fiduciaries and entities in probate cases. The cases illustrate how a professional fiduciary might conduct “trust business” through an entity and how members of the public, attorneys, and courts who are accustomed to dealing with professional entities in non-fiduciary contexts might assume that a professional fiduciary’s entity is entitled to conduct “trust business” in a probate court proceeding. There is every reason to believe that the few cases discussed here are the tip of the iceberg and that similar cases can be found throughout the courts of California. There is also every reason to believe that—if a professional fiduciary’s entity can be named to conduct “trust business” improperly in probate court proceedings—professional fiduciary entities are also improperly conducting “trust business” outside the courts.

The cases discussed below were overseen by many different judges and involved numerous attorneys. The names in the cases have been changed and the case numbers have been omitted because the author wishes to report and analyze the substance of what can be seen in the court records. The hope is to encourage discussion and resolution of an apparent problem. The author has no interest in disrupting any case or in embarrassing or inconveniencing any person. If or to the extent that the author is wrong, the wish is to ensure that waters have not been troubled. The author has made relevant documents available to the editors of the Quarterly, and the existence of the facts discussed below has been verified independently.

In each case, the entity is “Fiduciaries R Us,” owned and operated by the fictitious Joshua Deets, a licensed professional fiduciary.

1. Estate of Augustus McRae (2021)

The probate court appointed Fiduciaries R Us, LLC as Administrator of the Estate by an Order dated March 23, 2021. Letters were issued to Fiduciaries R Us, LLC on March 25, 2021. Attorney Clara Simon represented Fiduciaries R Us, LLC. Bond was set at $1,500,000.00.

The Affirmation portion of the Letters identified Fiduciaries R Us, LLC as an Institutional Fiduciary. The Letters were signed by Fiduciaries R Us, LLC by Joshua Deets.

Comment: The Order and the Letters appear to have violated Corporations Code section 17701.04 providing that a limited liability company cannot engage in either the banking business or the trust company business.

The professional fiduciary, Joshua Deets, appears to be operating his LLC in violation of Corporations Code section 17701.04 providing that a limited liability company cannot engage in either the banking business or the trust company business.

By signing the Affirmation, Mr. Deets appears to have violated both Corporations Code section 17701.04 providing that a limited liability company cannot engage in either the banking business or the trust company business and Probate Code section 60.1, subdivision (b), providing that only a licensed fiduciary can “act or hold himself or herself out to the public as a professional fiduciary.”

2. Estate of July Johnson (2020)

The Order appointed “Joshua Deets, Fiduciaries R Us, LLC” as Administrator of the Estate with full authority. The bond was set at $400,000. The Letters, which were apparently prepared by attorney A. Oakley, acting as attorney for a family member, identified the Administrator as “Fiduciaries R Us, LLC.” The Affirmation was executed by “Fiduciaries R Us, LLC” as an “Institutional Fiduciary” by “Joshua Deets, Managing Member.”

Comment: The Order is ambiguous. Who was appointed, Deets or Fiduciaries R Us, LLC?

Probable violation of Probate Code section 60.1, subdivision (b), and section 2340.

Probable violation of Corporations Code section 17701.04.

3. Estate of Maggie (2021)

Attorney Susan Onoda representing “Fiduciaries R Us, LLC” filed a petition for administration of the intestate estate of Maggie. The petition asked that Joshua Deets, individually, be appointed as administrator. Joshua Deets verified the petition individually, adding “CLPF Managing Principal of Fiduciaries R Us, LLC, Probate Administrator.” (“CLPF” apparently stood for California Licensed Professional Fiduciary)

It appears that no person was available to nominate an administrator. Therefore, Attachment 3g(2)(a) to the Petition recited, in part, “Fiduciaries R Us, LLC, through its California licensed professional fiduciary managing principals, and their licensed successor and assignees, is entitled to appointment as a personal representative even without nomination, pursuant to Probate Code Sections 56 and 8461, as this entity qualifies as ‘any other person.’” Attachment 3g(2) (a) also recited that another attorney was aware of “the potential nomination of Fiduciaries R Us as personal representative for Decedent’s estate.”

The Order for Probate, prepared by attorney George Smith, representing Fiduciaries R Us, LLC, appointed “Fiduciaries R Us, LLC” as administrator. The Letters of Administration, also prepared by Smith, granted authority to “Fiduciaries R Us, LLC.” The Affirmation was signed on behalf of an “Institutional Fiduciary” by “Fiduciaries R Us, LLC by Joshua Deets.”

Comment: Although the Petition properly asked that Joshua Deets be appointed administrator, as an individual, Attachment 3(g)(2) improperly asserted that it would be appropriate for the court to appoint Fiduciaries R Us, LLC, as administrator. The wording of Attachment 3(g)(2) suggests that the attorney who worked on the Petition was aware of one issue—that there was no nomination—but was not aware that the court could not appoint this LLC as administrator. However, the fact that Attachment 3(g)(2) refers to “Fiduciaries R Us, LLC, through its California licensed professional fiduciary managing principals, and their licensed successor and assignees” as being “entitled to appointment” reveals that someone was concerned about the issue of perpetual existence.

By (i) verifying the petition as “CLPF Managing Principal of Fiduciaries R Us, LLC, Probate Administrator,” (ii) signing the Affirmation as an “institutional fiduciary,” and cooperating in the process, Mr. Deets appears to have violated both Corporations Code section 17701.04 providing that a limited liability company cannot engage in either the banking business or the trust company business and Probate Code section 60.1, subdivision (b), providing that only a licensed fiduciary can “hold himself or herself out to the public as a professional fiduciary.” Mr. Deets also may have purposely misled the court.

4. Estate of Jake Spoon (2019)

The parties to a settlement stipulated that “Joshua Deets” would be appointed as personal representative of the estate.

Later, Joshua Deets, in pro per, petitioned for the appointment of “Fiduciaries R Us, LLC and its successors and assigns,” as administrator. The petition was verified by “Fiduciaries R Us, LLC by Joshua Deets, Co-Managing Principal.” Next to the signature, the Petition identified the Petitioner as “Fiduciaries R Us, LLC and its successors and assigns.”

The Order for Probate, prepared by Angela Crooks, as attorney for “Fiduciaries R Us, LLC, through its licensed principal, Joshua Deets,” named “Fiduciaries R Us, LLC, through its licensed principal, Joshua Deets,” as administrator. Letters were issued with the same wording. This time, the Affirmation was made on behalf of an “Individual” and was signed “Joshua Deets, Fiduciaries R Us, LLC.”

Comment: The documents show significant confusion between Mr. Deets and his entity. The parties to the settlement properly stipulated that Mr. Deets, as an individual, should be appointed. However, when Mr. Deets filed documents to implement the settlement, the petition requested appointment of his entity, and his entity “and its successors and assigns.” The court appointed the entity as administrator, adding “through its licensed principal Joshua Deets.”

While the parties to the settlement properly designated an individual to act as administrator, they appear not to have realized that Mr. Deets then acted to change the administrator’s identity to his entity. The Order and the Letters appear to have violated Probate Code section 2340, providing that when the Probate Court appoints a professional fiduciary, it can only appoint an individual fiduciary, and Corporations Code section 17701.04, providing that a limited liability company cannot engage in either the banking business or the trust company business.

The use of “Fiduciaries R Us, LLC and its successors and assigns” reveals Mr. Deets’s concern with continuity. “Successors and assigns” appears in several of the cases.

5. Dish Goggett Irrevocable Trust (2017)

An “Order After Hearing” filed by Maureen Cheeney as attorney for Fiduciaries R Us, LLC regarding a settlement recited the participation of two other attorneys, then stated:
…

2) Joshua Deets and Roscoe Brown of Fiduciaries R Us, LLC (“FRU”) shall serve as Successor Trustee. FRU shall post bond in the amount of $700,000.

3) FRU may set its “Petition to Modify Trust” for hearing and said Petition must be filed by September 8, 2017.

Comment: The Order is ambiguous. While it was appropriate for the court to appoint the individual professional fiduciaries as successor trustee, it was not necessary for the court to identify their entity. Identification of the entity did not add anything, and it certainly could have led to confusion regarding the role, if any, to be played by FRU.

The confusion and inconsistency were exacerbated by the fact that the order apparently appointed the individuals but required that the bond be posted by the entity and provided that a further petition was to be filed by FRU.
The court’s designation of FRU as the party to file the next petition emphasized that the court saw FRU as the trustee.

6. Lonesome Dove Trusts (2019)

An “Order After Hearing” filed by James Shelgren as attorney for Large National Bank, Trustee of the Lonesome Dove Trusts, recited a Settlement Agreement negotiated with the participation of three attorneys. The Settlement Agreement provided that almost $700,000 was to be distributed to “Fiduciaries R Us, LLC, Trustee of The Blue Duck Lifetime Benefit Trust, for administration and distribution thereunder per Restated Trust.” It also recited that almost $1,000,000 was to be distributed to “Fiduciaries R Us, LLC, Trustee of The Blue Duck Lifetime Benefit Trust, for administration and distribution thereunder per Insurance Trust.”

Comment: This was a complicated case involving several attorneys and large amounts of money. Nevertheless, the parties agreed to the appointment of an entity as trustee that, under Corporations Code section 17701.04 was specifically prohibited from engaging “in either the banking business or the trust company business.” The court compounded the mistake by approving this designation.

Armed with the order, Fiduciaries R Us, LLC could easily open bank and other accounts and manage the trusts in its name as an LLC. However, when it did so, it would be violating both Corporations Code section 17701.4, mentioned above, and Probate Code section 60.1, subdivision (b), providing that only a licensed fiduciary can “act or hold himself or herself out to the public as a professional fiduciary.”

7. Subtrust A, Woodrow Call Trust (2021)

An “Order Granting Ex Parte Petition for Modification of Trust and Appointment of Successor Trustee” filed by attorney Don Rogers, as attorney for an individual, recited a Settlement Agreement that had been reached with the participation of three attorneys. The Settlement Agreement provided “Fiduciaries R Us, LLC is appointed Successor Trustee of Sub Trust A to serve without bond.”

Comment: Once again, a court appointed an LLC as a trustee in violation of Corporations Code section 17701.04 providing that a limited liability company cannot engage in either the banking business or the trust company business.

Once again, Fiduciaries R Us, LLC was armed with an order permitting it to conduct trust business in California in violation of both Corporations Code section 17701.4, mentioned above, and Probate Code section 60.1, subdivision (b), providing that only a licensed fiduciary can “hold himself or herself out to the public as a professional fiduciary.”

Once again, a judge and several attorneys seem to have been unaware that a limited liability company cannot engage in the trust business.

The developments seen in the above cases seem inevitable. Attorneys can appear in court through a professional corporation.⁸⁴ Certified public accountants can practice accounting through a professional corporation.⁸⁵ Professional fiduciaries cannot conduct their fiduciary practices through an entity, but they can conduct their non-fiduciary activities through an entity. A rule requiring professional fiduciaries to conduct their core “trust business” only as individuals is confusing. A client who finds Fiduciaries R Us, LLC through a computer search, calls Fiduciaries R Us, LLC on the phone and enters a door labeled Fiduciaries R Us, LLC when seeing Joshua Deets logically thinks that Fiduciaries R Us, LLC is an entity that can conduct “trust business” and can be named as a fiduciary in an estate planning document. Judges and attorneys who identify Joshua Deets with Fiduciaries R Us, LLC naturally assume that they can name Fiduciaries R Us, LLC as a fiduciary.

Will the actions of Fiduciaries R Us, LLC as a personal representative or as a trustee be given effect? Can they be set aside?

Can the LLC business form provide Deets with any protection from personal liability under these circumstances?

If there is liability to the heirs or beneficiaries, what liability does Deets have? What liability does Fiduciaries R Us, LLC have?

If a bond was issued to Fiduciaries R Us, LLC, but Deets was the actor, can the bond be enforced? If the bond was issued to Deets, but Fiduciaries R Us, LLC was the actor, can the bond be enforced?

Will Deets or Fiduciaries R Us, LLC be able to retain fees if fees are contested?

Will any attorney who represented Fiduciaries R Us, LLC as a personal representative or as a trustee be able to retain fees if fees are contested?

Will Deets or his attorneys be sanctioned for misrepresentations to the court?

Are Deets and Fiduciaries R Us, LLC subject to removal?

What discipline might the Bureau impose on Deets? Can it impose penalties of any kind on Fiduciaries R Us, LLC?

If there is liability to the heirs or beneficiaries, do attorneys who participated in the negotiation of settlement agreements naming Fiduciaries R Us, LLC as a personal representative or as a trustee face malpractice exposure?

Any attorney who advised Deets that he could use Fiduciaries R Us, LLC to provide fiduciary services could be liable for malpractice.

In the Lonesome Dove Trusts case, Large National Bank as trustee distributed to Fiduciaries R Us, LLC as trustee. If there is liability to the beneficiaries what liability does Large National Bank face? If Large National Bank faces liability, what liability does its attorney face?

Professional fiduciaries typically begin their practices as sole proprietorships and act as individuals when they assume an executorship or a trusteeship. As their practices develop, many realize that they have the same interests in creating a business entity that other professionals have. These include:

• Protecting their personal assets from business liabilities;
• Creating entities that can employ staff and provide staff with benefits available to business entities;
• Operating with a business name that is recognizable and memorable; and
  Protecting the value of years of work by permitting them to have entities that can be bought and sold, or that can be left to qualified family members.

Professional fiduciaries have another important reason to conduct their business through an entity with an unlimited lifespan—the need to provide continuity for their clients. A well-run fiduciary business entity can create efficiencies for clients and their descendants who learn to trust the entity and the individuals in its employ and who can rely on the entity and its institutional knowledge for consistent administration of family matters over time. If a client must name an individual professional fiduciary as trustee, there is a potential for delay and confusion when that individual dies, becomes disabled or retires. In an easy case, the names on deeds, bank accounts, financial accounts, and similar items must be changed to identify the successor nominated in the relevant document. In a hard case, the replacement of one individual with another is a time for inefficiency, dispute and, potentially, court involvement.

The requirement that they must conduct their trust business as individuals is a competitive disadvantage for professional fiduciaries, especially now that law and accountancy corporations can act as trustees. When a client tells an attorney that the client is considering nominating a professional fiduciary, an attorney advising the client may have a duty to point out that the individual professional fiduciary does not have the perpetual existence possessed by a corporation, such that the professional fiduciary’s services cannot be as long-lasting or as continuous as the services provided by those entities.

Although it is not a matter directly related to the priorities of a professional fiduciary, the requirement that professional fiduciaries act as individuals can be a burden on the courts. When an individual who has been appointed as a fiduciary to administer one case dies or becomes incapacitated, it is one thing. When an accomplished individual fiduciary who is administering one hundred cases must be replaced, it is quite another. Since it is highly unlikely that all documents administered by the professional fiduciary will name an available alternate appointee, a multitude of court cases would be required to identify and appoint new individuals to replace the former fiduciary. The delay and expense inherent in this process burden not only the courts, but also the beneficiaries who rely on action from their fiduciaries.

1. Financial Code Section 1553, Subdivision (b), Appears to Conflict With Business and Professions Code Section 13401

Corporations Code section 13401, subdivision (b), provides that a professional corporation is a corporation “that is engaged in rendering professional services in a single profession, except as otherwise authorized in Section 13401.5 . . . .”⁸⁶ No provision in section 13401.5 authorizes a law corporation or an accountancy corporation to engage in business as a professional fiduciary. And, while a professional corporation can conduct business activities unrelated to the profession which it is authorized to practice, a professional corporation cannot engage in another activity “which would require another Business and Professions Code authorization covering a different professional service.”⁸⁷ Since a professional fiduciary must be licensed under Business and Professions Code section 6530, and since at this time there is no authority for the creation of a California professional fiduciary corporation, the Corporations Code authorizes a law corporation to practice law and an accountancy corporation to practice accounting, but neither is authorized, in addition, to conduct the business of a professional fiduciary.

However, Financial Code section 1553, subdivision (b), discussed above, now appears to authorize law and accountancy corporations to act as trustees in violation of Corporations Code section 13401.5 by exempting them from the statutory prohibition on conducting “trust business”: “any professional corporation of one or more members of the State Bar or certified public accountants, where these professionals are acting as trustee of a trust established by them for their respective clients, provided that the member of the State Bar, certified public accountant, or professional corporation engages in no advertising for trust business in this state.”

2. The Terms of Financial Code Section 1553, Subdivision (b), Are Ambiguous

a. Issues Affecting Accountancy Corporations

Financial Code Section 1553, subdivision (b), apparently exempts a professional corporation of “one or more . . . certified public accountants” from the historic prohibition on conducting “trust business” when “these professionals are acting as trustee of a trust established by them for their respective clients, provided that the member of the . . . professional corporation engages in no advertising for trust business in this state.”

The extent of the accountancy corporation’s authority under this statute is unclear. First, although the language of section 1553, subdivision (b), certainly appears to authorize an accountancy corporation to act as a trustee, the language of the statute also emphasizes the actions of the “member of the professional corporation,” suggesting that it may be the member who is in fact the trustee.

Second, if accountancy corporations are authorized to act as trustees, they can only act as trustees of a trust “established by them for their respective clients.” What does it mean to “establish” a trust? Must the accountancy corporation draft the trust? If so, is it practicing law without a license? Can an accountancy corporation administer a trust drafted by a lawyer or by an individual? Can an accountancy corporation administer a trust drafted by a CPA in a different accounting firm?

b. Issues Affecting Attorneys

Just as with accountants, it is not clear that a trust drafted by an attorney is “established” by the attorney. In addition, could a law corporation act as trustee of a trust drafted by an attorney who was unaffiliated with the law corporation? If an attorney in a law corporation amended a trust drafted by an attorney unaffiliated with the law corporation, did the law corporation “establish” the trust? If an attorney drafts a trust naming the attorney’s firm as trustee but then moves to another firm, what happens to the trusteeship?

3. If a Professional Corporation Acts as a Trustee, Must it Be Licensed as a Professional Fiduciary?

Under Business and Professions Code section 6501, subdivisions (f)(4)(A) and (f)(4)(B), the Professional Fiduciaries Act excludes banks and trust companies from the definition of “professional fiduciary.” Because they are not professional fiduciaries, banks and trust companies are not required to be licensed by the Bureau.⁸⁸

However, no portion of the Professional Fiduciaries Act excludes law or accountancy corporations from the definition of “professional fiduciary” or otherwise deals with professional corporations. This is not surprising because the Professional Fiduciaries Act was passed in 2006. At the time, no law suggested that a law corporation or an accountancy corporation could act as trustee—Financial Code section 1553, subdivision (b), went into effect on January 1, 2012.⁸⁹

If law and accountancy corporations begin acting as trustees, it appears that they may well be required to be licensed as professional fiduciaries. Business and Professions Code section 6501, subdivision (f)(2), provides that “‘[p]rofessional fiduciary’ also means a person who acts as a trustee….” Since “person” can include a corporation, the Professional Fiduciary Act on its face may require a law corporation or an accountancy corporation acting as a trustee to be licensed.⁹⁰

4. Financial Code Section 1553 Unnecessarily Exempts Individuals from the Coverage of Financial Code Section 1550

In addition to having been adopted in an unusual fashion, Financial Code section 1553, as brought to us by SB 664, contains provisions that are surplus at best, and confusing at worst.

Financial Code section 1550 is limited to corporations and provides that the only corporations that can engage in a “trust business” in California are banks and trust companies. Since Financial Code section 1550 applies only to corporations there is no need to exempt from its coverage any person or entity that is not a corporation. Nevertheless, Financial Code section 1553 unnecessarily exempts from the operation of section 1550 the following individuals: (i) “natural persons” serving as trustees of certain trusts,⁹¹ (ii) “any member of the State Bar,”⁹² (iii) “any certified public accountant,”⁹³ and (iv) “any person licensed as a professional fiduciary….”⁹⁴

There is no need for these exceptions and the lack of debate over SB 664 renders it impossible to understand why these exceptions were included in what became Financial Code section 1553. They make a confusing situation more confusing.

5. A Potentially Misleading Exemption for Individual Certified Public Accountants in Financial Code Section 1553

Besides unnecessarily exempting individuals from a statute that regulates corporations, Financial Code section 1553, subdivision (b), confuses the ability of an individual CPA to conduct “trust business” without being licensed.

Before section 1553, subdivision (b), was enacted, an individual CPA was exempt from being licensed only if the CPA was “acting within the scope of practice of, a certified public accountant.”⁹⁵ However, since section 1553, subdivision (b), applies to “any [individual] certified public accountant” it suggests that an individual CPA can conduct “trust business” only if the CPA “[is] acting as trustee of a trust established by them for their respective clients, provided that the . . . certified public accountant . . . engages in no advertising for trust business in this state.” And if an individual CPA is limited to acting as a trustee only a trust established by them for their respective clients,” can an individual CPA act as trustee of a trust drafted by an attorney? Further, if an individual CPA can only act as trustee of a trust “established by them” does the new statute conflict with—and perhaps limit—the rule in the Business and Professions Code that a CPA is exempt from being licensed as a professional fiduciary when “acting within the scope of practice, of a certified public accountant?”

6. Policy Issues Raised by Permitting Law and Accountancy Corporations to Act as Trustees

a. Beneficiary Protection

As discussed above, California’s historic approach to identifying individuals and entities that could conduct “trust business” protected beneficiaries by providing them a pocket from which to seek relief when they were damaged by a trustee’s actions. In the case of corporate trustees, banks and trust companies were heavily regulated and subject to inspection.⁹⁶ In the case of individual trustees, beneficiaries could seek relief from an individual who had no liability protection.

To the extent that Business and Professions Code section 1553, subdivision (b), authorizes law and accountancy corporations to act as trustees, the law appears to have changed to reduce relief available to beneficiaries. Law and accountancy corporations have liability protection for the clients of their law and accounting practices.⁹⁷ It is not clear that this protection would extend to beneficiaries of trusts administered by those corporations.

b. Consistency and Even-Handedness

Under current law, professional fiduciaries cannot form professional corporations even though they, as individuals, are subject to laws directly related to their ability to act as professional fiduciaries. If law and accountancy corporations are to be permitted to act as trustees, consistency would seem to require a law permitting professional fiduciaries to incorporate.

1. A Blanket Exclusion from Licensing for Attorneys

PFAC sponsored Senate Bill No. 1550 (“SB 1550”), which became the Professional Fiduciaries Act.⁹⁸ PFAC’s position was that every individual engaged in “trust business” should be included within the definition of “professional fiduciary.” A letter that PFAC wrote to Senator Figueroa, the legislative sponsor of the bill, stated:

Our position is that ALL individuals who are currently practicing as a “professional” Conservator, Guardian and Trustee should be included and required to be licensed and regulated to practice within this field…. We see this bill as … an opportunity to encompass ALL those individuals … this business is quite unique and just because one is a CPA, Attorney, Banker or with Public Guardian’s office does not mean they are qualified to practice within this field or should be allowed to practice in this field without the proper training and licensure….⁹⁹

In spite of PFAC’s position, SB 1550 as introduced provided that “an individual attorney could hold themself out to the public as a professional fiduciary” without being licensed as a professional fiduciary.¹⁰⁰ This meant that individual attorneys could continue to conduct “trust business” free from the new regulatory environment. Unlike the newly-created “professional fiduciary” the attorney fiduciary had no duty to submit to a credit check or disclose the amounts under fiduciary management. No government bureau tracked the attorney fiduciary’s cases or discipline imposed on the attorney fiduciary by the courts.

The legislative history does not explain why attorneys were given a blanket exclusion from licensing when SB 1550 was first introduced, and the exclusion does not appear to have been debated. The blanket exclusion remained in all amendments to SB 1550 and can be found in Business and Professions Code section 6530, subdivision (c).

2. A Limited Exclusion from Licensing for CPAs and Enrolled Agents

SB 1550 containing the licensing exclusion for attorneys was introduced on February 23, 2006.¹⁰¹ It was not long until CPAs determined that they, too, should be permitted to conduct “trust business” without being required to be licensed as professional fiduciaries. During the spring and summer of 2006, “more than 100” CPAs objected to being required to be licensed. Their letters included statements ranging from “we are already regulated by the California Board of Accountancy,” to “we are not the problem,” to “why aren’t we treated like lawyers?”¹⁰²

The California Society of Certified Public Accountants (“CSCPA”) wrote to oppose SB 1550 unless amended. Its letter dated May 30, 2006, stated:

[W]e are concerned that this bill creates a burdensome regulatory scheme that unnecessarily impacts CPAs. CPAs are often asked by long-term clients to act as trustees. CPAs are already licensed by the California Board of Accountancy and those requirements meet or exceed the minimal standard of competence envisioned by the bill. CPAs must abide by state law, a Code of Ethics and extensive national professional standards governing their actions in client matters….¹⁰³

For a time, the Senate refused to amend SB 1550 as requested by the CPAs.¹⁰⁴ Ultimately, however, the parties agreed on a compromise that CPAs could be excluded from the definition of “professional fiduciary” as long as they were “acting within the scope of practice of, a certified public accountant pursuant to Chapter 1….” This provision can be found in Business and Professions Code section 6530, subdivision (c).

Finally, when SB 1550 was last amended, the legislature also excluded enrolled agents from the licensing requirement “only when acting within the scope of practice pursuant to Part 10 of Title 31 of the Code of Federal Regulations,” although the legislative history contains no evidence explaining this exclusion.¹⁰⁵

3. Policy Issues Raised by the Exclusion of Attorneys, CPAs, and Enrolled Agents from Licensing as Professional Fiduciaries

The legislature’s exclusion of attorneys, CPAs, and enrolled agents who act as fiduciaries of estates from the need to be licensed as a “professional fiduciary” raises at least the following questions:

What is it about the licensing and regulation of attorneys, CPAs, or enrolled agents that qualifies them to act as trustees, executors, guardians, or conservators of estates and therefore to a blanket (for attorneys) or limited (for CPAs and enrolled agents) exclusion from the duty to be licensed as a professional fiduciary?

What regulations applicable to attorneys, CPAs, or enrolled agents require them to disclose their activities as trustees and personal representatives to state regulators?

How do the exclusions for attorneys, CPAs, and enrolled agents benefit the public?

Is the argument made by the CSCPA that “CPAs are already licensed by the California Board of Accountancy and those requirements meet or exceed the minimal standard of competence envisioned by the bill” accurate? Do CPAs receive training directly related to the functions of acting as a fiduciary?

What does it mean for a CPA to be acting as a fiduciary “within the scope of practice of, a certified public accountant pursuant to Chapter 1…”? The Consumer Assistance Booklet published by the California Board of Accountancy lists the tasks performed by CPAs with no mention of trusteeship or fiduciary services.¹⁰⁶ Does a CPA’s “scope of practice” include acting as a fiduciary?

Do the boards that regulate attorneys, CPAs, and enrolled agents maintain fiduciary-specific records on their licensees similar to those records maintained by the Bureau?

Given the foregoing realities and the confusion and ambiguities in the applicable statutes addressed above, it appears that it may be time for the California legislature to review the laws governing the powers of individuals and corporations to conduct “trust business” as a whole. This section discusses some of the matters that the creators of any such legislation might consider.

Financial Code section 1553, subdivision (b), authorizes law and accountancy corporations to act as trustees for their clients provided that they “established” the trusts and do not advertise. However, these entities are not subject to any regulation specifically addressed to their activities as fiduciaries. Public policy suggests that entities that are granted the authority to act as fiduciaries for individuals should have some degree of financial responsibility for their actions. That degree of financial responsibility does not appear to exist under the current law.

Any law generally permitting certain professional corporations to act as fiduciaries should clearly set forth the manner in which beneficiaries are to be protected.

If law and accountancy corporations are permitted to act as trustees, it is difficult to see a reason why professional fiduciaries should not be permitted to incorporate.

Attorneys have a blanket exemption from any requirement to be licensed as a professional fiduciary no matter how many trusts or estates they might administer. CPAs and Enrolled Agents have limited exemption from any requirement to be licensed as a professional fiduciary no matter how many trusts or estates they might administer.

The foregoing professionals argue that their training and licensing is sufficient to cover their activities as fiduciaries. It is not clear that this argument is persuasive. Does a tax accountant or a personal injury attorney truly have the training and continuing education to function effectively as a fiduciary? Will the argument that attorneys have all at least taken a course in trusts and estates be strong? Will the argument hold up when the Multistate Bar Exam no longer tests trusts and estates beginning July 2026?¹⁰⁷

The laws governing which individuals or entities are authorized to conduct the business of acting as trustees or as executors, administrators, guardians, or conservators of estates have developed in a confusing manner. It seems likely that attorneys and legislators dealing with professional corporations have ignored the Financial Code and the Probate Code, while attorneys, legislators, executors, and conservators have ignored the Financial Code and the Business and Professions Code.

If professional fiduciaries again seek legislation authorizing the formation of a professional fiduciary corporation, it will be a good time to review and reconcile the various codes.

Ralph Hughes

A version of this article was published in the California Trusts and Estates Quarterly, Volume 31, Issue 2, 2025, copyright Trusts and Estates Section of the California Lawyers Association, printed with permission.

The author thanks Kent C. Thompson and Mary Cronkleton for assistance with this article.

The Professional Fiduciaries Association of California provided funding for the purchase of the legislative histories of SB 664 and SB 1550 from Legislative Intent Service, Inc. (www.legintent.com). This material provided valuable insight into the development of the statutes discussed in the article. No person affiliated with the Professional Fiduciaries Association of California saw this article or any draft of this article before it was submitted to the California Trusts and Estates Quarterly.

1. Fin. Code, sections 115, 1100, 1550.

2. See discussion at Section 11 (A) post and accompanying endnotes 10-16.

3. Bus. & Prof. Code, sections 6500-6592.

4. Bus. & Prof. Code, section 6501, subd. (f)(2).

5. Bus. & Prof. Code, section 6501, subds. (f)(1)(A)-(f)(1)(B).

6. Bus. & Prof. Code, sections 6530-6534.

7. Bus. & Prof. Code, section 6530.

8. Fin. Code, section 1553, subd. (b).

9. See ibid. The extent to which a professional law or accountancy corporation may not provide beneficiaries with recourse to the corporation’s shareholders is discussed in Section VII. A. 6., post. The corporation’s unlimited lifespan, which is important in the fiduciary context is discussed in Section VI., post.

10. Questions regarding guardians or conservators of the person are beyond the scope of this article.

11. Fin. Code, sections 1550-1613.

12. See, e.g., Prob. Code, sections 60.1, 83, 300, 2340.

13. Bus. & Prof. Code, sections 6500-6592.

14. Cal. Code Regs., Tit. 16, sections 4400 et seq.

15. Bus. & Prof. Code, section 6510.

16. Cal. Dep’t of Consumer Affairs, Prof. Fiduciaries Bureau, Sunset Review Report 2023, p. 39. [as of April 30, 2025]. https://www.fiduciary.ca.gov/forms_pubs/2023_sunset_review.pdf

17. Ibid.

18. Assem. Bill No. 2148 (2023-2024 Reg. Sess.) (“AB 2148”) as Amended in the Senate June 25, 2024. No portion of AB 2148 as amended referred to the Financial Code or, specifically, to Financial Code section 1550.

19. Undated letter from the California Department of Finance to Honorable Evan Low stating an “Oppose” position to AB 2148 as amended June 25, 2024. “The Department of Finance notes the Professional Fiduciary Fund has a structural deficit and additional costs will exacerbate the low fund balance, which will result in fund insolvency.”

20. At the time that this article had completed its editorial round, AB 586 was working its way through the legislature but had not yet been harmonized between the Assembly and Senate.

21. Fin. Code, section 115 is derived from former Bank Code, section 115 and former Fin. Code, section 115, enacted in Stats. 1951 (1951-1952 Reg. Sess.) ch. 364 and repealed Stats. 2011 (2011-2012 Reg. Sess.) ch. 243, section 1.

22. Fin. Code, sections 115, 1550, 1100. The rule limiting corporate conduct of “trust business” to banks and trust companies was changed in 2011 with the adoption of Financial Code section 1553, subdivision (b), permitting legal and accountancy professional corporations to act as trustees in certain circumstances. This change is discussed more fully post.

23. Fin. Code, section 1573.

24. Fin. Code, sections 1570-1571.

25. Ibid.

26. Fin. Code, section 125. See also Fin. Code, sections 500, subds. (a)(6), (a)(4), 1603.

27. Fin. Code, sections 500, subd. (a)(6), 500, subd. (a)(4), 1603.

28. Stats 1968 (1967-1968 Reg. Sess), ch 1375, section 9.

29. 4 Ballentine & Sterling Cal. Corp. Law, section 723.

30. 4 Ballentine & Sterling Cal. Corp. Law, section 727. See former Corp. Code, section 15616.

31. Corp. Code, section 15901.04.

32. Stats 1994 (1993-1994 Reg. Sess.) ch. 1200 (Sen. Bill No. 469) effective Sept. 20, 1994.

33. Former Corp. Code, section 17200, subd. (a).

34. Corp. Code, section 17701.04.

35. 4 Ballentine & Sterline Cal. Corp. Law, section 641.

36. Corp. Code, section 15901.04, subd. (b).

37. See Rudolph & Hughes, A Lawyer is a Lawyer is a Lawyer, (2019) volume 25, No. 1, Cal. Trusts and Estates Q.

38. In 1986, Wells Fargo Corp. acquired Crocker National Bank. In 1988, Wells Fargo Corp. acquired Barclays Bank of California. In 1988, Security Pacific Corp. acquired The Hibernia Bank. In 1992, BankAmerica Corp acquired Security Pacific Corp. In 1994, First Interstate Bank acquired San Diego Trust and Savings Bank. In 1996, Wells Fargo Corp. acquired First Interstate Bancorp. In 1996, Union Bank acquired Bank of California. Wikipedia, List of Bank Mergers in the United States, [as of December 13, 2024]. https://en.wikipedia.org/wiki/List_of_bank_mergers_in_the_United_States

39. The divorce rate for women in the United States was 9.2 percent in 1960 and rose to 22.6 percent in 1980. It had fallen to 15.7 percent by 2018. Bowling Green State University National Center for Family & Marriage Research (NCFMR), < https://www.bgsu.edu/ncfmr/resources/data/family-profiles/schweizer-divorce-century-change-1900-2018-fp-20-22.html > [as of December 13, 2024].

40. Guardians for Profit, L.A. Times (Nov. 13, 2005) p. A1; (Nov. 14, 2005) p. A1; (Nov. 15, 2005) p. A1; (Nov. 16, 2005) p. A1.

41. Guardians for Profit, L.A. Times (Nov. 13, 2005) p. A1.

42. Ibid.

43. Ibid.

44. Bus. & Prof. Code, sections 6500-6592, Prob. Code, sections 60.1, 2340 (Added by Stats. 2006 (2005-2006 Reg. Sess.) ch. 491, section 3).

45. Guardians for Profit, L.A. Times (Nov. 13, 2005) p. A1.

46. Bus. & Prof. Code, section 6501, subd. (f)(1).

47. Bus. & Prof. Code, section 6501, subd. (b).

48. 2006 Legislative Highlights, Senate Office of Research, p. 12.

49. Cal. Code Regs., Div. 41, art. 1-11.

50. Bus. & Prof. Code, section 8501, subds. (f)(1)(A), (f)(1)(B), and (f)(2). See also Cal. Code of Regs, section 4406, subd. (e) “A person acting as a trustee under the Act is an individual who meets the requirement of paragraph (1) and (2) [regarding human relationships] and shall be licensed as a professional fiduciary unless exempt under the Act.” Banks and trust companies are statutorily excluded from the definition of “professional fiduciary.” (Bus. & Prof. Code, section 6501, subd. (f)(4)(A)-(B) [Emphasis added].

51. Bus. & Prof. Code, section 6501, subd. (f).

52. Bus. & Prof. Code, section 6501, subd. (f)(2).

53. Cal. Code Regs., section 4406, subd. (e) [Emphasis added].

54. Bus. & Prof. Code, section 6538.

55. Bus. & Prof. Code, section 6533 subd. (h).

56. Bus. & Prof. Code, section 6533 subd. (g).

57. Bus. & Prof. Code, section 6534.

58. California Legislature, Senate Final History, (vol. 1) p. 1013.

59. Bus. & Prof. Code, section 6501, subds. (f)(1)-(f)(2).

60. Bus. & Prof. Code, sections 6530-6543.

61. The author was unable to find any mention of professional corporations or the licensing of professional corporations in his review of the history of SB 1550.

62. Legis. Analyst, analysis of Sen. Bill No. 664 (2011-2012 Reg. Sess.) by the Assembly Committee on Banking and Commerce(Hearing Date June 27, 2011) pp. 1-2.

63. Smith, How The Dodd-Frank Act Protects Your Money, Mar. 10, 2023, Forbes, < https://www.forbes.com/advisor/investing/dodd-frank-act/ > (as of Dec. 13, 2024).

64. Ibid.

65. “DFI sponsored three pieces of chaptered legislation to accomplish this update, including: AB 1301(Gaines), Chapter 125, Statutes of 2008, AB 2749 (Gaines), Chapter 501, Statutes of 2008, and AB 1268 (Gaines), Chapter 532, Statutes of 2010. ” Analysis of Sen. Bill No. 664 (2011-2012 Reg. Sess.) by the Assembly Committee on Banking and Commerce (Hearing Date June 27, 2011) pp. 1-2.

66. Fin. Code, section 99.

67. Analysis of SB 664, supra, atpp. 1.

68. Analysis of SB 664, supra, at p. 2.

69. See List of amended and renumbered sections. Sen. Bill No. 664 (2011-2012 Reg. Sess.) pp. 99-100 as proposed February 18, 2011.

70. Sen. Bill No. 664, supra,at p. 99.

71. California Legislature at Sacramento, Senate Final History (2011-2012 Reg. Sess.) p. 477.

72. Sen. Bill No. 664, supra, as amended in the Senate April 25, 2011, p. 66.

73. Id. at p. 178.

74. California Legislature at Sacramento, Senate Final History (2011-2012 Reg. Sess.) p. 477.

75. Senate Banking & Financial Institutions Committee, Hearing Date Apr. 27, 2011, pp. 1-3.

76. Senate Banking & Financial Institutions Committee, Hearing Date Apr. 27, 2011, p. 1.

77. Assembly Committee on Banking and Finance, Date of Hearing, June 27, 2011, p. 1.

78. Assembly Committee on Banking and Finance, Date of Hearing, June 27, 2011, p. 2.

79. Assembly Committee on Appropriations, July 13, 2011, p. 1.

80. Assembly Committee on Appropriations, July 13, 2011, p. 1.

81. See Fin. Code, section 1553 (History, Deering’s Cal. Codes Ann. (2025)).

82. But see discussion at Section VII. A. 3., post, re possible licensing of professional corporations that act as trustees.

83. This article does not name any such entities, because this article is written as an examination of the law generally, with the knowledge that the author could be wrong. There is, therefore, no mention of any fiduciary individually or by entity name.

84. Corp. Code, sections 13401, 13404; Bus. & Prof. Code, section 6160 et seq.; see Rules Prof. Conduct, rule 3.150 et seq.

85. Corp. Code, sections 13401, 13404.

86. Corp. Code, section 13401, subd. (b).

87. 54 Ops.Cal.Atty.Gen. 272, 274 (1971).

88. Bus. & Prof. Code, sections 6530-6532.

89. See Fin. Code, section 1553 (History, Deering’s Cal. Codes Ann. (2025)).

90. “Person” does not appear to be defined specifically in the Business and Professions Code. See Bus. & Prof. Code, sections 1-40 (“General Provisions”). Regarding “person” as including a “corporation” generally, see Code Civ. Proc., section 680.280; Code Civ. Proc., section 17, subd. (b)(6); Merco Constr. Engineers, Inc. v. Municipal Court (1978) 21 Cal.3rd 724, 729;Prob. Code, section 56.

91. Fin. Code, section 1553, subd. (a).

92. Fin. Code, section 1553, subd. (b).

93. Ibid.

94. Fin. Code, section 1553, subd. (e).

95. Bus. & Prof. Code, section 6530, subd. (c).

96. See Section II. A. ante, regarding rules governing banks and trust companies and providing protections for beneficiaries.

97. See 16 Cal. Code Regs., section 75.8 (Accountancy Corporations) and Rules Prof. Conduct, rule 3.158 (Law Corporations).

98. Bus. & Prof. Code, section 6534, subd. (a)(2).

99. Letter dated May 10, 2006, from Professional Fiduciary Association of California to Senator Figueroa and G.V. Ayers Re: SB 1550—PFAC Legislative Committee Comments.

100. Sen. Bill No. 1550 (2005-2006 Reg. Sess.) (“SB 1550”) Chaptered as Ch. 491, p 7.

101. SB 1550, supra, Chaptered as Chapter 491.

102. Correspondence included in the legislative bill files relating to SB 1550.

103. Letter dated May 30, 2006, from California Society Certified Public Accountants to Senate Floor RE: SB 1550 (Figueroa) Senate Floor.

104. See, e.g., Assembly Judiciary Committee Mandatory Information Worksheet with stamped date Jun 8, 2008, Item 11.

105. SB 1550, supra, as Amended in the Senate August 24, 2006, p. 11.

106. California Board of Accountancy, Consumer Assistance Booklet, pp. 4-6.

107. See National Conference of Bar Examiners, Press Release (July 17, 2023). “Some Subjects to be Removed from the MEE in 2026”.