California Probate IAEA · Dirty Title Goldmine

California Probate IAEA

IAEA is shorthand for the Independent Administration of Estates Act. Probate Code § 10400 et seq. The purpose is to make the administration of a probate estate less complicated and time-consuming. It also relieves the court of the burden of myriad simple procedures. We must remember that the purpose of probate is not just to get an inheritance distributed to heirs and beneficiaries, it also is to protect creditors, give notice to various agencies who might have an interest in the estate, and to resolve disputes, among other things.

When a person or entity seeks appointment as executor or administrator of a decedent’s estate, one of the first questions to be asked is whether they are seeking “full IAEA authority”. This choice can have a significant impact on the entire course of administration of the estate.

An executor is a person or entity named in the decedent’s will. An administrator is generally appointed in cases where there is no will. Sometimes both are referred to as the personal representative of the decedent’s estate.

Authorization to administer the estate under the Independent Administration of Estate Act, if granted, authorizes the personal representative to handle most of the tasks of estate administration without seeking court authorization, approval, or confirmation. This means the estate can be more expeditiously and cost-effectively managed. If the IAEA authority is not granted, many of the tasks of the personal representative require specific court authorization, approval or authorization. This costs time, money, and delay, which can be expensive in other ways. For example, the value of an asset may decline over time, a loan may be in default, and family disputes may be exacerbated.

The court may grant full or limited IAEA authority. Limited Authority allows the personal representative to do most things except sell real property or borrow money when the loan is secured by real property. Even with full IAEA powers, the personal representative must give notice of proposed action for some actions, such as sale of real property. When a particular action might give rise to a contest later, best practice is to give the notice and find out at once whether someone will object. Moreover, if the notice is given and no one objects, their right to object later is curtailed. And of course, beneficiaries can consent to the proposed actions which will make things move along at a more rapid clip.

Actions that require a notice of proposed action include: selling real property, abandoning tangible property, granting an option to purchase real property, making a preliminary distribution, and some related actions. The personal representative should always check the statute to be sure the requirements of the statute are being met.

However, unless the Will otherwise provides, granting IAEA requires the posting of a bond. The bond amount is set by the court but the bond is posted by an independent surety. The standards of the surety must be satisfied before a bond can be posted. That means some personal representatives will be forced into proceeding without IAEA authority because they can’t post the bond.

A testator can waive the requirement of a bond in his or her will, and the beneficiaries can waive the bond when the estate is brought to the court for administration. It is up to the court whether to accept the waivers. When deciding whether to require a bond, a key consideration is whether the estate’s creditors are protected.

A bond is not an insurance policy for the personal representative. It is posted to protect the beneficiaries, and if the bond has to pay out, the bonding company can seek to be made whole by the personal representative.

The Independent Administration of Estates Act streamlines probate by granting personal representatives greater autonomy while preserving safeguards for beneficiaries and creditors. Through mechanisms such as notice of proposed actions and bonding requirements, the Act balances efficiency with accountability. In deciding whether to grant full or limited IAEA authority, courts must weigh the advantages of expedited administration against the need to protect the estate and those with an interest in it.

By Tamela Jensen, Past President, LACBA

Tamela Jensen is a recognized leader in Trust & Estate law and a trusted resource for probate professionals.

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California Probate IAEA