Probate Rules Keep Rolling Out
Written by Bogutz and Gordon
Handling probate, guardianship and conservatorship matters in Arizona just got more complicated. A slew of new rules took effect September 1.
In 2011, the Legislature passed laws aimed to protect vulnerable people and improve the transparency of probate procedures – in other words, keep vulnerable
people’s money from being drained by legal and fiduciary fees. The Supreme Court then approved corresponding rules of probate procedure. More than half of the rules took effect in February, and the rest kick in this month.
The new rules require the court to keep a close eye on costs of all kinds. Some new rules are aimed squarely at conservators, who take control of finances for those who are unable to handle their own affairs. Conservators have always had to file annual accountings, but now, conservators must file them on standardized forms that are very challenging to complete in real life cases. Conservators for adults also must file what’s called a “sustainability report” and a budget. These documents aim to force conservators and the court to examine whether the assets and income of the conservatorship are sufficient to sustain the protected person as long as needed. A simple formula is provided for determining sustainability. If it looks like the money will run out, the conservator must disclose a management plan. The idea is just to get a “general idea” of assets in relation to needs, and have a strategy if it appears the money is insufficient.
A conservator for an adult will generally be required to follow the budget, unless the court orders otherwise. A conservator’s budget and accountings must be filed in the new format, and there are no exceptions. Uniformity is intended to help the court assess the accounts more quickly, without having to make sense of different forms. Current conservators will have to begin using the new form after their next accountings. After a conservator’s next accounting, the court is to notify the conservator that subsequent accountings should conform to the new rule. There are forms for the first accounting, regular accounting, and final accounting, plus a simplified form that the court may order. The good news is the court has provided a website where you can download the required forms (in Excel format) or watch a video tutorial.
Additional rules that begin this month require non-licensed fiduciaries, plus any court-appointed attorney, guardian ad litem, or investigator in a guardianship or conservatorship to complete a training course. The courses are available online here.
Some of the rules that took effect in February attempt to rein in costs more directly. For example, they require a fiduciary to prudently manage costs, preserve assets, and protect against incurring any costs that exceed probable benefits to the ward, protected person, decedent’s estate, or trust. Various parties are required to tell the court and other interested parties if the costs of complying with a Court order might exceed the benefits. The Court may even order competitive bids for goods and services.
To minimize unnecessary expense and delay, a party may notify the court of a repetitive filing if another party requests the same or substantially similar relief. The court in that case may strike the repetitive motion without a hearing. There are remedies available if the court finds that a person has engaged in “vexatious conduct,” which means “habitual, repetitive conduct undertaken solely or primarily to harass or maliciously injure another party or that party’s representative, cause unreasonable delay in proceedings, cause undue harm to the ward or protected person, or cause unnecessary expense” but not “conduct undertaken in good faith.” A new statute provides fee shifting if a party’s conduct is unreasonable, meaning the party and/or his attorney may be ordered to pay.
There are guidelines for what constitutes a reasonable fee for a fiduciary or attorney, and the Arizona Code of Judicial Administration provides six pages worth of detail.
These are just a few of the rules that have taken effect in 2012. As attorneys, fiduciaries, and the court put them into practice, it will be interesting to see if they have the desired effect of preserving the assets of the vulnerable or whether they will simply increase fees and costs with the additional paperwork that will be required.
By Ana Perez-Arrieta & Jacque Mingle