In the absence of a trust that allows assets to pass without opening probate, the California probate process lasts for at least six months and can run much longer depending on the size of the estate and the nature of assets. The role of the personal representative (i.e., the “executor” if nominated in the will) is to administer the estate efficiently, resolve creditor claims, and get the assets out to the rightful beneficiaries.
By no means, of course, is the probate process supposed to drag out for two decades. That’s exactly what happened, however, in a case in Riverside County Superior Court. In Estate of Sapp (2019) ___ Cal.App.5th ___, the California Court of Appeal affirmed the probate court’s removal of the personal representative, providing guidance as to when a representative may be removed. As the opinion indicates, probate is no time for napping by the personal representative or the beneficiary: the former has a fiduciary duty to get the job done and the latter may need to poke the dozing, inept and/or corrupt representative.
Probate Court Rules that Real Property Should Be Liquidated
Roscoe Sapp, Sr. died in 1994, leaving seven surviving children and an estate worth millions of dollars. His will provided real property to his children “to share + share alike.”
The probate court admitted the will to probate in June 1995. While the court initially made the decedent’s sister the personal representative, she was eventually removed in July 1999 and replaced with the decedent’s granddaughter – Edith Rogers – and two other co-administrators.
By 2001, only Edith and one other co-administrator remained, and they petitioned the probate court for instructions on how to proceed because they disagreed. Some of the decedent’s surviving children were disabled and incapable of caring for themselves. Edith asserted that all but one of the real properties should be sold with the proceeds distributed to heirs capable of caring for themselves and used to establish a care facility for disabled heirs. The other co-administrator wanted to sell all the property and distribute all the proceeds.
The probate court selected the second of these routes, directing the personal representatives to sell all of the estate’s real property.
In 2003, Edith’s co-administrator died, however, leaving Edith as sole administrator.
Administrator Does Not Finish the Job and Beneficiaries Seek to Remove Her
Fast-forward 14 years. While four real properties were apparently sold in 2004, the remaining nine parcels still were unsold in 2017.
Armuress Sapp and another grandchild filed petitions to remove Edith as administrator and to be appointed as successor administrator.
Armuress alleged that none of the beneficiaries had received any inheritance and none of the creditors had yet been paid. He also alleged that Edith was not effectively marketing the real property because it had been removed from active listings, and Edith did not adjust the asking price after the market significantly dropped. In addition, Edith allegedly told Armuress that if he cooperated with her, he “would get something from the estate,” but wouldn’t otherwise receive anything. Edith also allegedly offered to pay approximately ten family members $10,000 each to “just sign off and walk away.”
In April 2017, the probate court in Riverside County granted the petitions to remove Edith as administrator pursuant to California Probate Code section 8502 and appointed Armuress as successor administrator.
Section 8502 allows a personal representative to be removed for any of the following reasons:
a) The personal representative has wasted, embezzled, mismanaged, or committed a fraud on the estate, or is about to do so.
b) The personal representative is incapable of properly executing the duties of the office or is otherwise not qualified for appointment as personal representative.
c) The personal representative has wrongfully neglected the estate, or has long neglected to perform any act as personal representative.
d) Removal is otherwise necessary for protection of the estate or interested persons.
e) Any other cause provided by statute.
In removing Edith, the probate court found that she was “incapable of properly executing the duties” of administrator under section 8502(b) because she had not yet sold the real properties. It also found that Edith had acted in bad faith toward the beneficiaries by trying to buy them out for $10,000 per person. Finally, it found that she had mismanaged the estate under section 8502(a) because she didn’t appear to be actively selling the real properties until recently.
Court of Appeal Affirms Removal of Administrator
Edith appealed the 2017 ruling and the Court of Appeal affirmed her removal. Interestingly, the court both expanded and narrowed the bases upon which an administrator may be removed under section 8502.
First, the appellate court disagreed with the probate court that Rogers should be removed under section 8502(b) because she was “incapable of properly executing the duties” of administrator. The court zeroed in on the term “incapable” in section 8502(b), finding that it means a lack of mental capacity such as when a person of “unsound mind” cannot enter into a contract. “Incapable” does not mean a mere unwillingness to perform duties. The court nonetheless found that removal was appropriate under section 8502(b) because Edith was “otherwise not qualified.”
Second, the court agreed that Edith had “mismanaged” the estate. Due to a shortage of authority on what “mismanagement” means, the court analyzed two cases dating back to 1945 and 1983. In Estate of Palm (1945) 68 Cal.App.2d 204, “mismanage” was construed to mean that an estate’s business was “badly, improperly, or unskillfully conducted.” In Estate of Feeney (1983) 139 Cal.App.3d 812, however, “mismanage” was more narrowly construed to mean “administrative malfeasance amounting to a moral wrong.” The court rejected the Feeney approach, adopting Estate of Palm’s broader construction of “mismanagement,” which did not require any moral wrong. It regardless found that, under either definition, Edith’s over 15-year delay in winding up the estate and her attempt to buy out beneficiaries for far less than the value to which they were entitled amounted to “mismanagement.”
Estate of Sapp is instructive on a few levels with respect to California probate administration.
First, to avoid the probate process and get his assets out to his family faster, Roscoe Sapp, Sr. should have created a trust with clear distributive provisions and should have selected a trustee ready and able to execute his instructions. He could have chosen a bank trust department or private professional fiduciary to serve as trustee in the alternative to a family member.
Second, personal representatives must be diligent when administering estates. For example, they should be careful to list real property for sale at an appropriate price – if the price is too high, a probate court might find that the property is effectively off the market. Poor management of the estate is enough to trigger the representative’s removal.
Third, the beneficiaries should proactively monitor the progress of administration. If it languishes, the beneficiaries should consult with an attorney and, if appropriate, file a petition to instruct or remove the administrator – otherwise, decades may pass before the assets get distributed. That’s an awfully long nap.