PMWJ H.B. 3432 75(R)BILL ANALYSIS JUDICIAL AFFAIRS H.B. 3432 By: Naishtat 4-28-97 Committee Report (Unamended) BACKGROUND Section 805 of the Probate Code outlines the order for payment of claims against the guardianship estate of a ward. A guardian's administrative expenses are a third priority, following 1) expenses for the ward's care, maintenance and education and 2) funeral expenses of the ward and expenses of the ward's last illness, if the guardianship is kept open after the ward's death. When an estate is solvent, the existing law's claim provisions allow for an efficient ordering of payment of claims. However, when an estate is insolvent, Section 805 becomes ineffective because administrative expenses remain a third priority. If the estate has insufficient funds to pay all outstanding claims, it then becomes difficult to find a guardian willing to be responsible for court costs and attorney fees that would be incurred in attempts to pay debts of the estate. The result is that guardians resign to avoid being personally liable for the court and attorney costs that are normally incurred in an estate's administration. PURPOSE The purpose of this bill is to change the priority in the order of payment for claims for insolvent estates to provide that administrative expenses will be paid first, thus allowing the guardian to receive administrative expenses as the guardian winds down the affairs of a ward's insolvent guardianship estate. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1 amends Section 805 of the Probate Code, concerning the order of payment of claims against the estate of a ward, to allow the guardian to give first priority to the payment of guardianship administration expenses, when the estate is insolvent. SECTION 2 allows the court, on its own or on any interested person's motion, to modify any guardianship in effect on September 1, 1997, to conform with Section 1. SECTION 3. Application of act. SECTION 4. Effective date. SECTION 5. Emergency clause.