IAEA authority within Probate
In 1987, the California Legislature enacted the Independent Administration of Estates Act (IAEA). IAEA is a collection of statutes granting the personal representative to administer some aspects of the decedent’s estate without court supervision. In order to be granted IAEA powers it must be granted within the will or upon petition. Typically, the personal representative requests IAEA authority art the onset of the probate filing but the Probate code allows for petition of the powers at anytime within the probate. Like most things in probate, interested parties could object to the granting of IAEA powers.
The court can grant the personal representative full or limited authority under the IAEA. If the personal representative has limited authority, court supervision is required for the sale, exchange or granting of an option to purchase estate real property. If the personal representative has full authority, court supervision for the sale, exchange or granting of an option is only required if the personal representative or estates attorney is the principal buying, exchange with or optioning the estate property, or, if objection are made to the Notice of Proposed Action. The notice of proposed action is one of the checks and balances (if you will – no pun intended) of IAEA authority. A notice of proposed action must include: 1) the name and mailing address of the personal representative; 2) the name and telephone number of the person to contact for additional information; 3) reasonably specific description of the action to be taken, including a description of the property and the material terms of the sale, exchange or granting of an option to purchase property, including the price and amount or method of calculating any brokerage commissions; and 4) the date on or after which the proposed action will occur.
The Notice of Proposed Action must be mailed or personally delivered to all persons entitled to receive it at least 15 days before the date the proposed action is to take place. Typically, the estate attorney will handle preparation of the Notice and serve such notice on the required parties.
If the court grants only limited authority to the personal representative, they have the power to do all acts allowed under the IAEA rules except the power to: (1) sell real property, (2) exchange real property, (3) grant an option to purchase real property; or (4) borrow money with a loan secured by an encumbrance on real property. Court supervision (in other words a petition must be filed each time the administrator desires to take action) is required under a party acting with limited authority.
On the other hand, full authority granted under the IAEA rules allows the personal representative to sell real property, exchange real property, grant an option to purchase real property, or borrow money with a loan secured by real property at his or her discretion.
With full authority to administer decedent’s estate, a sale of estate real property may be made at the price and on the terms determined be the personal representative subject to certain probate code restrictions and with the duty to maximize the sales price for the beneficiaries.
IAEA authority makes the estate process much easier when it comes to selling real estate and in theory speeds the process. With great power comes great responsibility – meaning that the personal representative undertakes the sale with a multitude of fiduciary duties to the beneficiaries and the estate as a whole. In addition, the probate code requires strict compliance with notice requirements, sale price, and the handling of objections. Despite that the IAEA was an advancement in handling of estates and sale of property.
Jeremiah Raxter, Esq
27851 Bradley Rd, Suite 145
Menifee, Ca 92586