The California Professional Fiduciaries Act becomes effective on January 1, 2009. It was scheduled to have become effective on July 1, 2008, however in October, the effective date was extended by the enactment of Senate Bill 1047. The Act requires a person meeting the definition of a “professional fiduciary” to obtain a license to act in such capacity. A professional fiduciary is a person who acts as a conservator or guardian for two or more persons at a time or who acts as a trustee, an agent under a durable power of attorney for healthcare, or an agent under a durable power of attorney for finances for more than three people or more than three families (an ambiguous term), or any combination thereof at the same time. While the new law is generally not applicable until January 1, 2009, under Probate Code Section 2340, any trustee appointed by a court after July 1, 2008, will have to be licensed.
There is an important exception that excludes from the licensing requirement any individual serving in such a fiduciary capacity for members of his own family. There is also an exception to the licensing requirement for attorneys licensed to practice in California and for certified public accountants licensed to practice in California. The licensing requirement could be applicable to business managers, personal managers and financial advisors who serve as trustee for their clients, unless they are either California attorneys or certified public accountants.
If you are required to be licensed, there are a variety of requirements that you will have to satisfy, including completing thirty hours of pre-licensing education courses prescribed by the bureau that will be set up to administer this law, and passing a licensing examination also administered by that bureau. There are certain minimum educational or work experience requirements imposed as well.
There is some uncertainty how these provisions may apply to investment advisors. A person is exempt from licensing if he acts in a fiduciary capacity only as a broker-dealer, broker-agent, or an investment advisor representative registered under the California Securities Law of 1968, the Investment Advisors Act of 1940 or the Securities Exchange Act of 1934. If such an advisor serves in any fiduciary capacity beyond the handling of his clients’ investments, such as by serving as the trustee of a family trust, he will have to be licensed unless he is a California attorney or certified public accountant.