Recently I was asked if I could help an elderly married couple who had run into an obstacle preventing them selling their home. That is, the Notary Public had refused to notarize the wife’s signature because the wife apparently did not understand the documents she was to sign. The wife did not have a Durable Power of Attorney authorizing her spouse to act as her agent in selling the property and now apparently lacked the capacity to sign one. That left two options.
The preferred option was to petition for An Order Authorizing a Particular Transaction (section 3100 et. seq. of the California Probate Code). When community property is involved and one spouse is competent and the other spouse is incompetent, the competent spouse can petition the court. Here the transaction involved was the sale of the couple’s residence, a community property asset.
The 3100 petition has numerous requirements, including the following:
First, the incapacitated spouse must be examined by a physician and a capacity evaluation form filed with the court, the same as in a conservatorship proceeding.
Second, a court must appoint a “guardian ad litem” to represent the incapacitated spouse’s interests. Persons whom I have seen appointed as the guardian ad litem include an adult child of the incapacitated spouse or an attorney. After investigating the proposed transaction, the guardian ad litem files a written report with a recommendation to the court.
Third, the transaction must involve the couple’s community property. There must be some community property interest in the transaction. The order can also affect additional separate property interests involved in the same transaction. In the absence of community property, the well spouse may “transmute” (change) some of the well spouse’s own separate property interests into community property in order to meet the requirement that community property be involved.
Fourth, the transaction must be for one of four allowed purposes, such as for the, “advantage, benefit or best interests of the spouses or their estates,” or for, “the care and support of either spouse or of such persons as either spouse may be legally obligated to support”. For example, in the aforementioned instance, authorizing the sale of the couple’s residence so that they could move out of state to live with children. Also, for example, transferring one spouse’s property to another spouse so that the incapacitated spouse becomes eligible for long term Medi-Cal at a skilled nursing home.
Fifth, the Notice of Hearing and a copy of the 3100 Petition must be served on all of the incapacitated spouse’s siblings, children and grandchildren. This can involve numerous relatives. Any of these relatives potentially could object to oppose the transaction.
Whenever, the 3100 petition is an available option it is usually preferable to initiating a conservatorship (unless a conservatorship already exists). Initiating a conservatorship involves more legal papers to be prepared and filed, and more legal expenses to pay. Once the conservatorship is established the conservator may then also still need to prepare and file a Petition for Substituted Judgement or a 3100 Petition to obtain a court order authorizing the conservator to complete the transaction on behalf of the incapacitated spouse.
The costs involved with a court petition would have been avoided had the couple either owned their residence inside of a Living Trust or if the wife had a Durable Power of Attorney authorizing her husband to sell her interest their residence. Unfortunately, for whatever reason, neither type of estate planning was in place.