Once a probate lawyer starts to fill out a Petition for Probate, one of the first questions they must answer is whether to ask for authority to administer the estate under the Independent Administration of Estates Act (“IAEA”). IAEA is the shorthand for the act, and any reputable trust and estates attorney will understand what is meant by “IAEA”. Most attorneys have no idea what IAEA means.
What is the Independent Administration of Estates Act?
California's Independent Administration of Estates Act was enacted in 1987. It can be found at California Probate Code §§ 10400 to 10592. The IAEA eases the job of the executor or administrator by allowing the personal representative to take certain actions on the estate without obtaining prior court approval.
The attorney will first examine the decedent’s will if there is one. The will often contains explicit language authorizing the executor to obtain IAEA powers. Sometimes, a will expressly denies the personal representative IAEA powers. If there is no will, or the will is silent on the topic, the attorney can still check the box for IAEA powers, and the court will review the request.
Limited and Full IAEA Powers
There are two levels of IAEA powers, “limited” and “full”. Full authority gives the personal representative the power to buy, sell, or borrow against real property without court approval. Limited authority does not give authority over real property; a personal representative with only limited powers will have to request court approval before moving forward with a purchase, sale, or mortgage.
Estate beneficiaries might object to the request for IAEA authority if they believe the personal representative will have conflicts of interest or should be watched more closely by the court.
Why would anyone ask for limited authority when they could have full authority? Because that person may have trouble obtaining a sufficient bond. We’ll discuss bond in a later post, but often the personal representative has to obtain a bond to cover the value of the liquid assets of the estate (cash, securities, etc.) With full IAEA powers, the court will consider the value of illiquid ("solid") assets, like real property, in determining the bond. Including the value of the real property can greatly increase the size of the bond required, so sometimes it makes sense to stick with limited IAEA powers and keep the bond value lower.
Additional Reading - Lodging the Decedent's Will