When an elderly client wishes to make an appreciative bequest to a caregiver in estate planning documents such as a will or trust, watch out. As experienced estate planners understand, the law requires a specific protocol. If the mandated procedure is ignored, a "caregiver's gift" may fail, leaving the drafting attorney subject to liability to the caregiver who is left out in the cold - even though the caregiver was never the lawyer's client. (See Osornio v. Weingarten
, 124 Cal. App. 4th 304 (2004).)
In the early 1990s, concerned that some caregivers and drafting counsel were preying on vulnerable testators, the Legislature amended the Probate Code to provide that when gifts are made to nonrelated caregivers (and to certain other "disqualified persons"), a certificate of independent review must show that a separate attorney has verified that the testator knows what he or she is doing. (Cal. Prob. Code §§ 21350-21356.) Without such a certificate, it is virtually impossible to validate a caregiver gift because the determination requires "clear and convincing evidence" above and beyond testimony of the drafter and the benefited caregiver. (§ 21351(d).)
New provisions to the code governing caregiver bequests took effect in 2011. (See §§ 21360-21392.) As one might expect, the statutory changes raise a number of thorny issues. For example, must a testator who made a caregiver bequest prior to 2011 obtain a new certificate? Section 21355(a) seems to answer yes, as the old rules (and presumably old certificates) apply only to instruments that became irrevocable prior to 2011. Thus, if a given testator included a caregiver gift in a revocable
trust in 2005 but doesn't die until 2012 - at which time the trust becomes irrevocable - the old rules (and perhaps the old certificate) do not apply.
Another issue is whether substantial compliance with the new rules in a pre-2011 gift will satisfy the new statute. No court has yet answered that question.
The 2011 provisions are clearer when it comes to defining many important terms. Section 21362 stipulates that a care custodian
is a person who provides health or social services to a dependent adult. However, the definition excludes persons who provided services without remuneration if they had a "personal relationship" with the dependent adult at least 90 days before providing those services; at least six months before the dependent adult's death; and
before the dependent adult entered hospice care.
Section 21366 defines a dependent adult
, distinguishing between individuals age 18 to 64 years, and those over 65. The term refers to a person who is "unable to provide properly for his or her personal needs for physical health, food clothing or shelter" or, due to a mental deficit, has difficulty (in the case of adults younger than 65, substantial difficulty) "managing his or her own financial resources or resisting fraud or undue influence."
Section 21370 defines an "independent attorney" as a lawyer with no pecuniary interest in the beneficiary of the gift at issue.
There is a presumption of fraud or undue influence for gifts to a "care custodian of a transferor who is a dependent adult, but only if the instrument was executed during the period in which the care custodian provided services to the transferor, or within 90 days before or after that period." (§ 21380(a)(3); the same presumption applies to gifts to drafting attorneys (see § 21380(a)(1).) To overcome the presumption, obtain a certificate of independent review.
Gifts to care custodians do not require certificates of independent review in certain situations, including transfers to certain blood relatives. (§ 21382.)
The Probate Code also provides an exception for people with estates larger than $100,000 who make gifts of up to $5,000. (See § 21382(e).)
One of the more significant changes is that with respect to bequests to care custodians (as opposed to other disqualified persons), the certificate of independent review may be signed by the drafting attorney. (Cal. Prob. Code § 21384(c).) This provision is a welcome change, as many "independent" attorneys do not want to issue the required certificates because they fear being drawn into a dispute without being fairly compensated (think: unpaid deposition time).
Understanding and appreciating these statutory nuances is crucial. Be sure to work with an experienced estate planning attorney.
Michael Burstein is the founder of Burstein Law in Los Angeles, where he practices estate planning and administration, wills and trusts, probate, guardianships and conservatorships, and elder law.