PVP Trust and Conservatorship Cross-overs

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

PVP Trust and Conservatorship Cross-overs

The Los Angeles County Bar Association, Trusts and Estates Section, sponsored the PVP Brown Bag Lunch in D-11 of the L.A. Central Court on September 29, 2010.  Andrew Wallet, Esq. of Hinojosa and Wallet, LLP spoke on “The Interplay Between Trust and Conservatorship Proceedings.”  He said the mandate to a PVP Attorney is “What is in the Best Interest of the Conservatee.”

THAT IS SPECIFICALLY NOT TRUE.  The mandate is to represent the interests of the conservatee.  If they have the capacity to direct you, you must represent them; not what you think is best. Later, he modified his position slightly during discussion.

He says the directive to the appointed attorney has gone back and forth: Advocate v. Best Interest.  He does Best Interest, realizing he is still to advocate. I suggest Best Interest, where you make that determination regardless of the conservatee’s wishes, has not been the position of the court or the law for many years; nor is it proper under the Rules of Professional Conduct.

The same rule applies to representing a party in a Trust situation.  You can, in the Trust situation, at the initial hearing bring the Trust into the Court’s jurisdiction.  If the court will not do this at an initial hearing, petition Ex Parte.  Ask the court to appoint an interim Trustee to take charge of things, as opposed to a named Successor Trustee who is not a professional and lacks sophistication.  Sometimes you can persuade the Successor to decline to act if you fear their capability to act.

Even with a conservatorship, if most assets are in a Trust, income/assets may not be readily available to support the conservatee.  So, you petition the court to take jurisdiction of the Trust.  Some courts will do that as part of the Conservatorship action (even if given a separate Case No.); others will not act on the Trust without a separate petition.

Getting a Trustee bonded is another safeguard.

Powers of Attorney are affected by the appointment of a Conservator.  An Attorney-in-Fact is not under court jurisdiction.

Find-out if these exist and you can ask the court, with notice, to vacate the Powers of Attorney.  Put it in your orders.  Cite the Attorney-in-Fact/Agents to the hearing.  Otherwise, you do not have control over these agents.  You can cite them into court, your can file for accountings, you can seek damages.             

You want to manage health care decisions.  If there is an Healthcare Power or Advance Directive there is a conflict over who controls decision making.

If there are pending lawsuits, the conservator should substitute in as the party.  Even with a Conservator, the Civil court can appoint a Guardian ad Litem.  Try to avoid this conflict.

Only the Conservator of the Estate (not the Person) can bring an action on behalf of the Conservatee.

If the Conservatee is the beneficiary of a Trust: The Conservator of the Estate should get a copy of the Trust; get an accounting; and, make certain proper benefits are received.

If action needs to be taken on behalf of the conservatee and the conservator refuses to take the needed action, the PVP attorney can Petition the court to compel the conservator to act or give authority to the PVP attorney to act in his place.

Probate Code §2580 can be used to do estate planning for the conservatee.  You must be able to prove to the court that the desired action is one the conservatee would take.

Use care in what you put in a Petition to the court that you do not violate attorney-client privilege in what you disclose to the court or others.  It is a delicate dance, he says, especially where the client in not able to make informed decisions.  He says that since the person may not have full capacity to make decisions or direct you, you are back to what you think is in their best interest.  I suggest that is not the law regarding PVP counsel; legal counsel is legal counsel.

No rule gives exception, that I am aware of, that you represent the client.  You are not the client.  As GAL, best interest applies.  You are the client.  You speak for the person you were appointed for.  That is not the same as PVP counsel.

Sometimes someone else shows up and says they represent the proposed conservatee.  You should not just accept that; it is for the court to determine.  You may have to tell counsel that you will ask the court to appoint an Evid. Code §730 expert to determine capacity to retain counsel.  If the person cannot and the conservatorship incurs fees to determine this, the court may be requested to order payment of your fees by the allegedly retained counsel.  And, what is their interest in that do they believe you, as PVP, can’t represent the conservatee adequately?

He further suggests that as PVP counsel, he represents the conservatee, even in a Trust matter.  I disagree.  I believe you must also get appointed in the Trust matter.

Judge Beckloff said last May in a seminar that there is no pendulum swinging back and forth–you are an advocate for what the client wants.

What about a jury?  Or putting the proposed conservatee on the witness stand?  If the proposed conservatee wants it, what do you do as their appointed counsel?  What do the code and rules require of an attorney for a client?  I think that if you cannot represent the person the way they want, you might have to petition to be replaced without disclosing information to opposing parties or the public.  Do not violate attorney-client privilege.  Use care in what might be disclosed that tells others what you are doing or thinking. 

MARK YOUR CALENDAR: Upcoming Long Beach Bar Estate Planning, Trust and Probate Section Brown Bag Meetings at the Long Beach Superior Court, Dept. G (5th Floor), from noon to 1 PM:   

Thursday, October 21, 2010 Judge Mitchell Beckloff on Updates from LA Dept.5:  What’s Happening in Probate

December 2, 2010, Jim Birnberg, Esq. on Legislative Updates

NOTE: THE PROBATE CALENDAR WILL HENCEFORTH BE CALLED IN DEPT G on the 5th Floor (still Thursday afternoons, but not in Dept. 11)

                _________________________________________________

                John T. Anderson, Section Chair

                Certified Specialist in Probate, Trust and Estate Planning

                by the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.10.06  PVP Role.docx

Re-visiting Gifts to Caregivers

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

Re-visiting Gifts to Caregivers

A brand new case carves away and helps further define the application of Probate Code §§21350 and 21351 together with Welfare and Institutions Code §§15610.17 and 15610.23.

Estate of Donald Richard Austin, deceased, Austin v. Simpson
F058119 (September 15, 2010)

Probate Code §21350 provides a list of relationships which cause a transfer to be presumptively invalid.  Probate Code §21351 provides the ground rules for exceptions to §21350 and sets forth the standard of proof to overcome the presumption that the gift is invalid as clear and convincing.  Welfare and Institutions Code §15610.17 defines a “Care Custodian,” and Welfare and Institutions Codes §15610.23 defines a “Dependent Adult.”

Judge Paul has spent a good amount of time explaining to counsel just how high that standard of proof is to prepare them before they proceed.

Here, decedent’s daughter (Dawn) challenged gifts to the daughter of decedent’s former wife (Debra).  Dawn’s mother was married to decedent for eight years.  They divorced “for Medi-Cal reasons.”  Probate Code §21350 established a burden of proof to overcome the presumption of invalidity of a transfer to persons of enumerated relationships.  One of those is a care-custodian as defined in W&I §15610.17.

The appellate court referred to the type of care provided by longtime friends in Conservatorship of Davidson (2003), 113 Cal.App.4th 1035 and Bernard v. Foley (2006) 39 Cal.4th 794 which, this court says disapproved of Davidson “to the extent it interpreted §21350 as excluding from the definition of a ‘care custodian’ those caregivers whose service relationship . . . arose out of a pre-existing personal friendship rather than a professional or occupational connection.”

At the trial, the court found, and the Appellate Court agreed, that to be a “care custodian,” did not require that one be compensated; but required that they provide health services or social services to a dependant adult (Bernard).  In Bernard v. Foley decedent resided with Foley and Erman.  “She was incapable of caring for herself and was dependent upon them for her daily needs.”  They put her to bed, changed diapers, prepared meals, applied medications, handled banking and finances; “[s]ubstantial, ongoing health services.”

In Davidson, the court found, and the Appellate Court agreed, “the kinds of errands, chores, and household tasks performed . . . simply cannot be equated with the provision of “health services and social services” . . . constituting custodial care.” 
Because of the limited services provided by Debra, the court found that Dawn had not met her burden of proving that Debra was a care custodian under the code and thus §21350 did not even come into play to shift the burden of proof to her to prove, by testimony other than her own or anyone else in §21350, by clear and convincing proof, that the gifts were not a product of fraud or undue influence and that she fell within an exception in §21351.

So friends who provide limited assistance may not be disqualified persons to receive gifts.  In planning, I recommend assuming they are care custodians if the friends assist in any acts of daily care.  After the fact, when it is too late to plan, this case will provide guidance.


MARK YOUR CALENDAR: Upcoming Long Beach Bar Estate Planning, Trust and Probate Section Brown Bag Meetings at the Long Beach Superior Court, Dept. G (5th Floor), from noon to 1 PM:   

Thursday, October 21, 2010 Judge Mitchell Beckloff on Updates from LA Dept.5:  What’s Happening in Probate

December 2, 2010, Jim Birnberg, Esq. on Legislative Updates

NOTE: THE PROBATE CALENDAR WILL HENCEFORTH BE CALLED IN DEPT G on the 5th Floor (still Thursday afternoons, but not in Dept. 11)

   
                _________________________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and Estate Planning
                by the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.09.24  Gifts to Caregivers Austin v. Simpson.docx

Tortious Interference with Inheritance Expectancy

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

Tortious Interference with Inheritance Expectancy

This theory that the court finds, at least in this case, has not made its way to California, made me think about the fertile octogenarian which applies to the Rule Against Perpetuities (neither of which is relative to the case at hand).  Munn v. Briggs 185 Cal.App.4th 578 (2010) is an appeal of a civil case out of San Diego.  Decedent, Janell, had two children, Carlyn and James.  Carlyn and her husband Michael are the Defendants, and James is the Plaintiff.           

James has appealed the trial court’s sustaining of Carlyn and Michael’s demurrer to his civil complaint for interference with an inheritance expectancy. 

James did not contest the Will, and it was admitted to probate along with the Codicil.  Janell had a Living Trust and a Pour-Over Will.  The Trust was put in place while her husband was alive.  It split into three sub-Trusts upon his death.  Janell had a general power of appointment over the assets of the Survivor’s Trust.  She exercised that power of appointment in the Codicil by directing $1 million each to two grandchildren, only; the children of Carlyn.

James claimed that he did not contest the Will or Codicil in the probate because of the no-contest clause.  Instead, he brought this civil action.  The codicil was executed December 22, 2007.  Janell passed away January 23, 2008.

The Appellate Court took judicial notice of, among other things, the “safe harbor” petition under former Probate Code §21320(a) filed by James in the Probate and the court’s finding that the instant civil action was not a contest under the no-contest provision as the civil filing “did not contest the validity of the codicil.”

James’ civil action claimed that Carlyn manipulated Janell.  She kept her grandchildren away from her when she didn’t do what Carlyn wanted.  She threatened that she “would not scatter her ashes alongside those of her husband Henry.”  Further, that Carlyn convinced Janell, falsely, that James’ children had a better relationship with their maternal grandparents, who were going to leave them sizable inheritances.

James alleged that the $2 million to Carlyn’s children reduced his inheritance by $1 million.

In sustaining Defendants’ demurrer without leave to amend, the Trial Court found that no California case supported a “cause of action of Intentional Interference with an Inheritance Expectancy” and that a determination that such a claim should be recognized in California should not come from a trial court.”

The court reviewed the standards for review of a demurrer on appeal.  CCP §430.10(c) discusses demurrers.  The standard of review is “de novo.”

Next the court reviewed the background of the tort of “intentional interference with an inheritance expectancy” which is set forth in §774B of the Restatement of Torts for the first time in 1979.  The court gave a survey of law review articles and pointed-out that one-half of the states recognize it.

Citing an article “Suggestions for Resort to the Tort” in the University of Toledo Law Review, Vol. 39, Page 772, “unlike probate proceedings, which seek to carry-out the intent of the testator with respect to the distribution of the testator’s estate, a tort action for interference with an expected inheritance endeavors ‘to restore the plaintiff with the benefit arguably lost because of defendant’s tortious conduct.”

Next the court discussed the “availability of the Tort and the Adequacy of a Remedy in Probate.” 

Again citing the Toledo Law Review the court said Tort cases fell into three categories (1) Where Probate provides an adequate remedy and the tort claim is not needed; (2) Where Probate would provide no remedy or an inadequate remedy; and (3) Where there is a probate and the result is inadequate.  In the third situation collateral estoppel becomes an issue.

“The adequacy of a party’s remedy in probate is also one of the justifications given by courts in those states that have declined to recognize the tort of interference with an expected inheritance.”

The court here concluded that James had an adequate remedy in probate to challenge the codicil without resorting to the Tort.  James had standing and had ample opportunity to challenge the validity of the codicil in probate.  James claimed the no contest clause prevented him from proceeding in Probate; the Appellate Court disagreed. 

The court reviewed the status of no contest clauses and how we got to the current state of the law. 
The court stated that “if we accepted James’s argument that he lacked an adequate remedy in probate merely because Janell’s codicil contained a no contest clause, and, if we afforded him the right to sue in tort for interference with an expected inheritance, we . . . would undermine the important public policies served by no contest clauses, we also would all but eliminate ‘will contests’ in probate to the extent the testamentary document(s) contained a no contest clause.”  The court noted the new no contest clause statutes did not apply to Janell’s codicil admitted to probate in 2008.

Safe Harbor procedures are now gone, but no contest clauses are enforced against “direct contests” (P.C. §21310(b)) only when brought without “probable cause” (P.C. §21311(b)).

“In light of the Legislature’s ‘wholesale revision(s)’ to the provisions governing no contest clauses,” the court declined to recognize a new tort which might “undermine” the new law.

The court concluded by leaving the door open with different facts by saying, “Our holding in this case is limited.  Because we conclude James had an adequate remedy in probate to challenge the validity of Janell’s codicil, we decline under the present circumstances to adopt the tort of interference with an expected inheritance.”  That sounds like an invitation to try again, at least in that district.

MARK YOUR CALENDAR: Upcoming Long Beach Bar Estate Planning, Trust and Probate Section Brown Bag Meetings at the Long Beach Superior Court, Dept. G (5th Floor), from noon to 1 PM:   

Thursday, October 21, 2010 Judge Mitchell Beckloff on Updates from LA Dept.5:  What’s Happening in Probate

December 2, 2010, Jim Birnberg, Esq. on Legislative Updates

NOTE: THE PROBATE CALENDAR WILL HENCEFORTH BE CALLED IN DEPT G on the 5th Floor (still Thursday afternoons, but not in Dept. 11)

                _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and  Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.09.17  Munn v. Briggs Tortious Interference with Inheritance Expectancy.docx

How Long to Wait After a Death to Take Legal Action

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

 How Long to Wait After a Death to Take Legal Action

In the Estate of Paul Ziegler, which was reported August 31, 2010, claimants waited one year and three weeks to file their claim.  The Appellate Court determined that was three weeks too long.

The “Code of Civil Procedure §366.3(a) provides: ‘If a person has a claim that arises from a promise . . . to distribute from an estate or trust or under another instrument . . . an action to enforce the claim to distribution may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply.’”

The real parties in interest are decedent’s neighbor, who became his caregiver (Richard and his wife), and W.C. Cox and Co, an heir search company “acting as the attorney-in-fact for nine residents of Germany” who claimed as heirs of decedent.

The court acknowledged that all of the equities seemed to be with Richard.  He and his wife lived next door to decedent and over the years shopped for him and took care of him more and more. The court referred to Cox & Co. as being “soulless.”

Decedent finally told Richard that he had no family, so he wanted to leave Richard his house for all Richard had done for him.  He had Richard write-out that he was signing over his home to Richard.  It was to be in “exchange of my care and daily meals.  This note will be immediately active if and when I no longer can reside in my home due to death.”  Decedent and Richard signed.  It was witnessed.

Decedent died January 15, 2006 at 60 years of age.  Richard notified known relatives and then moved into the home and started making improvements.

The Public Administrator filed a Petition for Administration of the Estate in September 2006 and was appointed Administrator in October 2006.

Richard filed his claim on February 9, 2007 for the cost of improvements he had made.  On February 13, 2007 Richard filed an alternative claim on the value of the house.

In May 2007 the Administrator filed a Petition for Instructions favoring Richard.  Cox filed objections based upon violation of the Statute of Limitations and a Petition to Determine Persons Entitled to Distribution.  In September 2007 Richard filed an 850 Petition for the house itself.

The Trial Court ruled in favor of Richard finding that the contract was to be performed upon Ziegler’s death and was never breached, so the statute of limitations never ran.
The Appellate Court overturned the Trial Court’s decision citing CCP §366.3; that the statute commenced running at the date of decedent’s death.  The Statute of Limitations “runs from the date of death, not the date on which the cause of action accrues.”

The Appellate Court did note that an exception might be where “estoppel to assert the statute of limitations” occurs due to indications by the personal representative that they intended to comply and perform on decedent’s agreement.  But this was not raised as an issue in this case.

The Appellate Court reviewed the concerns of the Legislature in passing these limitations . . . the hardship to the beneficiaries and administrators if there was no cut-off date for claims.

Although the payment of a claim is not normally referred to as a distribution, the legislature made it clear that a contract to make a Will is a claim to distribution of an estate and a promise to make a distribution is subject to the same limitation period.

Even Richard’s alternative claim in quantum merit is barred by CCP §366.2's similar one year statute of limitations.

MARK YOUR CALENDAR: Upcoming Long Beach Bar Estate Planning, Trust and Probate Section Brown Bag Meetings at the Long Beach Superior Court, Dept. G (5th Floor), from noon to 1 PM:   

Thursday, October 21, 2010 Judge Mitchell Beckloff on Updates from LA Dept.5:  What’s Happening in Probate

December 2, 2010, Jim Birnberg, Esq. on Legislative Updates

NOTE: THE PROBATE CALENDAR WILL HENCEFORTH BE CALLED IN DEPT G on the 5th Floor (still Thursday afternoons, but not in Dept. 11)

   
                _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and  Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.09.08  Ziegler How Long To Wait After Death.docx

Damages and Parties in Probate Code §§850, 856 and 859 Cases

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

Damages and Parties in Probate Code §§850, 856 and 859 Cases

Estate of Janice Helena Kraus, deceased, The Regents of U.C. et. al. v. David Kraus (2010) involved mother, Irene, and her two children, Janice and David.  Irene was rather elderly; and Janice is hospitalized, dying of brain cancer.  Irene had disinherited David from her estate plan and set forth that he refused to return to her $160,000 they (David and his wife) were to have held for her.

Janice, likewise, excluded David from her estate plan.  She left her estate via her living trust, written in 2003 and amended in 2005, to the Make-A-Wish Foundation of Greater Los Angeles and the Regents of University of California.  Janice had approximately $160,000 in bank accounts; some of the accounts had Irene as a Joint Tenant, and some others had Irene as a beneficiary.

The day before Janice died, David got her “X” on a Power of Attorney which he used to close the bank accounts and take the funds.  They were placed in accounts for David, with his daughter as beneficiary.

Janice’s attorney/Trustee wrote to David regarding the funds.  Janice’s Will provided that the Bank Accounts were to go to her Trust and the Trustee “assigned all ‘choses [sic] in action and claims’ against David to the beneficiaries.”

Irene died prior to trial, but after Janice.

David wrote a letter to the charities threatening “to expose their greed to the media.”  Further, he told them they could not bully him; he knew the law and they “have no standing in the eyes of the court”; that bringing a matter against him would forever prejudice the court against them; and, that they would “long be remembered in her court.”

The Trial Court found that David’s power of attorney was void and that David acted “wrongfully and in bad faith” converting property.  He was ordered to pay damages of $197,402 to a court-appointed representative of Janice’s estate; and, per §859, $394,804 (double damages) the personal representative.  The minute order changed the total damages to $394,804.

The appellate court reviewed Probate Code §§850-859 and reviewed the persons, including “any interested person” who could bring a §850 action. §48 defines an “interested person;” § 855 defines types of actions which may be brought; and §859 provides for recovery of twice the value of property taken in bad faith “. . . wrongfully taken, concealed, or disposed of property belonging to the estate of a decedent, conservatee, minor, or trust . . ..”

The court does not have to wait until a determination is made as to who ultimately will receive the funds or to award punitive damages.  “The statutory emphasis is not on to whom the property belongs, but whether the person in possession in bad faith wrongfully acquired it.”

The probate court did not award damages “it ordered David to hand over misappropriated funds together with a statutory penalty for his bad faith conduct.  The funds were taken out of the hands of the person who wrongfully acquired them.”

So, once again, guard against acting in bad faith.  There are consequences.
   
                _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson
All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.
File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.05.31  Trustee Bad Faith Damages Kraus.docx

Community Property

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

Community Property

A December 2008 case was referred to recently by Judge Paul.  He mentioned during our Brown Bag Luncheon that Judge Beckloff had cited the case as the most recent appellate court case dealing with the issue of community property.  The case did not involve Family Code §852 issues of transmutation because title was taken, from the outset, in wife’s name alone.  The court, in a footnote, cites Hogoboom and King’s Cal Practice Guide: Family Law.  The decision was written by Justice King.

Michael (“Husband”) and Annikkawa (“Wife”) married in 1997.  A home was purchased in 2000.  Wife took title to the real property in her name alone.  The down payment was from Husband’s earnings.  Husband agreed with the realtor that financing would be easier if the home was in Wife’s name and the Grand Deed and two Deeds of Trust were to Wife, “a single woman.”

Husband remained in the home when Husband and Wife separated.  Prior to Husband filing for divorce, Wife sold the property to ECG.  ECG purchased the property and later, after an Unlawful Detainer action, evicted Husband.  Husband filed for Joinder to bring ECG into the divorce and to set aside the sale. 

Husband testified that he had met with Wife and employees of ECG at the property.  He identified himself as Husband, told them the property was community property, and told them that he wouldn’t sell.  The two employees testified that they only spoke with Wife and that they were never advised the Husband and Wife were married.  Husband’s claims were denied by the Trial Court, which ruled ECG was a bona fide purchaser.  The Trial Court’s decision was affirmed by the Appellate Court.

Transfer of real property title of community property real property requires that both parties join in execution of the deed.  Absent that, the rule is that such a transfer is voidable by the spouse who did not join in the conveyance (Family Code §1102).  However, the deed is presumed valid if received in good faith, without knowledge of a marriage relation [Family Code §1102(c)(2)].

Husband argued that ECG at least knew he was a tenant in possession if not that he had an interest in the property and thus that he had an interest in the property, and thus they had a duty to inquire as to his interest.

The court, in what appears to be dicta, indicates that “there appears to be merit” to Husband’s contentions that ECG is “charged with whatever knowledge it would have acquired” had it made inquiry to Husband.  But the court says it does not have to “reach the issues” because Husband “did not have an interest in the property as a matter of law.”

The court reviews that there is a “form of title” presumption as a matter of public policy citing Marriage of Haines (1995) 33Cal.App.4th 277 and In re Marriage of Broderick (1989) 209 Cal.App.3d 489, codified in Evidence Code §662.  The presumption requires clear and convincing proof to rebut.

Husband argued the fact that the marriage pre-dated the purchase of the property and that the general presumption that property purchased during marriage was community property negates the presumption arising from the form of title.  The court says “the affirmative act of specifying a form of ownership in the conveyance of title “removes the property” from the more general presumption” [In re Marriage of Lucas (1980) 27 Cal.3d 808].

Husband correctly states that legislation was passed superseding Lucas (Family Code §§2581 and 2640); but the court states that those statutes are “unrelated to the analysis and holding we rely on.”  The statutes enacted involved other issues.  Some of those issues involved title held as joint tenancy presumed to be community property and the right to reimbursement for separate property contributions to community property.  In addition, the new statutes involved “division of property on dissolution of marriage or legal separate of the parties.”  This property was not acquired by the parties and it involves a dispute between Husband and ECG.

“To overcome the form of title presumption, the evidence of a contrary agreement or understanding must be ‘clear and convincing’” [Evidence Code §662, In re Marriage of Weaver (1990) 224 Cal.App.3d 478].

The fact that Husband testified that he allowed title to be in Wife’s name alone for financing purposes actually confirms that the vesting in Wife’s name alone was intentional and not inadvertent.

Husband argued that requirements for a valid transmutation were not met; but this argument, the appellate court says, is misplaced because “there are no facts suggesting a transmutation” and the court’s ruling “is not based upon and does not imply a transmutation.”  This was not a case where there was a change in the character of property already owned by the parties.

                _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.05.31  Community Property.docx

Trustee’s Fees and Attorney’s Fees in Contested Accountings

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

Trustee’s Fees and Attorney’s Fees in Contested Accountings

In two recent cases, different Appellate Courts made rulings regarding awards of Trustee Fees and Attorney’s Fees in Accountings. 

In the first case, Donahue v. Donahue (2010) 2010 DJDAR 2844, the Appellate Court reversed and remanded back to the Trial Court an award of $5 million.  The court left no doubt that Trustees are entitled to “reasonable attorney fees to defend adverse claims against the trust.”  The court here couldn’t determine the reasonableness of the award in light of established principles.   “. . . [R]easonable in amount and litigation . . . but it also must be reasonable and appropriate for the benefit of the trust.”           

Donahue was a fight between Michelle (surviving spouse) and her brother-in-law, Patrick.  Michelle is the life income beneficiary of her husband’s trust, with her three daughters as remainder beneficiaries.  Patrick filled multiple roles.  He is the successor Trustee of the trust and the “director, officer, and shareholder of the real estate investment trust in which the Trust assets are heavily invested.”

After two years, Patrick resigned as Trustee and his brother, Terence and Northern Trust Bank of California succeeded him.  Patrick initiated the court action by the filing of a Probate Code §17200 Petition to get court confirmation of this accounting.  Michelle objected to the accounting and alleges that Patrick sold 40% of the Trust’s interest in the REIT below fair market value, at a loss of $20 million.

There was a 14 day trial resulting in the court’s approval of the accounting.  Michelle’s appeal was denied.

In 2007, Patrick petitioned for more than $5 million in Attorney’s Fees and Trustee’s Fees for defending himself against un-meritorious allegations.  Patrick used three separate law firms and a 45 member legal team.  Charges included $184,000 to prepare fee petitions; $366,000 to prepare an 80 page case chronology and “case administration”; one attorney billed 3,661 hours at $1.5 million; $150,000 was charged for visual effects and multi-media; 86% of the fee request was for eight “key” individuals.  The Trial Court approved the fee request after excluding some charges that it could not “assess the appropriateness . . . .”

Patrick argued that it would be unjust to make him sell assets and borrow funds “to fend-off Michelle’s relentless attacks.”

Michelle objected to duplication in charges between two firms and her attorney argued that the $150,000 for multi-media could have paid for two weeks of trial.

Both sides objected to the Trial Court’s “failure to specify how it arrived at the amount of fees and costs . . . .”

The Appellate Court said, “Probate courts have a special responsibility to ensure that fee awards are reasonable, given their supervisory responsibilities over trusts.”  A lack of detail and explanation by the trial court thwarts meaningful appellate review.

“Reasonable compensation does not include compensation for ‘padding’ in the form of inefficient or duplicative efforts . . . .” (Ketchum v. Moses (2001) 24 Cal.4th 1122.

“A reduced award might be fully justified by a general observation that an attorney over litigated a case or submitted a padded bill . . . .” (Gorman v. Tessajara Development Corp (2009) 178 Cal.App.4th 44.

Over and again the Appellate Court emphasized “we cannot tell” in discussing the amount of work done; overlaps; multiple law firms; and not way to tell the necessity of the effort and resulting benefit to the Trust.  Maybe the great effort was to protect Patrick in his “spare no expense” strategy.

THEN, in Leader v. Cords (2010), which I previously discussed, Terry was the Trustee and he and his sister, Carol, were the beneficiaries of their parent’s Trust.  Carol died after her parents, but during administration of the Trust.  Her two children, Adam and Rachel, succeeded to her interest.  Terry delayed distribution and then, when he finally was ready to distribute, delayed an accounting, then offered to settle if previously distributed jewelry was reconsidered with some returned to him.

The Appellate Court ultimately ruled that Rachel and Adam could be entitled to attorney’s fees and costs for contesting a Trust accounting if the court finds that the Trustee acted “unreasonably and in bad faith” per Probate Code §17211(b).

These cases are a must read for Trust litigants and in particular for Trustees.  Trustees must act in good faith in their responsibilities, which includes litigation.

                 _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and  Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.05.31  Donahue Leader Trustee Attorney Fees.docx

Mr. Benjamin Duncan, Esq.--Tax Debt Collection

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

Mr. Benjamin Duncan, Esq.--Tax Debt Collection

Appropriately, the speaker at the April 15, 2010 meeting of the Estate and Trust Council of Long Beach was Mr. Benjamin Duncan, Esq. of the Office of Chief Counsel, IRS, Deputy Area Counsel.  Last year he had a staff of 65 attorneys; he now has 90 attorneys. 

He said he has tortured us in the past on procedural issues; this year he is torturing us with collection issues.  He loves collecting taxes.

Revenue Agents determine tax liability, Revenue Officers collect taxes.  He works with Revenue Officers.  They have a lot of discretion.  Mr. Duncan’s job, in part, is to advise Revenue Officers.  It is challenging and fun.

The key is when tax owed becomes an “assessment.”  That is when the Revenue Officer gets involved.  He sees what the debtor owes, then he gets to look into everything the debtor has to see what the easiest way to collect will be.  He sees whether the debtor will be a cooperative person or if he is in for a fight.

He will send out a Demand for Payment.  Ten days later a lien goes out on “everything” that the debtor owns, the “secret tax lien.”  Then there can be a public recording of the secret tax lien and a publication of notice.

Next, a “piece of paper” is issued called a “levy.”  No court is involved.  The Revenue Officer writes it out and send it certified mail to, for example, the debtor’s bank.  The bank, who is loyal to it’s customer, will give all the money the debtor has on deposit over to the IRS or the bank is liable for the amount PLUS A 50% PENALTY.

The Revenue Officer might suggest installment payments, or the debtor might propose an Offer and Compromise.  The Offer and Compromise is just an agreement to settle the debt for some compromised amount.  The least that will be settled is 20%.

In the past, IRS could “seize” the debtor’s house, advertise, then auction it.  Many of the buyers are the same groups of people.  IRS’s sales price is usually well-below market price, in part because the Buyer still has to get the Debtor out.  Oftentimes there is damage to the house and there are expenses to sell.

With a “cooperative” debtor (one who responds, returns calls, etc.), the Revenue Officer will usually use the least intrusive method to collect; they will attempt to work things out.

With an “uncooperative” taxpayer, the Revenue Officer immediately starts looking into levy and seizure.  They have a “wage levy” they can send to the employer.  There is a formula to determine the share of each paycheck to go to IRS.

A Homestead Allowance is not superior to a Federal Tax Lien.

There are 5,000 to 6,000 tax cases in Los Angeles per year.  All but about 1,000 will be settled by the Appeals Division.  IRS will win about 95% of the cases which go to trial because the laws are stacked in the government’s favor and the Taxpayer has had numerous opportunities to resolve the matter before it gets to trial.

He spoke of the Taxpayer’s Bill of Rights and a procedure for the Taxpayer to go into Tax Court and challenge the method of tax collection being used as not being the “least intrusive.”  He says that initially collections was concerned that it would make their work much harder.  In fact, he cited a study done over a five year period (rounding-off the numbers) finding that there were three million assessments; and 300,000 tax liens recorded, with 3,000 challenged by the Debtor as overly intrusive collections.  Of these 3,000 only 30 were successful.

                _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.05.31  IRS Duncan Tax Debt Collection.docx

Priority of Appointment

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

Priority of Appointment

I LIKE THIS DECISION–not so much because of the legal position it stands for, but because it relates to mixed martial arts.  What, you say, could a case dealing with priority of appointment as personal representative of an estate have to do with Ultimate Fights and Mixed Martial Arts?

For forty-five years I have been involved with wrestling, karate and ju-jitsu.  I teach karate when I am not practicing law.  Still, what does that have to do with Estate of Charles David Lewis, Jr. Williams, as Public Administrator v. Diane Larson (2010) 2010 DJDAR 6732?

There was a fight, but that is not the answer.  Lewis died and left two minor children as his sole heirs.  The two minors reside with their mother, Larson, in Illinois. Public Administrator and Larson filed competing Petitions to Administer the Estate.

Probate Code §8461 sets forth the priority, in order, for appointment: (b) lists “children” whereas (p) is Public Administrator.  Thus, decedent’s children are second in priority and the Public Administrator is 16th.  Issue solved, right?  Well, don’t answer too quickly.  The children are minors; so we go to §8464, which states “If a person otherwise entitled to appointment as administrator is a person under the age of majority . . ., the court in its discretion may appoint the guardian . . .or another person entitled to appointment.”

Public Administrator argued that Larson was not the Guardian; and that they were in Illinois; as “another person entitled to appointment” he was in the best position to serve; and, given the choice the code gives, should be appointed.  Public Administrator was appointed Special Administrator.

Larson argued that she was the children’s natural parent, and because of that was their guardian.

The Appellate Court traced the history of the code section to Code of Civil Procedure §1368 and references Estate of Turner (1904) 143 Cal 438.  The code section read essentially the same and competing petitions were filed by decedent’s brother and by the guardian of the decedent’s minor children.

The issue was whether competing Petitions by persons of equal priority required appointment by one who was not the minor.  That court said no.  The court both there and in the current situation dealt with the language of the code and whether the “or any other person entitled to letters” referred to someone in the same class of the minors or to someone in inferior classes who were entitled to appointment “in the absence of others having superior rights.”

The court rejected the latter argument.  A person is never entitled to appointment over a person with priority unless that person is disqualified.  The legislature did not hardly intend to qualify a minor by appointment of a guardian just to allow them to compete with a person in a subordinate class.

The court in Turner further set forth if more than one person in a class petition the court can name them to serve together, or, if they cannot “agree, the court may appoint the public administrator or a disinterested person in the same or the next lower class of priority as the persons who are unable to agree.”

In Estate of Waltz (1966) 244 Cal.App.2d 217, the court followed Turner saying, “the guardian is to be considered a member of the class to which his ward belongs to and ahead of all lower classes, and the court has no discretion to appoint a person of an inferior class in preference to the guardian.”

Public Administrator attempted to distinguish the cases due to the word “must” that the appointment “must be granted to his or her guardian, or any other person . . . .”  The court said this was an “insignificant” distinction.

The court ruled that absent a finding that Larson was incompetent to serve, the court “lacked statutory authority to appoint the Public Administrator, instead of Larson” and thereby abused its discretion under §8464.

So, there you go.   So, did you figure out what that had to do with Mixed Martial Arts?  Decedent Lewis had an estate valued in excess of $10 million and owned a 28% interest in “Tapout LLC,” a clothing and marketing company associated with Mixed Martial Arts.  Tapout or “to tapout” is to pat your opponent or the mat to express that you give-up.

You learn something new every day, right?  But, I don’t suggest that the next time you are losing on a motion that you pat the table twice signifying your surrender in order to avoid further damage.

                _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2010 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.05.31  Priority of Appointment Karate Tapout.docx

D. Michael Trainotti-- Estate Tax and Basis

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

D. Michael Trainotti-- Estate Tax and Basis

The Long Beach Bar Association Estate Planning, Trust and Probate Law Section held a Brown Bag meeting, with standing room only as D. Michael Trainotti, Esq., a local Tax and Sophisticated Business and Tax Planner spoke on The Estate Tax Unified Credit-What Now? and Capital Gain-Hang-on To All Your Records (not the vinyl kind).  What Applies–Step-Up or Carry-Over?

You can e-mail Mike at Mike@Trainotti.com and (a) get on his monthly e-mailer concerning tax issues primarily related to estate planning; and (b) request an e-mail copy of the 120 page article by Jonathan Blattmacher.  Practice in Estate Planning in 2010 by Howard M. Zaritsky is available for about $90 and discusses issues in planning with examples.

Will Rogers said he “doesn’t make jokes.  He just watches the government and reports the facts.”

Ronald Reagan said, “Politics is supposed to be the second-oldest profession.  I’ve come to believe it is very closely related to the first.”

A case that is being dealt with: An individual dies with a $22 million estate of primarily real estate and stock.  No estate tax (for now).  Step-up in basis for income tax purposes on appreciated property of $1.3 million.  The balance has carry-over basis and upon a sale will have income tax on the gain.

Formula clauses for A/B/C Trusts are based upon the existence of an Estate Tax and a Generation Skipping Tax which do not currently exist for 2010.

An incapacitated and dying client with a spouse, some community property and some separate property; and, his kids as successor Trustees has a very difficult and likely litigious situation.

$25 billion is raised with the Death Tax–A lot to you and me, but a drop in the bucket to Congress and the National Budget.  The fight over the estate/death tax is a money raiser for politicians.

People continue to die in 2010 and no-one knows what Congress is going to do.  The chance that a retroactive tax bill will be approved is possible.  As we pass April, the likelihood of retroactivity becomes less and less (but with Congress, who knows?)

No step-up in basis for IRD items (income with respect to a decedent).  An IRA is an example.

Community Property of $10 million.  Last year, both halves, with planning, got $3.5 million exemption.  This year, with a marital trust, the half belonging to the first spouse to die can get a $3.4 million step-up in basis.  Survivor’s half gets no step-up in basis.

So, how do you draft?  Do you notify clients with formula clauses in their Trust?

2010–Define the source of the assets. Decedent’s to Q-TIP/Marital Deduction ad provide for a Disclaimer to an Exempt or By Pass Trust.
2011–Up to $3 million: Q-TIP as minimum amount; By-pass as residual.

It is very mechanical.  Zaritsky’s book goes through the mechanics.  It is not written with community property in mind, so you must consider it.

Gifting and Generation Skipping: There is currently no Generation Skipping Tax (2010).  So you may want to distribute this year.  But, if you are the Trustee, you may want to hold money back.  If income distributes, it has to pay GST tax.

There is a song: “No One Knows, No One Knows.”


                _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.04.23  Trainotti Estate Tax and Basis.docx

Arbitrary Postponement of Trust Corpus Distribution

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

Arbitrary Postponement of Trust Corpus Distribution

In Leader v. Cords (3/23/2010), 210 DJDAR 4343, the court confirmed that the Trustee cannot arbitrarily postpone distribution of Trust corpus.

Glen and Alice Cords established a living trust.  After several amendments, Glen died in 1999.  Alice died in 2001.  They had two children, Terry and Carol.  The two children were to divide the trust estate equally.  Terry was the successor Trustee.  Upon the death of a child, that child’s respective children were to take the parent’s share.  Carol died in 2002 and her two children succeeded to her interest.

In 2008 Carol’s two children filed a Petition under Probate Code §17200 to compel distribution and for $19,227.70 for attorney’s fees and costs.

The petition alleged that Terry (Trustee) gave no information Carol’s children (Rachel and Adam).  They discovered Bank of America stock and demanded it be distributed.  After numerous excuses, the stock was finally distributed in 2007.  They discovered there was cash on hand and no accounting had been done since 12/31/2002.  They demanded an accounting; then granted an extension.  On May 15, 2007 Terry provided an accounting through 12/31/2006.  It showed $75,000 cash and no debts.

After demand, Terry said he was “willing to make distribution of the cash only as part of a ‘global settlement.’” There had been jewelry of Glen and Alice’s which Terry and Carol had divided.  Terry did not believe it was divided equitably and wanted to resolve that now.

The court found that the jewelry was not part of the trust and that Terry wrongfully withheld Trust distribution.  His claim that he was withholding distribution as a reserve because Rachel and Adam were suing him was not accurate because their suit was due to his failure to distribute.

After a review of several cases, the Appellate Court discusses that Trust beneficiaries must usually pay their own fees and costs.  In this case, the trial court rejected fees requested to be paid personally by the Trustee to the beneficiaries.  The Appellate Court reversed and remanded for the Trial Court to determine if the Trustee, Terry, acted unreasonably and in bad faith in delaying distribution; and, if so, to award fees to the beneficiaries under Probate Code §17211(b).


                _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.04.21  Leader v Cords postpone distribution.docx

Michael “Mick” McGuire, Esq. -- Longterm Care Planning

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

MARK YOUR CALENDAR! 

The Long Beach Estate Planning, Trust and Probate Section will be having a Brown Bag Meeting from noon to 1 PM on  Thursday, April 22, 2010.  Our speaker will be the local guru on Tax Planning, D. Michael Trainotti, Esq.  He will be speaking on the Estate Tax Unified Credit–What Now?  and Capital Gains–Hang on to All Your Records (not the vinyl kind)!  Does Step-up or Carry-over Basis Apply?  We hope to see you on April 22nd.

Michael “Mick” McGuire, Esq. -- Longterm Care Planning

Local elderlaw attorney, Michael “Mick” McGuire, Esq. who specializes in longterm care planning, spoke to the Estate Planning and Trust Council of Long Beach on February 18th concerning the status of longterm care planning.

Since Medicare was enacted in 1965 under Lyndon B. Johnson, people are living longer, more people are now in their 80's.  The two “M’s”: Mobility and Mentality apply.  Of people 65 or over, 70% will require long term care at an average cost of $82,000 per year; and if there is dementia it is even more.  For people 85 or over, 50% will have severe dementia.  The victim in these circumstances is the entire family coping with the disease.  There is a $1 trillion shortfall in U.S. pension plans.  The answer from the actuaries is that you must retire later.  You may need help–maybe just someone to remind you of your of appointments or to remind you to take your pills.  You can get help.  You can get many new body parts, but you can’t get brain/memory parts.

Geriatric Care Management is important because they can help the family determine the right place for the senior. 

Pay Source: Private Pay.  Then sell the house (then you don’t have a home to stay in) or get a reverse mortgage (and you can stay in the home).

Next Public Programs.  These programs are based on income.  Most are much bigger than they were ever intended to be.  After income determination, they look at resources/assets. 

Medi-Cal (California’s version of Medicaid)

In February of 2006 the President signed the DRA.  This year, California finally has to have it in effect or it will lose federal moneys.  Change is coming.  Citizenship is already required.  Increasing the healthy spouse’s assets to increase income will be out.  A reverse mortgage will help pay for long term care; but it is due and payable if and when you are outside of the house. 

The home used to be an exempt resource.  The new rule will limit that to a home with an assessed value of less than $750,000.

The “look-back” period is the BIG change.  Some annuities are still a possible way to plan.  As long as the annuity is written to pay out in equal payments of principal and income over your life expectancy.  Looking back for “gifts” can cause a disqualification/penalty period.  Current rules started the penalty period from the date of the gift.  The new rule will “look-back” 60 months AND the penalty period will start NOW when you apply for benefits and NOT back when the transfer was made.  There is a one year re-certification.

A “hook” in the regulations is that if you take steps on the advice of a 3rd party that causes your ineligibility, the person who gave that advice may be guilty of elder abuse (criminal).

THE NEW RULES ARE CURRENTLY EXPECTED AT THE END OF SUMMER 2010.

“Aid and Attendance” through the V.A. may be available to a veteran who serves at least 1 day of war time on 90 days active duty to help with in home care, assisted living, board and care.  Rules are similar but different from Medi-Cal.

Top care, whether private pay or public pay, comes to one with an advocate-family or otherwise, who stays involved in the care.

   
                ________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson
All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.
File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.03.03  McGuire Long Term Care.docx

EXAMINER’S TOP 20 REQUESTS/SUGGESTIONS

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

MARK YOUR CALENDAR! 

The Long Beach Estate Planning, Trust and Probate Section will be having a Brown Bag Meeting from noon to 1 PM on  Thursday, April 22, 2010.  Our speaker will be the local guru on Tax Planning, D. Michael Trainotti, Esq.  He will be speaking on the Estate Tax Unified Credit–What Now?  and Capital Gains–Hang on to all your records (not the vinyl kind)!  Does Step-up or Carry-over Basis Apply?  We hope to see you on April 22nd.

The Orange County Trusts & Estates Section held a Brown Bag meeting at the Orange County court.  The following, provided to me by the highly regarded current Chairperson, Amy E. Haupert, Esq., are the Examiner’s Top 20 Requests/Suggestions from the Orange County Probate Department’s Probate Examiners.

I passed this by our own Probate Attorney, Darci Horton, Esq., who agreed with the list, entirely, with the addition that “all attorney/fiduciary fee requests should be submitted at the same time as the account, and not ‘to be supplemented later.’”

EXAMINER’S TOP 20

REQUESTS/SUGGESTIONS

1.    DO NOT file your Petition/Accounting if what you are going to file is not complete.  Make the appearance, request that amount of time you need, complete your Petition/Accounting and then file.  If your Petition/Accounting requires schedules, bank statements, facility statements, etc., file them at the same time that you file your Petition/Accounting.  REMEMBER TO CHECK BEFORE FILING.  If your Petition/Accounting is going to include attachments, PLEASE make sure that the attachments are attached to your pleading.

2.    DO NOT put the cart before the horse.  Make sure that all documents required to be on file prior to the filing of your Accounting, such as the I & A, are on file before you file your Accounting/Petition as it is impossible for the examiner to examine same completely without other documents first being on file.

3.    DO NOT wait until the notes are created to prepare and give your notice.  Notice requirements are     statutory so you can give without notes to tell you to give notice.

4.    REMEMBER that the PC §1064 allegations are required to be made in all accountings AND REPORTS.  It would be helpful to put all of the required allegations together in your pleading.

5.    REMEMBER that if there is a mandatory judicial council form, you are required to use same.  EXAMPLE: Notice of Hearing should be done on the required judicial form and not on pleading paper. 

6.    DO NOT give notice only to an attorney who is “attorney for” a party.  It is insufficient for attorney to only receive notice or sign Notice and Acknowledgment of Receipt if attorney has not appeared for that party FOR A PETITION THAT IS CURRENTLY BEFORE THE COURT.

7.    SAY IT AGAIN.  If note requires a supplement to provide several additional items of information and one of the allegations that is being requested has already been made in the original pleading, it is much easier/more efficient/faster to review and update if you just make that additional allegation in your supplement rather than type an additional paragraph to advise the examiner where the allegations was made in the original pleading.  REMEMBER: If petitioner is a fiduciary, verification must be by the fiduciary per PC §1023.

8.    UPDATE INFORMATION.  The names, relationships and CURRENT addresses of interested parties should be set forth in any petition/accounting wherein notice is going to be given to them as addresses often change during administration.  If address set forth in original Petition, for example, is different than the address set forth in the Notice of Hearing for the current petition, you will get a deficiency note requesting current address and stating that Notice on file, minus a supplement, is insufficient as address on file vs. address in notice are different.

9.    MORE IS BETTER.  If there has been a change in circumstances during the accounting period in a Conservatorship or Guardianship that is going to affect substantially the Receipts and Disbursements, tell us in a paragraph or 2 what the change in the circumstances was which resulted in substantially more expenses, reduced income, etc.  If an explanation is provided that substantiates/explains the major changes, the examiner will then only have to advise the court of the change in circumstances and put the matter as a “Court to Determine” rather than creating lots of notes questioning lack of receipts, increased disbursements, etc.

10.    CORRECT ORIGINAL BANK STATEMENTS.  The bank statements required per PC §2620 require that you provide bank statements reflecting the balances in all accounts owned by the conservatee/minor IMMEDIATELY PRECEDING THE DATE THE CONSERVATOR OR GUARDIAN WAS APPOINTED for the First account AND STATEMENTS SHOWING THE ACCOUNT BALANCE AS OF THE CLOSING DATE OF THE FIRST ACCOUNT.  Make sure that the statements that you provide include the applicable dates.  Statement for balance immediately preceding date of appointment should include period prior to appointment and include date of appointment (the date the court approved your petition for appointment).  Statement for balance at the end of accounting period MUST cover the end date of your accounting period.  For Certificates of Deposit, statements are not always issued.  A letter from the bank would be sufficient.

11.    ORIGINAL FACILITY STATEMENTS.  If Conservatee or Ward are in a residential care facility or long-term care facility the ORIGINAL bill statements for each facility for the entire accounting period are required to be filed.  If the Ward or Conservatee was not in a facility for the entire accounting period, make that clear in your accounting being sure to point out to the examiner why statements for the entire accounting period are not provided.  This will avoid a note stating that not all facility statements were provided.

12.    ACCOUNTING SHOULD BALANCE.  Your summary of Account should balance and the totals reported in the Summary of Account and on the accompanying schedules should match.  If you accounting does not balance, report same.  Advise the court that the accounting doesn’t balance, how much the accounting is off by, what efforts you have made to balance same and why you believe the accounting does not balance.  Again, reporting same up front avoids receiving examiner notes stating that accounting does not balance and amended accounting required.  Court will determined if accounting will be accepted as filed based on the information provided, etc., or if an amended accounting is necessary.

13.    PROPER EMAIL USAGE/CONTINUANCES.  You cannot clear notes by responding to examiner’s notes via email when a supplement is required.  Improper to submit your “proposed” supplement for pre-review prior to filing via email.  IT WILL NOT be reviewed.  You will receive an email that advises you that upon timely filing of the original supplement, same will be reviewed by examiner and notes updated accordingly.

If you do not find posted notes for your matter on the public website at least 2 weeks prior to your hearing date, you can send an email and advise.  Same will be looked into and a response will be forwarded to you regarding the status of your notes.  Notes should be there.  Occasionally, there was an error in the inputting of the hearing date and your email brings it to the attention of the court for correction and the review of your matter.

Only the moving party/attorney for the moving party can request a continuance.  If there are other attorneys that have appeared for objectors, etc., they must also acknowledge the request for continuance and agree to same by sending an email stating same. Court will give next available date IF THE REQUEST IS FOR THE FIRST CONTINUANCE AND THE CONTINUANCE IS ALLOWED.

Only 1 continuance will be allowed via email request.  Court will require appearances for all other requested continuances.

14.    TRANSFERS ARE NOT DISBURSEMENTS.  Transfers between accounts during accounting period should not be reported in Receipts and Disbursements schedules.  An informational schedule to report change in form of assets would be more appropriate.

15.    DISPOSITION OF ASSETS REQUIRED TO BE REPORTED EVEN IN WAIVERS OF ACCOUNT.  If the assets have changed from what was inventoried, the disposition of the assets must be reported, even in Petitions for Final Distribution on Waivers of Account.  Accounting and/or Report must report whether a gain or loss resulted from said sale.  REMEMBER: A loss on sale must be included in the fee base, a schedule must set forth the receipts, whether filing a Final Accounting or a Petition for Final Distribution on Waiver of Account.

16.    FINANCIAL DOCUMENTS FILED BY PPC’S.  PC§2620 requires that Private Professional Conservators file ALL original account statements for the entire period covered in the accounting.  This court has a procedure that includes a Financial Documents Cover Sheet for the presentation of the original documents for review and then returned to the attorney after scanning.  ONLY the original bank statements should be included in the binder presented to the court.  DO NOT include cancelled checks, original receipts to itemize “petty cash” expenditures, etc.  Attorney can advise the court that said receipts, cancelled checks, etc. are available for review by the court if required.

17.    DHS AND VICTIM COMPENSATION NOTICES.  If Notice is required, give it.  If Notice is not required, make the appropriate allegations.  Remember that you must advise the court re DHS for the decedent and the predeceased spouse.  If any heir/devisee IS currently or WAS confined in a prison or facility, this court will require notice to Victim Compensation and Government Claims Board.

18.    FRANCHISE TAX BOARD NOTICE.  Per PC§9202 personal representative is required to give notice to the Franchise Tax Board NOT LATER THAN 90 DAYS AFTER LETTERS ARE FIRST ISSUED.  Mere allegation that notice was sent is insufficient.  Date of mailing should be alleged and copy of Notice should be provided.  There is no form for notice, so a letter giving notice to FTB would be sufficient.  If notice is given after Petition for Final Distribution is filed, a letter from the FTB stating that no claim will be filed in required.  If Notice was given more than 90 days after Letters were issued but notice was given more than 3 months prior to the filing of the Petition for Final Distribution and Notice with proof of service is on file reflecting the same, Notice will be deemed sufficient.  To expedite processing for filing claims, notice may be faxed to FTB Decedent Team (916) 845-0479.  FTB has indicated that if notice given requests response from FTB, they will send a letter.

19.    TWO-SIDED DOCUMENTS.  Per CRC§2.134 if a form is longer than one page, the form may be printed on sheets printed only on one side even if the original has 2 sides to a sheet.  You may wish to file your Notices of Hearing and other documents that are 2-sided as a 2 page document to avoid the possibility of the second side inadvertently not being scanned.

20.    NOTICES OF HEARING AND COPY OF PETITION.  DO NOT attach a copy of the Petition to the original Notice of Hearing that is being filed with the court.  There is a box that can be checked to reflect that a copy of the Petition was sent to all parties with the Notice of Hearing.

 
                _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location: C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.03.03  OCBA Probate Examiner Request.docx

Helpful Hints from the Probate Attorney

Probate, Trust and Estate Planning Tidbits.
by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization

Helpful Hints from the Probate Attorney

Following are notes from the January 28, 2010 meeting of the Estate Planning, Probate and Trust Law Section of the Long Beach Bar Association.  Darciann Horton, Probate Attorney, and LaKendra McGlothin, Probate Examiner presented the following, with an occasional assist by Judge Paul:

LaKendra McGlothin:

They try to update the probate notes two weeks in advance. E-mail the person (Darciann Horton or LaKendra McGlothin) whose initials are on the notes.  If notes are not cleared, they will indicate a continuance date.  You do not have to e-mail you’re “okay” with the continuance.  If the date is NOT okay, then e-mail to ask to change it.  They are in Long Beach only Wednesday and Thursday.

If you file a supplement to clear notes, let them know by e-mail.  LaKendra tries to clear matters even if she is not in Long Beach, and will often ask you to e-mail a conformed copy of the filed supplement so she can try to clear it from where she is at.

Try to clear matters before 1 PM on Wednesday so they have time to get the documents that have to be reviewed.

Darciann Horton, Esq.:

California Rule of Court §7.702 sets the requirements for extraordinary fees and by reference for Conservatorships and Guardianships.  Regardless of how detailed your fee schedule is, you need to set forth a narrative of what was done, by category, showing the result and the benefit derived.

The Judge commented on fee disputes.  He wants reports he can read, draw conclusions from, and make a finding.  What did you do?  What was the result to the estate?

The fact that no one objects is not the issue.  Even with a probate estate the consent of the heirs is NOT determinative.  In addition, the size of the estate is important regardless of the effort or the result.

The Judge says he will try to give you what you deserve, but if he opens the Petition and “it smells like a skunk” it will be dealt with as such.

P.C. §2620.2 concerns Late Filings of Accountings.  If they file a late accounting, it is to be reported to their licensing board.  It is a mandatory reporting and, it is considered to be contempt of court. 
Remember the mandated use of Judicial Council Accounting forms in Conservatorships and Guardianships with the supporting documents when required.

The use of the “omnibus clause” in Orders for Distribution is NOT acceptable unless is it clear that the persons and assets are the correct ones.

The Probate Attorney will not approve continuances of an Order to Show Cause.  The Judge wants to see you and determine “Why are you here?”  It costs the court money to set these and have you there.

A question on waiving of the final account in a Conservatorship where the sole heir is the conservator was raised.  Darci responded, “Rarely, and only by the Judge.”  They want to see what care was required and provided to the conservatee.

The Long Beach court is one which will approve Heggstad Petitions, but only where “written intent” is shown.

IF YOU ARE INTERESTED: The Los Angeles Superior Court is offering the following training, free of charge:

Orientation & Training for non-Professional Conservators.  March 1, April 5, May 3, and June 7 from 1:00 pm to 4:30 pm.  They will explain the Duties of Conservator, how to care to the Conservatee, how to prepare for the accounting and how to access valuable resources.  Attendees need to bring their copy of the Handbook for Conservators or purchase one at the courthouse.  The cost for the Handbook is $21.95 and can be purchased at the Forms Window in Room 426.

Conservatorship Accounting Training for non-Professional Conservators.  February 22, March 15, April 19, May 17 and June 21 from 1:00 pm to 4:30 pm.  They will explain the Proper Accounting Format and How to Prepare and Accounting.  Attendees need to bring their Handbook for Conservators, a filed stamped copy of the Order Appointing the attendee as Conservator, and a filed stamped copy of the attendee’s Letters of Conservatorship.

These classes are held on a “walk-in” basis with no need to R.S.V.P. and are at the Los Angeles Superior Court-Stanley Mosk Courthouse, 111 N. Hill St. Resource Center Room 426 (4th Floor), Los Angeles, CA.

If you have questions regarding these classes contact Susy Wong, Probate Secretary at (213) 974-5501 or by e-mail swong@lasuperiorcourt.org.
                _________________________________
                John T. Anderson, Section Chair
                Certified Specialist in Probate, Trust and  Estate Planning
                By the California State Bar Board of Legal Specialization

Copyright © 2011 by John T. Anderson

All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.

File Location:C:\Users\John's LT\Documents\Work\Website\Articles for Website\Word Version of Articles From Lisa\2010.01.28  Brown Bag Horton McGlothin Attorney Fees & Filings.docx