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