Wednesday, 28 February 2024

Estate planning: Substantial Gifts to unrelated caregivers and certificates of independent review

A particularly nettlesome area of estate planning – one fraught with potential danger – is the area of substantial gifts transferred in California by “dependent persons” [as California residents] in favor of an unrelated “care custodian” (e.g., a caregiver who is not related by blood or marriage to the dependent person).


For example, consider an elderly person aged 65 years or older, or a disabled non-elderly person, who makes a large gift to an unrelated person who provides care by driving them to the hospital, preparing their meals, assisting them with their other personal needs – taking medicine, bathing – and so on.


This scenario frequently applies to elderly persons who are neglected by their natural family while alive.


Public awareness of this nettlesome rule is important because the proposed transfer, when legitimate, can be validated if independently reviewed in advance by a disinterested (unbiased) attorney who issues a certificate of independent review. Obviously, this must occur while the “dependent adult” is still alive. This review requires proactive action.


Now, let’s examine Probate Code section 21350.


In order to prevent abuse and fraud being perpetrated by caregivers upon their presumably vulnerable dependent persons, section 21350 of the Probate Code presumptively invalidates transfers (or gifts) made by dependent persons to these unrelated care custodians unless the transfer is reviewed by an independent attorney who issues a “certificate of independent review.”


The certificate validates the transfer. Knowing when a transfer might later on become susceptible to being subsequently characterized by an adverse party, such as the dependent’s heirs who lost out, as being an invalid transfer is important.


Recognition should prompt a certificate of independent review being obtained out of prudence. Often the certificate of independent review is requested of the dependent adult’s own attorney when drafting their will or trust, which includes the substantial gift. The drafting attorney will then usually advise their client to see a second neutral attorney to review the matter and issue a certificate.


When might the rule apply to invalidate a gift? First you need a “dependent person”. That means anyone age 65 or older and younger persons with significant disabilities.


Second, you need a transfer whose value exceeds $3,000 in the case of a person whose estate is greater than $100,000 or a transfer of any amount in estates under $100,000.


Third, you need an unrelated care giver – that is someone who is unrelated by blood or marriage to the dependent person.


Fourth you need a “care custodian,” also known as a “caregiver.” Whether the recipient is a “care giver” is where the litigation controversy abounds (usually after the dependent person is dead).


The concept of “caregiver” is broadly defined and includes, “persons providing care or services for elders or dependent adults."


If the foregoing pattern appears relevant to a situation then a certificate of independent review should be obtained, and, in some other instances a court ordered “substituted judgment” order approving the proposed gratuitous transfer (involving conservatorships).


The attorney drafting that certificate must be someone who is so entirely disassociated from the transaction and the care giver as to be able to independently and confidentially advise the dependent adult who is their client as to the nature and consequences of the proposed transfer.


The whole purpose of the second attorney’s independent review is to ensure that the proposed transfer is not, “the product of fraud, menace, duress, or undue influence.”


Presumably, if the certificate itself were to be challenged as being a “rubber stamp” issued by the reviewing attorney then the certificate itself will likely only be as good as the second attorney’s underlying independent review upon critical examination.


Dennis A. Fordham is an attorney licensed to practice law in California and New York. He earned his BA at Columbia University, his JD at the State University of New York at Buffalo,and his LL.M in Taxation at New York University. He concentrates his practice in the areas of estate planning and aspects of elder law. He can be reached at dennis@dennisfordhamlaw, by phone at 263-3235 or at his office at 55 First St., Lakeport.

Upcoming Calendar

29Feb
02.29.2024 1:00 pm - 3:00 pm
Vision resource group
29Feb
02.29.2024 3:30 pm - 4:30 pm
Clearlake City Council special meeting
2Mar
03.02.2024 10:00 am - 1:00 pm
Special Olympics Polar Plunge
3Mar
03.03.2024 3:00 pm - 5:00 pm
Pianists Benefit Concert
10Mar
17Mar
03.17.2024
St. Patrick's Day
31Mar
03.31.2024
Easter Sunday
1Apr
04.01.2024
Easter Monday
15Apr
04.15.2024
Tax Day

Mini Calendar

loader

LCNews

Award winning journalism on the shores of Clear Lake. 

 

Newsletter

Enter your email here to make sure you get the daily headlines.

You'll receive one daily headline email and breaking news alerts.
No spam.