Gifts to Caregivers Prohibited

Posted October 31, 2011 in Estate Planning by Lonich and Patton.

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October 31, 2011
Gifts to Caregivers Prohibited
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An estate plan may be created to do almost anything a person desires.  For example, a will can distribute the decedent’s personal and/or real property; passing on specific items to a relative, friend, or organization.  A trust can hold specific property or funds for a designated beneficiary; any and all terms of which may be determined by the trustor.  While drafting these estate planning documents, it’s important to keep in mind restrictions that state laws impose on to whom transfers can be made.  In California, an important restriction is outlined in Probate Code section 21350.

Section 21350 outlines California’s limitations on transfers to “drafters, care custodians, and others.”  Specifically, provisions that make donative transfers (i.e. gifts) to (1) the person who drafted the instrument, (2) any person who has a fiduciary relationship with the transferor, or (3) a care custodian, among others, are strictly prohibited.  Despite the statute’s clear restrictions, there have been issues relating to who exactly qualifies under these categories.  In Estate of Austin, 188 Cal. App. 4th 512 (2010), the Fifth District California Court of Appeal needed to decide whether a former stepdaughter should be considered a “care custodian” under the statute and thus disqualified from receiving gifts.  The former stepdaughter took her former stepfather to his doctor appointments, prepared meals for him, and helped out whenever she could after he broke his hip and while he recovered from triple bypass surgery.  Decedent’s daughter filed a lawsuit seeking to disqualify her former stepsister from receiving gift transfers totaling about $185,000.

Earlier in the case, the Fresno County Superior Court ruled that the gifts to the former stepdaughter were valid.  The Appellate Court affirmed.  A care custodian is defined by California case law as someone who provides care or services to elders or dependent adults, whether paid or as a result of preexisting personal friendship.  Health or social services were defined as including cooking, gardening, running errands, assisting with banking, and driving to doctor’s appointments.  The Appellate Court found that the former stepdaughter’s “services” could not be reasonably characterized as providing substantial, ongoing health or social services and she was thus not a care custodian.  Further, the decedent made the gift transfers to the former stepdaughter while he was residing in a nursing home, when the former stepdaughter was not providing any services to him.  Therefore, the gift transfers were valid and the former stepdaughter was not disqualified from receiving them.

Statutes do not always clearly define who falls into certain categories, the courts are able to make decisions based on specific factual scenarios.  If you care for an elder relative and think you may be considered a care custodian, an attorney can help clarify what, if any, impact this may have on your ability to inherit from that relative.  If you are interested in learning more about individual gift transfers or estate planning, please contact  the San Jose estate planning attorneys at Lonich & Patton, LLP.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

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No-Contest Clauses in Trusts

Posted October 28, 2011 in Estate Planning by Lonich and Patton.

Trusts are incredibly useful estate planning instruments (see Testamentary versus Inter Vivos Trusts blog).  They can be drafted and administered in almost any way you want; they can even protect your heirs’ inheritance from creditors (see Spendthrift Clauses blog).  Another useful way to ensure that your estate is administered in a particular way is to include a “no-contest” clause in your estate planning documents.

A no-contest clause is a “provision in an otherwise valid instrument that, if enforced, would penalize a beneficiary for filing a pleading in any court.”  California Probate Code sections 21310-23315 govern these provisions and define a contest as a “pleading filed with the court by a beneficiary that would result in a penalty under a no-contest clause, if the no contest clause is enforced.”  The Probate Code also defines a “direct” contest, which, if brought with probable cause (as defined by statute) does not violate the no-contest clause.

Direct contests allege the invalidity of a protected instrument or one or more of its terms based on forgery; lack of due execution; lack of capacity; menace, duress, fraud, or undue influence; revocation of a will by statute; and/or disqualification of a beneficiary by statute.  However, it is important to note that a no-contest clause will only protect the instrument containing the no-contest clause and other instruments only if they were already in existence and expressly identified in the no-contest clause.  Accordingly, it is important to consult an experienced estate planning attorney to ensure your estate is protected from contests.

If you are interested in learning more about estate planning and protecting the administration of your estate, contact  the San Jose estate planning attorneys at Lonich & Patton, LLP.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

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California Enforcement of Out-of-State Support Orders

Posted October 19, 2011 in Family Law by Lonich and Patton.

If a child support order is obtained in another state and the custodial parent and child move to California, there are a few steps that need to be taken to enforce the out-of-state order.

All fifty states have adopted the Uniform Interstate Family Support Act (UIFSA).  The UIFSA governs when more than one state is involved in cases establishing, enforcing, or modifying child or spousal support orders.  The UIFSA helps to determine the jurisdiction and power of the courts in different states and establishes which state’s laws will be applied in the proceedings.

California’s version is codified in California Family Code section 4900 et al., which outlines the general procedures for enforcing support orders or income-withholding orders issued by another state.  Specified documents must be submitted to the California tribunal to register the order.  Then, the registered order is enforceable in the same manner and subject to the same procedure as an order issued by California.  It becomes a California judgment for any arrearages and subject to the same defenses as any other judgment.  Although California lacks jurisdiction to reduce or modify the support arrearages, it has the discretion to determine the manner in which the judgment will be enforced.

The Certified Family Law Specialists* at Lonich & Patton have decades of experience handling complex and heavily disputed interstate child and spousal support enforcement issues.  If you have a child or spousal support enforcement issue, please contact the Certified Family Law Specialists* at Lonich & Patton, who can provide you with an in depth analysis regarding your case.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

*Certified Family Law Specialist, The State Bar of California Board of Legal Specialization

 

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Court of Appeal Clarifies Seven-Day Waiting Period for Premarital Agreements

Posted October 14, 2011 in Family Law by Lonich and Patton.

California Family Code §1615 outlines the factors a court will consider when deciding whether to enforce a premarital agreement.  If the court finds that, among other reasons, the agreement was not executed voluntarily or if the agreement was unconscionable (a fancy word for unreasonable), it will void a premarital agreement.

Section 1615(c) states that a premarital agreement will not be deemed voluntary unless the court makes three findings; one of them being that the party against whom enforcement is sought had not less than seven calendar days between the time the party was first presented with the agreement and advised to obtain a lawyer and the time the agreement was signed.  The question most recently before the First Appellate Court was whether section 1615(c)(2) applied to a party who was represented by an attorney from the outset.

In Marriage of Cadwell-Faso & Faso, 191 Cal. App. 4th 945 (2011), husband (H) and wife (W) married in 2006.  H was a wealthy, retired businessperson and W owned and operated her own business.  Prior to their marriage, H’s attorney drafted a premarital agreement and presented it to W and advised her to seek independent counsel.  W was unhappy with the agreement and her attorney subsequently drafted four separate addenda to which H disagreed.  W faxed a goodbye letter to H following their inability to come to an agreement.  Following further discussion, W’s attorney drafted a fifth addendum and faxed it to H.  Six days later, H and W signed the agreement and were married

Eighteen months later, H and W sought dissolution of marriage.  H asked the court to void the fifth addendum because he did not have seven days between the time of representation and execution and the agreement was thus involuntary per §1615(c)(2).  The trial court ruled in H’s favor, finding that the requirements of §1615(c) were mandatory and the addendum was thus invalid.   W appealed and the appellate court reversed.  In its decision, the court could not determine from the text of the statute alone whether the seven-day rule was confined to unrepresented parties.  Therefore, the court looked to the legislative history of §1615 and found that the legislature was concerned with situations where one party was not represented by counsel, not where counsel has been present from the start.  The appellate court thus held that both the premarital agreement and the addendum were enforceable against H where he was represented by counsel throughout the premarital agreement process.

The Certified Family Law Specialists* at Lonich & Patton have decades of experience handling premarital agreements. If you are contemplating marriage, please contact the Certified Family Law Specialists* at Lonich & Patton, who can provide you with an in depth analysis of your issues.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

*Certified Family Law Specialist, The State Bar of California Board of Legal Specialization

 

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Executing an Estate: A Blessing or a Curse?

Posted October 5, 2011 in Estate Planning by Lonich and Patton.

Friends or family come into the role as the executor of an estate in different ways.  Some are asked by a friend or family member and are honored to have been considered.  Some find out they were designated as the executor only after that person’s passing.  Some step up to the plate amidst grief and sorrow while other surviving relatives mourn their painful loss.  Regardless, executing an estate is not an easy task; there are legal, and often times personal, repercussions if something goes wrong.

According to a recent Wall Street Journal article, “executorships gone bad” are rising.  There are a number of possible reasons for this increase but tough economic times may be the driving force.  As families struggle economically, disagreements over shares of inheritances or interpretations of wills are occurring more often.  This adds to the heavy burden already placed on executors of an estate.

An executor administers a will through the probate court process which can take years (if the decedent created a trust during their lifetime, this significantly simplifies the process for an executor).  The probate process includes accounting for assets, paying outstanding bills, and distributing property as indicated by the decedent’s will.  Depending on a number of factors, the probate process can take as long as three years for larger, more complex or contested estates.  While not impossible for a nonprofessional to handle, it is generally worthwhile for complex wills to be handled by a professional to avoid mistakes and contentious dealings between the executor and other family members.

If you are interested in learning more about the probate process or creating a plan to ensure your family members are well-prepared to handle your estate, please contact the experienced estate planning attorneys at Lonich & Patton for further information.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship

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