Conservatorship of
Filed 5/17/13 Conservatorship of Anderson CA1/4
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST
APPELLATE DISTRICT
DIVISION
FOUR
Conservatorship
of the Person and Estate of ANNE S. ANDERSON.
ANNE F.
SMITH, as Conservator, etc., Petitioner and Appellant,
v.
SHARON
SMITH et al.,
Objectors and Respondents.
A132474
(Marin
County
Super. Ct.
No. PRO1002583)
Anne
F. Smith (Conservator), the conservator of the person and estate of Anne S.
Anderson (Wife), appeals an order of the trial court denying her petition for
substituted judgment, in which she sought authority to execute a new trust and
will and to retain litigation counsel.
We shall reverse the order.
I.
BACKGROUND
A.
The
Estate Planning Documents
Wife
and her husband, Curtiss M. Anderson (Husband), created a revocable trust in
1996. The 1996 trust provided that while
both Husband and Wife were living, the trust could be “modified or amended by
either settlor acting alone as to any separate and quasi-community property of
that settlor, and by both settlors acting jointly as to any community property
of the settlors.†The trust documents included
a schedule of community property assets, which listed real property, bank and
investment accounts, stocks, and bonds.
The documents did not list any separate or quasi-community property.
Under
the 1996 trust, after the death of one spouse, “the remaining trust estate
[would] be distributed outright to the surviving settlor.†However, “[a]ny property or portion of
property that [was] disclaimed by the surviving settlor [would] be held,
administered, or distributed according to the terms of the Disclaimer
Trust.†The Disclaimer Trust would be
irrevocable and not subject to amendment.
Until the death of the surviving spouse, the trustee would pay to the
surviving spouse the income of the Disclaimer Trust, and the principal
necessary for the surviving spouse’s health and support. After the death of the surviving spouse, the
income would be divided among various named individuals, primarily Husband and
Wife’s siblings, nieces, and nephews.
In
February 2010, Husband and Wife executed an “Amendment and Restatement of the
[1996] Curtiss M. Anderson and Anne S. Anderson Revocable Trust,†which stated
that both Husband and Wife were empowered to amend the 1996 trust and “do
hereby amend such trust.†The February 2010
trust provided that upon the death of one spouse (the predeceased spouse), the
“Survivor’s Share,†consisting of the surviving spouse’s one-half interest in
the community estate and the surviving spouse’s separate estate, if any, would
be distributed to the surviving spouse and held in a Survivor’s Trust. With certain exceptions, the remainder of the
predeceased spouse’s share of the trust estate would be held in a Bypass
Trust. The surviving spouse would
receive the income from the Bypass Trust and any principal the trustee deemed
necessary for the surviving spouse’s health and support. Upon the death of the surviving spouse, the
estate would be divided among Husband and Wife’s beneficiaries: If wife were the predeceased spouse, the
residue of the Bypass Trust would be divided among her two nephews and
Husband’s two nieces. If she were the
surviving spouse, the residue of the Survivor’s Trust would be divided in the
same way. If Husband were the
predeceased spouse, the residue of the Bypass Trust would be divided as
follows: 12.5 percent to Camie Sumrall,
a care custodian; 12.5 percent to Sharon Smith, a care custodian; 5 percent to
Shelly Fuqua Junker, a care custodian; 20 percent and 15 percent, respectively,
to his two nieces; 20 percent and 10 percent, respectively, to Wife’s two nephews;
and 5 percent to a step-niece. If
Husband were the surviving spouse, the residue of the Survivor’s Trust would be
divided in the same way. Attorney Robert
Pollak prepared the trust document.
After
the original February 2010 trust documents were lost, Pollak prepared a new
trust document, entitled “Amendment and Restatement of the Curtiss M. Anderson
and Anne S. Anderson Revocable Trust,†which Husband and Wife executed on April 2, 2010. As relevant here, the April 2010 document
differed from the February 2010 version in the amounts given to Husband’s
beneficiaries: upon the death of both
spouses, the caretakers Sumrall and Sharon Smith would each receive 15 percent
of Husband’s share, caretaker Junker would receive 5 percent, Husband’s two
nieces would receive 15 percent and 20 percent; Wife’s two nephews would
receive 20 and 5 percent, and Husband’s step-niece would receive 5
percent. That is, the amount given to
the caretakers Sumrall and Sharon Smith was increased by a total of 5 percent
from the amount in the February 2010 trust, and the amount given to one of
Wife’s nephews was decreased by the same amount.
A
“Second Amendment and Restatement†was executed on May 7, 2010. The amounts given to the beneficiaries upon
the death of both Husband and Wife did not change from those specified in the
April 2010 restatement.
name="_ftnref1" title="">[1]
Husband
died on May 22, 2010.
B.
Conservator
was appointed as Wife’s temporary conservator on May 27, 2010. She was appointed as general conservator of
Wife’s person and estate on August 23, 2010.
On
February 23, 2011, Conservator filed the petition for substituted judgment at
issue here.
title="">[2] She proposed the following: First, that all of Wife’s prior wills,
trusts, powers of attorney, and advance health care directives be revoked. Second, that a revocable trust and pour-over
will be created that would divide Wife’s estate into two equal shares at the
time of wife’s death. Half would pass to
Husband’s brother, or, if he did not survive Wife, in equal shares to his two
daughters, and the other in equal shares to Wife’s two sisters, with her
nephews as alternate beneficiaries.
Third, Conservator would be authorized to execute the will and trust. Fourth, Conservator would be authorized to place
all conservatorship assets into Wife’s trust in order to terminate the
conservatorship of the estate and thereby avoid additional fees and costs to
the estate.
According
to the petition, Husband hired Home Helpers to provide 24-hour care for him and
Wife in late 2008. Sumrall and Sharon
Smith were the owners of Home Helpers, and Junker was one of the
caregivers. Conservator learned from
viewing emails between Husband and his friends that Husband became infatuated
with Sharon Smith; the emails spoke of him wanting to marry her if he had been
younger, planning trips with her, wanting to run off with her, and loving her,
and of her telling him she would buy him a Mercedes convertible. Throughout 2009 and early 2010, Sharon Smith
and Sumrall would have lunch with Husband frequently and give him alcoholic
drinks, although he was an alcoholic.
Sharon Smith and Junker were seen climbing onto Husband’s bed, holding
him and stroking him. In November 2009,
Junker got a $1,600 check from Husband, with the amount of the check written in
her own handwriting.
Husband
began interviewing professional fiduciaries to serve as Wife’s conservator in
late 2009, because of his impending death from cancer and his concern about
Wife’s dementia and severe alcoholism.
Around the same time, he began making changes to the estate plan with
Pollak. The petition alleged Pollak introduced
Husband to a professional fiduciary who might serve as Wife’s conservator.
June 2010 trust documents for Husband and Wife to sign. Pollak arranged for Clyde H. Charlton to
conduct an independent review of the April 2010 trust, which included bequests
from Husband’s share of the community property to the caregivers, Sharon Smith,
Sumrall, and Junker. When Conservator’s
attorney asked for Charlton’s notes from his review, Charlton said he had no
notes, that he had spoken only with Husband, not with Wife, and that he knew
nothing of Wife’s condition or her position on such gifts.
C.
Wife’s
Mental State
The petition alleged that Wife’s
doctor had referred her for an evaluation by a clinical psychologist, Tessa ten
Tusscher, in July 2009. Dr. Tusscher’s
evaluation found deficits in a number of areas; in particular, Wife had
moderate and specific deficits in memory, and moderate deficits in reasoning,
judgment, insight, and executive functioning.
She also had mild deficits in orientation; although she was oriented as
to place, person, and time, she did not know the current president or her own
age. Dr. Tusscher concluded Wife had
“marked deficits in immediate and short-term memory, judgment, mental
flexibility and executive functioning.â€
Dr. Tusscher also noted that Wife suffered from vascular dementia, that
Wife had alcohol and nicotine dependence, that Wife saw no reason to change her
drinking or smoking, and that she was “in denial about her alcoholism.â€
Conservator
arranged to have Wife evaluated in July 2010 by Jonathan Mueller, M.D., a
forensic expert certified in neurology and psychiatry. Dr. Mueller found Wife had “ ‘basic
impairments in four areas: 1) attention
and registration . . . ; 2) short term memory loss which is dramatic . . . ; 3)
impairments in orientation (She did not know the year, the day of the week, the
date of the month, or time of day); 4) and visual spatial skills
. . . .’ †Wife had
no recollection of changing her estate plan in February, April, and May 2010 or
of leaving anything to the caregivers, and she believed Husband would have
discussed such a gift if he had wished to make one. She did not recall participating in an
alcohol rehabilitation program three years previously, did not know why she had lost her driver’s license, and did not
know what her medical problems were. She
could not initially recall the name of Husband’s nieces. When asked the value of her estate, she
estimated it as being about $500,000, which she thought was the approximate
value of her home. She was unable to say
how much she had in her checking or savings accounts, and denied having stocks,
bonds, certificates of deposit, or investments of any kinds. She did not know if she had an individual
retirement account.
title="">[4] She said that if she were preparing a will,
she would want to leave her estate in equal portions to her two sisters. She did not recall any details of her former
testamentary disposition. Dr. Mueller
stated: “I conclude that Ms. Anderson
currently lacks testamentary capacity and has not possessed it at any point in
the last twelve months†and she “likely would have had diminished ability to
resist undue influence from any individual(s) willing to play an active role
either in providing her with alcohol or in continuing to allow her to abuse
alcohol and nicotine despite repeated admonitions of [Wife’s primary care
physician] that she give up alcohol and cigarettes.â€
Dr.
Mueller also reviewed Husband’s medical records and emails, and opined that
“[t]he combination of severe crippling
cardiovascular, pulmonary and arthritic problems . . .
followed by lung and kidney cancer in an alcoholic octogenarian likely served,
in my medical opinion, to diminish Mr. Anderson’s capacity to withstand undue
influence.â€
Based
on her review of the evaluation reports, Conservator believed Wife had advanced
dementia when she executed the 2010 estate documents, and she alleged that the
documents were invalid.
The
petition alleged that when Conservator’s attorney spoke with Pollak on
May 14, 2010 and told him of the petition for a conservatorship, he told
her it was “ ‘highly likely that [Wife] has advanced dementia,’ †and
said, “ ‘She’s losing it, losing it!’ â€
It also alleged that in February 2011, Pollak told Conservator’s
attorney that Wife had “ ‘questionable capacity’ †when he was preparing documents.
D.
Objections
to Petition and Supporting Evidence
Sharon Smith and Sumrall filed an
objection to the petition in which they requested an
the 2010 estate planning documents should be revoked.
Pollak
also objected to the petition, to the extent it sought to use conservatorship
funds to investigate or pursue a claim against him.
2009. Husband and Wife had been referred
to him by Wife’s care manager, who advised Pollak that Wife was an alcoholic
and chronic smoker, but did not tell him Wife had dementia or was
incapacitated. Consequently, he was
“very careful in interviewing [Wife and Husband] concerning their desire to
make changes to their then current estate plan.†He met with Husband and Wife, and had a “long
substantive discussion†with Wife about her life, her family, and her
satisfaction with the care she was receiving.
He also had a “detailed discussion†with Husband and Wife about their
relatives and proposed beneficiaries.
After the discussion, Pollak concluded Wife had “sufficient mental
capacity to execute an estate plan.†He
discussed with Wife “three major defects†in the 1996 trust: certain tax consequences, the fact that the
surviving spouse could change the beneficiaries of the community property half
of the predeceased spouse, and the fact that under the 1996 trust, probate
proceedings might be necessary after the death of the second spouse. Pollak asked Wife “if it would be OK with
her, if she died first, if her husband changed her chosen beneficiaries. She said no and that she wanted the Trust
revised to prevent the surviving spouse from changing the beneficiaries of the
first spouse to die,†and that she wanted the trust revised to remedy the
“defects†Pollak identified. Husband and
Wife executed the February 2010 restatement, but the documents were apparently
lost. The trust was re-executed on April
2, 2010. Pollak referred Husband to
three attorneys to interview him and execute a certificate of independent
review, because Husband’s dispositive provisions included gifts to
caregivers. One of the attorneys,
Charlton, executed the certificate of independent review. Pollak prepared the May 2010 trust documents
in order to include provisions required by Franklin Templeton Bank, the
successor trustee. Pollak denied that he
had told Conservator’s counsel that it was likely that Wife had advanced
dementia, that she was “losing it,†or that she had questionable capacity when
he was preparing the documents.
Dr.
Tusscher submitted a declaration on Pollak’s behalf stating her opinion that at
the time of the July 2009 evaluation Wife “did not have major deficits and had
the capacity to understand the nature of her acts and had the capacity to make
an estate plan, provided the estate plan was not extremely complex.â€
E.
Wife’s
court-appointed attorney, Eliot Lippman, filed a report on April 20, 2011. Lippman averred he had met with Wife, and
that she did not object to the petition.
Wife had no memory of executing any of the 2010 trust documents. She remembered Sharon Smith and Sumrall, and
said she was surprised by and disapproved of the gifts to them. Wife’s long-term memory appeared to be
intact, she could identify family members, and she approved of Conservator’s
proposed distribution of the trust assets.
Lippman believed Wife lacked the requisite capacity to understand and
knowingly execute the three 30-page trust documents. Lippman believed the 2010 trust documents
were the product of undue influence and should be revoked, and that disposition
of assets provided for in the 1996 trust documents, including specific gifts of
tangible personal property, should be restored.
F.
The
Trial Court’s Ruling
Ruling on the petition, the trial
court noted that Charlton’s April 9, 2010 certificate of independent review was
facially valid. The court went on to
rule: “The result of the substituted
judgment petition would be to revoke the Bypass Trust, which became irrevocable
when Curtiss Anderson died and to subvert Curtiss Anderson’s apparent
testamentary wishes regarding his separate property and his half of the
parties’ community property. . . . This court will not posthumously rewrite
Curtiss Anderson’s estate plan based on the allegations in this Petition for
Substituted Judgment.
[¶] [Conservator] argues that since there was no independent review
of the 2010 estate plans conducted for Anne Anderson, the gifts to care
providers should be nullified. This
argument is not persuasive.
[Conservator] admits that the Bypass Trust was to be funded from
Curtiss’ portion of the estate. Curtiss
was at liberty to designate the disposition of his separate property and/or his
half of the community property, even in a jointly executed Trust
Declaration.†The court ordered as
follows: The petition was denied to the
extent it sought to amend the Bypass Trust.
The court assumed Conservator would wish to submit a revised petition for
substituted judgment, addressing the Survivor’s Trust only, and made no orders
as to the Survivor’s Trust. Conservator
was not permitted to execute a will for Wife or transfer property in a manner
that was at variance with the 2010 Bypass Trust provisions. The request to retain litigation counsel was
denied without prejudice; the court would consider the matter further if
Conservator initiated litigation against Pollak or Charlton.
II.
DISCUSSION
A.
Substituted
Judgment Statutory Scheme
“Probate
Code section 2580 provides for an order which authorizes or requires the
conservator to take a proposed action for the purpose of (1) benefiting the
conservator or the estate; (2) minimizing current or prospective taxes; or (3)
providing gifts to persons or charities which would be likely beneficiaries of
gifts from the conservatee.†(
Cal.App.4th 536, 552.) In deciding a
motion for substituted judgment, “the court shall take into consideration all
the relevant circumstances.†(Prob.
Code,
§ 2583.) Those circumstances may
include 13 circumstances listed in section 2583, including whether the
conservatee has or is likely to recover legal capacity for the proposed
transaction; the conservatee’s past donative practices, traits, and wishes; the
relationship and intimacy of the prospective donees with the conservatee, their
standards of living, and the extent to which they would be natural objectives
of the conservatee’s bounty; any known estate plan of the conservatee; the
manner in which the estate would devolve upon the conservatee’s death; and the
likelihood that the conservatee would take the action as a reasonably prudent
person if the conservatee had the capacity to do so. (§ 2583.)
“After
hearing, the court, in its discretion, may approve, modify and approve, or
disapprove the proposed action and may authorize or direct the conservator to
transfer or dispose of assets or take other action as provided in the court’s
order.†(§ 2584.) The court in Conservatorship of Hart (1991) 228 Cal.App.3d 1244, 1254, explained
the duty of the trial court in considering a substituted judgment motion: “The superior court’s primary function under
the substituted-judgment statute will be to make a decision (as the conservatee
would if able) on the basis of information furnished to it. The information the superior court receives
may or may not be consistent: If there
are issues of fact the court of course must determine whether the issues are
material to the decision to be made and then resolve any issues it deems
material.†When considering a
substituted judgment petition, “the trial court determines whether the
information presented in the petition is sufficient or whether a full contested
evidentiary hearing is required.†(
376, 398; see also Conservatorship of
McElroy, supra, 104 Cal.App.4th 536, 554.)
For instance, an evidentiary hearing may be unnecessary where
“circumstances such as a need to reduce tax liabilities [] make it obvious that
action is required.†(
Wife’s
Capacity to Amend the 1996 Trust
Conservator
contends the trial court improperly failed to consider wife’s incapacity to
execute the 2010 amendments to the trust.
There
is a rebuttable presumption that all persons have the capacity to make
decisions, and a person with a mental disorder may still be capable of
executing wills or trusts. (§ 810,
subds. (a) & (b).) A decision that a
person lacks capacity to execute a will or trust must be supported by evidence
of a deficit in at least one of a number of mental functions, including
orientation to time, place, person, and situation; ability to attend and
concentrate; short- and long-term memory; and ability to understand and
appreciate quantities. (§ 811,
subd. (a).) A deficit may be considered
only if, by itself or in combination with other deficits, it “significantly
impairs the person’s ability to understand and appreciate the consequences of
his or her actions with regard to the type of action or decision in
question.†(§ 811, subd. (b).)
Under
section 6100.5, subdivision (a)(1), an individual is not competent to make a
will if at the time of making the will, “[t]he individual does not have
sufficient mental capacity to be able to (A) understand the nature of the
testamentary act, (B) understand and recollect the nature and situation of the
individual’s property, or (C) remember and understand the individual’s
relations to living descendents, spouse, and parents, and those whose interests
are affected by the will.†Courts may
apply these standards in deciding whether a person had the ability to
understand the consequences of his or her actions in executing trust documents: “When determining whether a trustor had capacity
to execute a trust amendment that, in its content and complexity, closely
resembles a will or codicil, . . . it is appropriate to look to section 6100.5
to determine when a person’s mental deficits are sufficient to allow a court to
conclude that the person lacks the ability ‘to understand and appreciate the
consequences of his or her actions with regard to the type of act or decision
in question.’ (§ 811,
subd. (b).) In other words, while
section 6100.5 is not directly applicable to determine competency to make or
amend a trust, it is made applicable through section 811 to trusts or trust
amendments that are analogous to wills or codicils.†(Andersen
v. Hunt (2011) 196 Cal.App.4th 722, 731 (Andersen).)
However,
“ ‘[i]t is well established that “old age or
forgetfulness, eccentricities or mental feebleness or confusion at various
times of a party making a will are not enough in themselves to warrant a
holding that the testator lacked testamentary capacity.†[Citations.] “It has been held over and
over in this state that old age, feebleness, forgetfulness, filthy personal
habits, personal eccentricities, failure to recognize old friends or relatives,
physical disability, absent-mindedness and mental confusion do not furnish
grounds for holding that a testator lacked testamentary capacity.†[Citation.]
Nor does the mere fact that the testator is under a guardianship support
a finding of lack of testamentary capacity without evidence that the
incompetence continues at the time of the will’s execution.’ †(Andersen,
supra, 196 Cal.App.4th at p. 727.)
In
connection with her petition, Conservator alleged and presented evidence that
Wife lacked capacity to execute the 2010 trust documents. In particular, there was evidence that she
had dementia, and—in an evaluation two months after she executed the last 2010
document—that she was impaired in her ability to attend, that she had dramatic
short-term memory loss, and that her orientation as to time was impaired. There was also evidence that in July 2010, she
had no memory of having changed her estate plan two months previously and that
she was surprised by and disapproved of the gifts to Sumrall and Sharon
Smith. Dr. Mueller opined that Wife
lacked testamentary capacity and that she had not had it for the past
year. There is also evidence—which
Pollak denies—that Pollak told Conservator’s attorney that Wife likely had
advanced dementia, that she was “losing it,†and that she had “ ‘questionable
capacity’ †when he was preparing documents.
In addition, the petition contains an allegation that in late 2009,
Husband began interviewing professional fiduciaries out of concern for Wife’s
dementia and alcoholism, as well as an allegation—which Pollak denied—that
Pollak introduced Husband to a professional fiduciary who might serve as Wife’s
conservator.
The
trial court did not address any of this evidence, and indeed, entirely ignored
the issue of Wife’s capacity when it made its order. Rather, the court relied entirely on its view
of Husband’s right to dispose of his
community property share of the estate, and its concern that the effect of
granting the petition would be to revoke the Bypass Trust, which became
irrevocable when Husband died. In doing
so, the court failed to address the question of whether the trust amendments
were effective in the first place to the extent they changed the disposition of
the couple’s community property.
The
1996 trust provided that, while both spouses were living, “[a]ny trust created by this instrument may be modified or amended by
either settlor acting alone as to any separate and quasi-community property of
that settlor, and by both settlors acting
jointly as to any community property of the settlors.†(Italics added.) The court in King v. Lynch (2012) 204 Cal.App.4th 1186, considered a similar
provision of a trust. There, a married
couple executed a revocable trust that provided, in pertinent part,
“ ‘During the joint lifetime of the Settlors, this Trust may be amended,
in whole or in part, with respect to jointly owned property by an instrument in
writing signed by both Settlors and delivered to the Trustee, and with respect
to separately owned property by an instrument in writing signed by the Settlor
who contributed that property to the Trust, delivered to the Trustee.†(Id.
at p. 1188.) After the wife
suffered a brain injury
that left her incompetent to handle her own affairs, the husband executed three
amendments to the trust, which reduced the monetary bequests to the couple’s
children and grandchildren. (
were ineffective. In doing so, it relied
on section 15402, which provides: “Unless
the trust instrument provides otherwise, if a trust is revocable by the
settlor, the settlor may modify the trust by the procedure for
revocation.†The court ruled that
section 15402’s qualification “ ‘[u]nless the trust instrument provides
otherwise’ indicates that if any modification method is specified in the trust,
that method must be used to amend the trust.â€
(Id. at p. 1193.) Because the trust specified a modification
method that required the signature of both spouses, the amendments signed by
only the husband were ineffective. (
Similarly
here, the trust specified a method for amending the trust as to community
property, a method that required the action of both Husband and Wife. By their terms, the 2010 trust documents
amended and restated, rather than revoked or terminated, the 1996 trust, and
respondents do not contend that they acted as a revocation. Thus, Wife’s agreement was necessary to amend
the trust to alter the trust’s disposition of Husband’s one-half share of the
couple’s community property. In failing
to consider, and decide, whether Wife had the capacity in 2010 to amend the
1996 trust, the trial court erred.
We
are not persuaded otherwise by respondents’ citation to Conservatorship of Hart, supra,
228 Cal.App.3d at p. 1265, for the proposition that section 2583 does not
require the superior court to “make express findings as to the circumstances it
considers†when deciding a substituted judgment motion. Respondents suggest we should therefore
conclude the trial court implicitly found Wife had capacity. The order here, however, suggests strongly
that the trial court failed to consider that question, rather than deciding it
implicitly. In the circumstances of this
case, it is appropriate to remand the matter to the trial court to hold an
evidentiary hearing and decide whether Wife had capacity to execute the 2010
trust documents.
C.
Conservator
contends the trial court erred in considering whether the provisions of the
trust giving property to Sumrall, Junker, and Sharon Smith were invalid under the
provisions of the Probate Code governing gifts to care custodians. Section 21350 et seq. sets out limitations on
donative transfers by testamentary instrument, including trusts. (Bernard
v. Foley (2006) 39 Cal.4th 794, 799 & fn. 3; § 45.) “Section 21350 lists seven categories of
persons who cannot validly be recipients of such donative transfers, including,
inter alia, ‘[a] care custodian of a dependent adult who is the transferor’ (
custodian’ for these purposes ‘has the meaning as set forth in section 15610.17
of the Welfare and Institutions Code.’
(§ 21350, subd. (c).)†(
Welfare & Institutions Code section 15610.17 defines “care
custodian†as “an administrator or an employee of any of [a list of types of]
public or private facilities or agencies, or persons providing care or services
for elders or dependent adults.â€
Included in that list are “[h]ome health agencies†and “[a]ny other
. . . person providing health services or social services to elders
or dependent adults.†(Welf. & Inst.
Code, § 15610.17, subds. (c) & (y).)
A “dependent adult†includes a person older than age 65 who “resides in
this state and who has physical or mental limitations that restrict his or her
ability to carry out normal activities or to protect his or her rights,
including, but not limited to, persons who have physical or developmental
disabilities, or whose physical or mental abilities have diminished because of
age.†(§ 21350, subd. (c) &
Welf. & Inst. Code, § 15610.23.)
Respondents do not contend they were not care custodians.
Section
21351 provides exceptions to the prohibition of gifts to a care custodian. One of those exceptions exists if “[t]he
court determines, upon clear and convincing evidence, but not based solely upon
the testimony of [the care custodian], that the transfer was not the product of
fraud, menace, duress, or undue influence.â€
(§ 21351, subd. (d).) The
statutory scheme thus establishes a rebuttable presumption of undue influence
with regard to donative transfers from dependent adults to care custodians,
rather than an absolute bar on such transfers.
(Estate of Winans (2010) 183
Cal.App.4th 102, 113 (Winans).)
More
relevant here, the statutory bar is overcome if “[t]he instrument is reviewed
by an independent attorney who (1) counsels the client (transferor) about the
nature and consequences of the intended transfer, (2) attempts to determine if
the intended consequence is the result of fraud, menace, duress, or undue
influence, and (3) signs and delivers to the transferor an original certificate
in substantially the following form, with a copy delivered to the drafter: [¶] ‘CERTIFICATE OF INDEPENDENT
REVIEW [¶] I, ____________________
(attorney’s name) have reviewed [¶] _________________ (name of instrument)
and counseled my client [¶] __________________ (name of client), on the
nature and consequences of the transfer, or [¶] transfers, of property to
____________________ (name of potentially disqualified person)
[¶] contained in the instrument. I
am so disassociated from the interest of the transferee as to be in a position
to advise my client independently, impartially, and confidentially as to the
consequences of the transfer. On the basis
of this counsel, I conclude that the transfer, or transfers, in the instrument
that otherwise might be invalid under Section 21350 of the Probate Code are
valid because the transfer, or transfers, are not the product of fraud, menace,
duress, or undue influence.’ â€
(§ 21351, subd. (b).)
Clyde
Charlton signed a certificate of independent review that tracked the language
of section 21351, subdivision (b). In
particular, the certificate stated he had reviewed the April 2, 2010 amendment
and restatement of the 1996 trust, that he had counseled Husband on the nature
and consequences of the transfer, or transfers, of certain percentages of his
property to Sumrall, Junker, and Sharon Smith, and that on the basis of this
counsel, he concluded the transfer or transfers were not the product of fraud,
menace, duress, or undue influence. The
record contains no other evidence of Charlton’s counsel to Husband. According to the petition, when Conservator’s
attorney asked for a copy of Charlton’s notes, Charlton stated that he had no
notes. He said he had spoken only with
Husband, not with Wife, and that he knew nothing about her condition or
position on the gift. Conservator’s
attorney had written to Charlton asking for information on what he discussed
with Husband at the independent review, but Charlton had not responded. The certificate states that Charlton had
reviewed the April 2, 2010 amendment to the 1996 trust, but does not indicate
he had reviewed the February 2010 amendment or the 1996 trust itself.
Conservator argues
the court improperly accepted the certificate of independent review at face
value, without inquiring into the adequacy of the counseling Husband received
at the review. Winans is instructive on this point. The decedent there had executed a will
leaving property to his care custodian.
(Winans, supra, 183 Cal.App.4th at p. 108.)
An attorney had counseled the decedent pursuant to section 21351 in the
presence of another attorney and a notary public, informing him he was giving
property to the caregiver, asking whether he had been pressured to give the
bequest or whether there had been any threats or promises, and telling the
decedent that if he had any problems with
the caregiver, the attorneys would take care of them. The decedent said his bequest was
voluntary. The counseling session lasted
between one and five minutes. (
The
decedent’s niece and nephew, who were excluded from the will, challenged it,
asserting among other things that the certificate of independent review was
invalid. The trial court granted summary
judgment in favor of the care custodian, and our colleagues in Division One of
the First Appellate District reversed the ensuing judgment. (Winans,
supra, 183 Cal.App.4th at p.
108.) In concluding there was a triable
issue of fact as to the adequacy of this counseling, the court stated: “Proper counseling about the nature and
consequences of a bequest to a disqualified person [] requires the attorney to
ensure the testator understands (1) the nature of the property bequeathed; (2)
that a disqualified person will receive the property; and (3) that the ‘natural
objects’ of the testator’s bounty, if any, will not receive the property. The certifying attorney must also ensure the
testator voluntarily intends this result and does not believe himself or
herself to be under any compulsion, whether legal, financial or otherwise, to
make the bequest. This may require the
certifying attorney to confirm, for example, the testator is aware the
disqualified person has already been fully compensated for the services
provided to the testator or otherwise has no legal claim on the testator’s
bounty.†(Winans, supra, 183
Cal.App.4th at p. 117.)
Here,
aside from the bare language of the certificate of independent review, there is
no evidence of what counseling Husband received before Charlton executed the
certificate. Moreover, the certificate
indicated that Charlton had reviewed the April 2010 amendment, but did not show
he had reviewed or knew the terms of either the 1996 trust itself or the
February 2010 amendment—and therefore, there was no indication he counseled
Husband about the effects of the amendment on the “natural objects†of his
bounty. (See Winans, supra, 183
Cal.App.4th at pp. 116–117.) On this
record, it appears Husband was a dependent adult, and the trial court had a
duty to determine whether the counseling he received was adequate.
Moreover,
as Conservator points out, no certificate of
Wife. (§ 21350, subd. (c) &
Welf. & Inst. Code, § 15610.23.)
Respondents contend no certificate was necessary for Wife, because
Husband was entitled to dispose of his half of the community property. For this contention, they rely upon section
100, subdivision (a), which provides:
“ ‘Upon the death of a married person, one-half of the community
property belongs to the surviving spouse and the other half belongs to the
decedent,’ †and upon the rule that “[e]ach spouse has the right of
testamentary disposition over his or her half of the community property.†(Estate
of Miramontes-Najera (2004) 118 Cal.App.4th 750, 756; see also
1434, 1437 [community property trust assets transmuted to separate property on
decedent’s death].) Here, however, the
terms of the 1996 trust provided that during the lifetime of both spouses, it
could be amended as to community property assets “by both settlors acting
jointly.†It did not provide for
unilateral amendment of the trust while both spouses were alive. The issue, therefore, is not whether Husband
had the right to make a testamentary disposition of his portion of the
community property, but whether the couple validly made a joint amendment,
during Husband’s lifetime, to the disposition he had made.
Moreover,
Wife’s interests were affected by the transfer.
Under the 1996 trust, “[o]n the deceased settlor’s death, the remaining
trust estate shall be distributed outright to the surviving settlor.†The surviving spouse could then disclaim
property, which would be put into the Disclaimer Trust, and distributed to
named beneficiaries upon the death of the surviving spouse. Under the terms of the 2010 amendments, the
surviving spouse’s separate estate and one-half interest in the community
estate would be held in the Survivor’s Trust; with certain exceptions, the
remainder of the trust estate would be held in the Bypass Trust. The spouse would receive all the net income
from the Bypass Trust, and “as much of the principal of the trust as the
Trustee deems reasonably necessary for the proper health, maintenance, support
and education of the surviving spouse.â€
Upon the death of the surviving spouse, with certain exceptions for
tangible personal property, the residue of the Bypass Trust would go to the
beneficiaries designated by the predeceased spouse. As a result of the amendments to the trust,
then, the surviving spouse would have the right to less property than would
have been the case under the 1996 trust.
Additionally, if, as was the case here, Husband was the predeceased
spouse, those beneficiaries would include the three caregivers, at the expense
of Wife’s own family members. On these
facts, we conclude the 2010 amendments effected a donative transfer from Wife
to her caregivers that raised a rebuttable presumption of undue influence in
the absence of a certificate of independent review.
On
remand, the trial court shall consider and decide whether the presumption of
undue influence has been overcome.
D.
Litigation
Counsel
Finally, Conservator contends the
trial court abused its discretion in denying her request for authority to
retain litigation counsel to investigate, and, if appropriate, pursue legal
action against Pollak and Charlton. The
trial court denied the request without prejudice, adding that if Conservator
decided to initiate litigation against Pollak or Charlton, the court would
consider the matter further. We cannot
discern from the court’s order to what extent its ruling was affected by its
views on the questions of Wife’s capacity to execute the 2010 trust documents
and the validity of the gifts to the caregivers. In the circumstances, we shall reverse this
portion of the order as well and direct the trial court to reconsider the
matter after it has held an evidentiary hearing. In so ruling, we express no view on how the
trial court should exercise its discretion.
The
order appealed from is reversed, and the matter is remanded to the trial court
for further proceedings consistent with the views expressed in this
opinion.
_________________________
Rivera.
J.
We concur:
_________________________
Ruvolo,
P.J.
_________________________
Reardon,
J.
name="_ftn1" title=""> [1]
It appears that the May restatement included provisions required by Franklin
Templeton Bank, the successor trustee.
name="_ftn2" title=""> [2]
The Petition was captioned: “Petition
for Substituted Judgment for Authority for Conservator to Execute New Trust and
Will and Assignment and Deed for Conservatee, for Revocation of All 2010 Estate
Planning Documents Executed by Conservatee, for Authority to Place All
Conservatorship Assets into New Trust, and for Authority to Retain Litigation
Counsel to Investigate and to Pursue All Appropriate Legal Actions Against Attorneys.â€
