Hoffman Law Firm

Independent Reviews

Do You or Your Client Need A Certificate of Independent Review?

If you or your client is considering making a testamentary gift by will or trust to an attorney, care provider or individual involved with caring for your physical or social needs (or their relatives) or others, as the law in this area expands, and if you want the gift to withstand legal scrutiny you must obtain a Certificate of Independent Review.  

The requirement is designed to protect individuals from being taken advantage of and prevent fraud or undue influence.

Our firm is available to perform an Independent Review of contemplated testamentary transactions and if appropriate issue a Certificate upon successful completion of the review.  See California Probate Sections 21380-21392.

Section 21380 is in many ways a unique and effective tool for a person who wishes to challenge the existence and validity of a will or trust, but the direct evidence needed to challenge the suspect document is little or nonexistent. The statute provides for a shifting of the burden of proof if the trial judge determines that a person receiving a gift or “donative transfer” is deemed to fall within a category of a disqualified person.

Section 21380 states that a donative transfer under an “instrument” is presumed to be the product of fraud or undue influence if the gift is given to a person who drafted the instrument, a person in a fiduciary relationship with the person who transcribed the instrument or caused to be transcribed, a “care custodian” of the person who made the gift and the person is a dependent adult (but only if the instrument was executed when the care custodian provided services to the person or within 90 days before or after that person and they received compensation for the services rendered such as health or social services), a person who is related by blood or affinity to any of the persons identified above, a person who is a cohabitant or employee of the persons identified above or the person is a partner, shareholder or employee of a law firm who made the instrument or caused it to be transcribed.

If a person is found to have drafted the subject instrument by the court, the presumption if fraud or undue influence is conclusive and cannot be rebutted. However, if the person is the subject of the other categories then the presumption may be rebutted by clear and convincing evidence that the donative transfer was not the product of fraud or undue influence. Recently, an appellate court found that the clear and convincing standard requires a finding of high probability so clear as to leave no substantial doubt – the evidence must be sufficiently strong to command the unhesitating assent of every reasonable mind. See Estate of Ben-Ali (2013) 216 Cal. App. 4th 1026, 1037. Accordingly, even though the statute allows the clear and convincing evidence presumption to be rebutted, the level of proof required is so high that it would be a rare case for the presumption to be rebutted since the evidence for rebuttal would likely have been produced in discovery and the case would likely be resolved prior to any Section 21380 hearing.

Cases which have reviewed the statute emphasize that it is intended for the protection of families and the court may make findings based upon the circumstantial or indirect evidence. In other words, the appellate courts acknowledge that direct evidence is very difficult to obtain in cases where the person who executed the instrument is dead and the persons involved with the instrument are the respondents to a court petition seeking to divest their interest in the estate. These cases include fiduciaries and non-fiduciaries alike. See Butler v. LeBouef (2016) 248 Cal. App. 4th 198; see also Estate of Swetmann (2000) 85 Cal. App. 4th 807.

To summarize , where the facts are difficult to obtain to show fraud or undue influence in connection with a will or trust and gifts to suspect persons, Section 21380 is a very powerful tool to obtain relief from the probate judge. Further, a motion to bifurcate any probate hearing to trial judge rule in favor of the petitioner who successfully prevails on a Section 21380 claim. Moreover the legislature also provided for the recovery of attorneys’ fees and costs at Section 21380(d) to a family who prevails on the claim and where the suspect beneficiary is unsuccessful in rebutting the presumptions set forth in the statute.

With an independent review and a corresponding Certificate of Independent Review (Probate Code § 21370 (“Independent attorney” means an attorney who has no legal, business, financial, professional, or personal relationship with the beneficiary of a donative transfer at issue under this part, and who would not be appointed as a fiduciary or receive any pecuniary benefit as a result of the operation of the instrument containing the donative transfer at issue under this part.) and §21384  your client’s intended testamentary transfer can be better implemented and protected. §21384 provides is pertinent part:

"A gift is not subject to Section 21380 if the instrument is reviewed by an independent attorney who counsels the transferor, out of the presence of any heir or proposed beneficiary, about the nature and consequences of the intended transfer, including the effect of the intended transfer on the transferor’s heirs and on any beneficiary of a prior donative instrument, attempts to determine if the intended transfer is the result of fraud or undue influence, and signs and delivers to the transferor an original certificate in substantially the following form…[a “COIR”]…"

And, it may very well be that the planning attorney will face malpractice liability FOR FAILING TO RECOMMEND that his/her client obtain a COIR.  See Osornia v Weingarten (2004) 124 Cal. App. 4th 304 (The attorney drafted the will without including a certificate of independent review as required by Cal. Prob. Code § 21351…The court balanced the five Biakanja/Lucas factors and held that an attorney drafting instruments to transfer property to a presumptively disqualified person owed a duty of care to advise as to the likelihood of presumptive disqualification and to recommend that the client seek independent counsel. Thus, the attorney owed a duty of care to the nonclient under the facts as could be alleged.); see also Paul v Patton (2015) 235 Cal. App. 4th 1088.

For further guidance regarding the above or to schedule an Independent Review, the reader is encouraged to contact:

The Hoffman Law Firm/ Nathan B. Hoffman, ESQ. 

at www.TheHoffmanLawFirm.com or by

 telephone at (844) HLF-4LAW [844-453-4529]

ATTORNEYS - AVOID MALPRACTICE

INDEPENDENT REVIEW AND CERTIFICATES OF INDEPENDENT REVIEW (COIR)

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CA Probate Code §§21380-21392

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In ‘2010, a great deal of attention was paid to California Probate Code §21350, the so-called “disqualified person rules.” Both the California courts and the State Legislature have weighed in on the interpretation and application of the rules, and the State Legislature has passed a replacement statute, Probate Code §21381, et seq. which modifies the rules as well.

The disqualified person statutes (Probate Code §21350, et. seq.) void provisions found in deeds, wills, trusts and other donative instruments that purport to make a transfer of property from a transferor to a caregiver, family member or drafter unless one of the exceptions set forth in Probate Code §21351 applies. The California Supreme Court in Bernard v. Foley (2005, Cal App 2d Dist)

130 Cal. App. 4th 1109, 30 Cal. Rptr. 3d 716, broadened the application of the disqualified persons

and settled the conflict among the lower courts by holding that a care custodian under Prob. Code §

21350 includes any person providing health services or social services to an elderly person or dependent adult.

Essentially, the Court adopted the definition of care custodian found in California Welfare and

Institutions Code §15610.17, which lists categories and specific language in subsection (y) upon

which the court relied: “any other person providing health services or social services to elders or

dependent adults.” Widening of the definition of care custodian creates implications for friends who

may be assisting an elderly or dependent adult. Suddenly, transfers that seemingly have been made to

express gratitude and appreciation to a caregiver are now presumptively barred even if there was an

ongoing and long term friendship.

The Bernard court further held that there is no preexisting personal friendship exception or professional occupation limitation to this definition, thereby broadening the class of people that could be defined as “care custodians” under the statute and subject to a rebuttable presumption of fraud, undue influence, menace and duress should they be the beneficiary of a testamentary bequest.

Admittedly, the Bernard case and the statute create a presumption of fraud, menace, duress or undue influence and the presumption can be overcome by clear and convincing evidence but not based solely on the testimony of the disqualified person. This creates a trap for the unwary estate planner and drafter who is not aware of the significant issues created by the disqualified person rules.

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In 2011, the Legislature passed and enacted Probate Code §21380, et seq. as of January 1, 2011.

According to LexisNexis the following differences between the two statutory schemes are noted. For the most part, Probate Code §21380 restates the substance of former §21350(a) with some notable exceptions:

• (1) Subdivision (a)(3) limits the care custodian presumption to gifts made during the period

in which the care custodian provided services to the transferor, or within 90 days before or after that period.

• (2) Subdivision (a)(6) generalizes the reference to a “law partnership or law corporation” in former Section 21350(a)(3), to include any law firm, regardless of how it is organized.

• (3) Subdivision (a)(6) generalizes the rule creating a presumption of fraud or undue influence when a gift is made to the law firm of the drafter of a donative instrument, so that it also applies to a fiduciary of the transferor who transcribes an instrument or causes it to be transcribed.

• Subdivision (b) restates the substance of the first sentence of former Section 21351(d), with two exceptions:

o (1) The former limitation on proof by the testimony of the beneficiary is not

continued.

o (2) The presumption of menace and duress is not continued.

• Subdivision (c) continues the substance of former Section 21351(e)(1), and expands the rule to apply to gifts to specified relatives and associates of the drafter of a donative instrument.

• Subdivision (d) restates the substance of the second sentence of former Section 21351(d).

§21380(d) provides that if a beneficiary is unsuccessful in rebutting the presumption, the beneficiary shall bear all costs of the proceeding, including reasonable attorney fees. Representing beneficiaries of proposed transfers that fall within the gambit of 21380 can be dicey, and the careful advocate will warn his/her client in writing of the possible consequences of a failed attempt to validate the gift by

means of clear and convincing evidence.

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However, as LexisNexis points out, “The burden of establishing the facts that give rise to the presumption under subdivision (a) is borne by the person who contests the validity of a donative transfer under this section. See Evid. Code § 500 (general rule on burden of proof).” This is undoubtedly because gifts are presumed to be valid, unless and until there is sufficient evidence to give rise for the application of the 21380 presumption of fraud or undue influence.

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The Certificate of Independent Review (COIR) is the way to avoid the presumptions of invalidity found in §21380, and §21384(a) sets forth the wording of the certificate. Careful practitioners will want to create a declaration in support of the COIR. The declaration of the drafting attorney helps to make sure that all of the requirements of a valid COIR are met.

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Now that the Certificates of Independent Review are so important, and it looks like we are going to be using them even more, it is important to read the case of Estate of Winans (2010), 183 Cal.App.4th102. The case discusses the duties of an attorney who provides a COIR under the old\ §21351(b). The issues surrounding the statutory scheme of disqualification of specified people under §21380 are not affected by the application of the common law governing menace, duress, fraud and undue influence. See Bernard v. Foley, 39 Cal. 4th 794, 800, 139 P.3d 1196, 47 Cal. Rptr. 3d

2482006); Rice v. Clark, 28 Cal. 4th 89, 97, 47 P.3d 300, 120 Cal. Rptr. 2d 522 (2002).

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And, it may very well be that the planning attorney will face malpractice liability FOR FAILING TO RECOMMEND that his/her client obtain a COIR.

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See Osornia v Weingarten (2004) 124 Cal. App. 4th 304 (The attorney drafted the will without including a certificate of independent review as required by Cal. Prob. Code § 21351…The court balanced the five Biakanja/Lucas factors and held that an attorney drafting instruments to transfer property to a presumptively disqualified person owed a duty of care to advise as to the likelihood of presumptive disqualification and to recommend that the client seek independent counsel. Thus, the attorney owed a duty of care to the non-client under the facts as could be alleged.); see also Paul v

Patton (2015) 235 Cal. App. 4th 1088 (Demurrer without leave to amend was improper in a legal malpractice action because a trial court erred in concluding as a matter of law that a decedent's children could not establish that the decedent's attorney owed them a duty as trust beneficiaries to

ensure a trust amendment reflected the decedent's testamentary intent, and the children thus should have been permitted to amend their complaint to allege such a duty).

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AVOID MALPRACTICE – RECOMMEND AN INDEPENDENT REVIEW BEFORE THE ESTATE PLANNED IS SIGNED