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INDEPENDENT REVIEW AND CERTIFICATES OF INDEPENDENT REVIEW

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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.

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.

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.

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 CIR 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).

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 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