Leaving the Million-dollar Estate to the “Help”

Earn one hour of Legal Ethics MCLE credit by reading the article below and answering the questions on the Self-Study MCLE test. Send your answers, along with a check ($30 per credit hour for CCCBA members / $45 per credit hour for non-members), to the address on the test form. Certificates are dated as the day the form is received.

A new client has scheduled an appointment with you to create a trust, or restate an existing trust. When she arrives, her caregiver has come along. You assume the caregiver will be sitting in the lobby, but she asks her caregiver to join the two of you in your meeting.

After pleasantries and your typical intake questions, your client informs you that she will be making her caregiver a beneficiary. You are now on high alert. You already weren’t comfortable with the caregiver being present, but now that you know your client is leaving everything to the caregiver, you have a real concern about potential elder abuse. Before jumping to the worst-case scenario, there are several factors to first consider.

The law says that in order for a will to be valid, your client must have testamentary capacity. What does this mean? Does your client know who she is, does she know who her family is and does she understand the property she has? The burden is rather low. Clients may be well aware of who they are and what they own, but have no understanding that they could be acting under the influence or manipulation of a caregiver.

In fact, according to Probate Code section 21380, when a client leaves a donative gift to a caregiver, it is automatically presumed by law to be the product of undue influence or fraud. Thus, it is up to the caregiver as beneficiary  to demonstrate by clear and convincing evidence that the donative transfer was not the product of fraud or undue influence. This is no easy hurdle to overcome and careful consideration should be given when one is faced with this situation.

Indeed, it is not all that uncommon for a client to think he or she owes a caregiver everything and feels an obligation to compensate the caregiver through a donative gift. After all, many clients develop a very tight bond with their caregiver. The caregiver is with them constantly and tends to their most sensitive needs. Often, clients spend more time with their caregiver than anyone else in their life, including their family. It is natural to feel gratitude and appreciation for the caretaker.

However, if a caregiver is pressuring the client to name the caregiver as beneficiary, the client may feel even more obligated to financially provide for the caregiver, regardless of the fact that the client is already paying for the caregiving services. Indeed, even an innocent comment can be influential on this susceptible group.

Likewise, there are other considerations to ponder. Should a person be able to show appreciation by making a monetary gift to a caregiver? Should we be able to leave our assets to whom we choose, even when these wishes arise from the last phase of life and at the expense of a lifetime of relationships? It’s difficult for family members to accept such a disposition even absent any wrongdoing.

As attorneys, we have the obligation to be aware of the possibility of such circumstances. There are certain steps that we can take to ensure our clients are not taken advantage of. We should look at the client’s history in his or her current and prior estate plans. Does the client have children? Are the children estranged or involved? Is there a history of omitting the children as beneficiaries?

In the asking of the questions, we will get a sense of our client’s capacity. At some point, you will need to explain to your client the necessity to speak with him or her privately and inquire into the relationship with the caregiver.

In order to best protect the client and make sure his or her planning goals are met, it is critical to be sure you are confident in the client’s desires. Moreover, to prevent the donative gift from being contested, you will want to demonstrate in the documents that your client is acting freely with no undue influence from his or her caregiver.

Once we are comfortable that our client has capacity and is not unduly influenced, we need to do our best to avoid a costly contest and the possibility of our client’s wishes being circumvented. Probate Code section 21384 offers a partial solution to this problem; specifically, the presumption of fraud and undue influence as defined in section 21380 is not applicable if an independent review of the gift is made by an independent attorney in accordance with parameters of this code section.

In addition to establishing the client’s testamentary capacity, recording the client by video can also be a useful form of evidence to avoid litigation. The client can plainly state his or her wishes. This evidence can be used to disprove incapacity and undue influence. Depending on the degree of friction or animosity in the family, this may be an advisable recommendation to clients. The attorney also needs to assess the client’s appearance and condition to determine if a video will be helpful or actually detrimental. It’s an added expense but, as the saying goes, an ounce of prevention is worth a pound of cure.

In addition to the legal hurdles facing unnatural dispositions, there are many social, cultural and psychological influences directing the outcome of these cases. Many adult children believe that they are entitled to an inheritance. If we let go of that idea, how many of these cases would be litigated? We accept it as normal that we are going to have some cases where adult children are going to fight over their inheritance. The value of money itself drives much of the conflict.

Another factor contributing to the fray is sibling rivalry. A comment often heard is “it’s not fair.” In some cases, the caregiver is one of the children. This doesn’t seem to make an uneven distribution more palatable. Is “fair” an even distribution to the children? Perhaps “fair” is to allow people to give according to their wishes. Maybe it would be fair to give more to a child that has made sacrifices for the parent, or to give to the child with greater need even if that child did not make the wisest choices in life.

As attorneys, our job is not to make moral judgments, but to implement our clients’ wishes in a manner that minimizes or avoids conflict. Being aware of the undercurrent of these beliefs and issues can help us navigate these cases.

Ultimately, it is important to trust your gut and feel comfortable in honoring your client’s request. If you feel that your client is being taken advantage of, and after a thorough discussion, the two of you cannot reach an agreement, then it is best to refer them elsewhere.

Earn one hour of Legal Ethics MCLE credit by reading the article and answering the questions on the Self-Study MCLE test. Send your answers, along with a check ($30 per credit hour for CCCBA members / $45 per credit hour for non-members), to the address on the test form. Certificates are dated as the day the form is received.