BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 105| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 105 Author: Harman (R) Amended: As introduced Vote: 21 SENATE JUDICIARY COMMITTEE : 5-0, 5/5/09 AYES: Corbett, Harman, Florez, Leno, Walters SUBJECT : Donative transfer restrictions: care custodians SOURCE : California Law Revision Commission DIGEST : This bill repeals current provisions related to restrictions on donative transfers to specified persons. This bill instead establishes an express presumption of fraud or undue influence if the donative instrument makes a gift to the person who drafted or who transcribed the instrument or to their family members, or makes a gift to certain other disqualified persons, including a caregiver or care custodian, and provide exceptions to the operation of this presumption. It provides that the presumption may be rebutted by preponderance of the evidence. Finally, this bill defines "degree of kinship" or consanguinity for the Probate Code. ANALYSIS : Existing law presumptively invalidates any provision or provisions of an instrument that makes a donative transfer to certain disqualified beneficiaries. Disqualified beneficiaries include: CONTINUED SB 105 Page 2 1. The person who drafted the instrument. 2. Any relative, domestic partner, cohabitant, or employee of the person who drafted the instrument. 3. Any partner, shareholder, or employee of a law firm in which the drafter has an ownership interest. 4. Any person who stands in a fiduciary relationship to the transferor, or any relative, cohabitant, or domestic partner of the fiduciary. 5. Any care custodian of a dependent adult who is the transferor, or any relative, cohabitant, or domestic partner of the care custodian. (Section 21350 of the Probate Code. All references are to the Probate Code unless otherwise indicated.) This bill repeals Section 21350 and related provisions, and reenacts and recasts the provisions as Section 23160 et seq., with the following changes: 1. It limits the definition of "care custodian" to a person who provides services for remuneration, as a profession or occupation. 2. It limits the definition of "dependent adult" to a person who is over 18 years old and (a) who is unable to provide for personal needs, or (b) who is unable to manage his or her own finances or resist fraud or undue influence. 3. It extends the definition of "interested witness" to a will to include a person who is also a devisee of the will. 4. It allows an attorney who drafted the donative instrument making a gift to a care custodian to also provide the independent attorney certification if the attorney has no interest in the gift. It defines "independent attorney" for this purpose. 5. It removes the presumption against "menace" and SB 105 Page 3 "duress," leaving only a presumption of fraud or undue influence in the making of the donative transfer to a disqualified person. 6. It updates the upper limit of the value of the donative transfer exempt from the restrictions of Section 21350 to $5,000, if the transferor's estate is valued at or in excess of $100,000 (to reflect increases in Section 13100). 7. It reduces the burden of proof, on the part of the disqualified person against whom the presumption would operate, from clear and convincing evidence that the donative transfer was not the product of fraud, menace, duress, or undue influence, to preponderance of the evidence to rebut the presumption created by this act. 8. It continues the existing rule as to the effect of a failed gift, but removes the exception for an intestate share. Existing law does not describe how degree of kinship or consanguinity is determined for purposes of the Probate Code. This bill defines lineal kinship or consanguinity as the relationship between two persons, one of whom is a direct descendant of the other (parent and child, for example) and by counting the generations separating one from the other. This bill defines collateral kinship or consanguinity as the relationship between two people who spring from a common ancestor, but neither person is the direct descendant of the other (thus siblings are related in the second degree, an aunt or niece is related to the person in the third degree, and a first cousin is related in the fourth degree). This bill contains various provisions intended to conform the statutes to the changes made by SB 1264 (Harman), Chapter 174, Statutes of 2008. Background SB 105 Page 4 In 2006, the California Supreme Court in Bernard v. Foley (2006) 39 Cal.4th 794 dealt with the presumptive invalidity of donative transfers (gifts) made by dependent adults to their caregivers. While the court majority agreed that in Foley the transferees were caregivers who were subject to the presumption of invalidity and that the caregivers did not overcome the presumption, the Chief Justice, in his concurring opinion, invited the Legislature to make an exception to the presumption of invalidity when the gift from a dependent adult to a caregiver predates the date of the caregiving. Bernard v. Foley overruled two earlier decisions holding that "care custodian" does not include a personal friend. ( Estate of Kathryn McDowell (2004) 125 Cal.App.4th 659, 673-74; Estate of Dolores Davidson (2003) 113 Cal.App.4th 1035, 1048-50) AB 1727 (Assembly Judiciary Committee), Chapter 553, Statutes of 2007, was a cleanup bill to the 2006 Omnibus Conservatorship and Guardianship Reform Act, and included among its provisions a response to the Supreme Court's invitation to clarify the rules relating to donative transfer restrictions. However, the donative transfer restriction provisions were deleted from AB 1727 and referred to the California Law Revision Commission (CLRC) for recommendations, since the CLRC was already studying this subject. SB 105 implements the recommendations of CLRC. This bill also contains corrections to obsolete cross-references to the no-contest clause provisions of the Probate Code that were repealed by SB 1264 (Harman), Chapter 174, Statutes of 2008. SB 1264 repealed the former no-contest clause statute. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 5/7/09) California Law Revision Commission (source) ARGUMENTS IN SUPPORT : According to the author's office: SB 105 Page 5 "In 2007, AB 1727 attempted to address the issue of donative transfers to caregivers, at the invitation of the Foley , supra, decision. The Chief Justice, in his concurrence opinion in Foley , suggested eliminating the independent review requirements for caregivers to receive testamentary gifts, when those gifts predate their role as caregivers. Such legislation would, as stated by supporters then, help ensure that the testamentary wishes of dependent adults are carried out for caregivers with whom they have had a pre-existing personal relationship, while still helping prevent abuse in the case of other caregivers. "These provisions were deleted from AB 1727 and sent to the California Law Revision Commission for recommendations, since the CLRC earlier had been charged with a study of the restrictions on donative transfers via testamentary instruments and the presumptive disqualification of certain classes of individuals from becoming beneficiaries of donative transfers of a dependent adult. The need to resolve the issue of donative transfers to caregivers has not abated, thus the CLRC has submitted their recommendations in SB 105." RJG:mw 5/7/09 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****