BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   SB 105|
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                                 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:
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          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  







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             "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  








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          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:








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            "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

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