BILL ANALYSIS
SB 105
Page 1
SENATE THIRD READING
SB 105 (Harman)
As Amended August 2, 2010
Majority vote
SENATE VOTE :38-0
JUDICIARY 10-0
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|Ayes:|Feuer, Tran, Brownley, | | |
| |Evans, Hagman, Huffman, | | |
| |Jones, Knight, Monning, | | |
| |Saldana | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Revises restrictions on donative transfers from
dependent adults to care custodians. Specifically, this bill :
1)Revises the statutory presumption that a gift by a dependent
adult to his or her care custodian is the result of fraud or
undue influence if executed during the period of care by the
care custodian, or within 90 days of that period. Continues
the clear and convincing rebuttal standard to overcome the
statutory presumption.
2)Revises the definition of "care custodian" to be a person who
provides health or social services, as defined, to a dependent
adult, but does not include a person who provided services
without remuneration, if the person had a personal
relationship with the dependent adult that began: a) at least
90 days before providing those services; b) at least six
months before the dependent adult's death; and, c) if the
dependent adult was admitted to hospice care, before the
dependent adult was admitted to hospice care. Provides that
"remuneration" does not include the gift at issue or
reimbursement of expenses. Limits the scope of "health or
social services" to those services provided to a dependent
adult because of that person's dependent condition.
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3)Revises the definition of "dependent adult" to be:
a) For a person 65 years of age or older: i) the person
was unable to provide properly for his or her personal
needs for physical health, food, clothing, or shelter; or,
ii) due to one or more deficits in mental functions, as
defined, the person had difficulty managing his or her own
financial resources or resisting fraud or undue influence;
or, iii) both i) and ii) apply.
b) For a person age 18-64: i) the person was unable to
provide properly for his or her personal needs for physical
health, food, clothing, or shelter; or, ii) due to one or
more deficits in mental functions, as defined, the person
had substantial difficulty managing the person's own
financial resources or resisting fraud or undue influence;
or, iii) both i) and ii) apply.
4)Requires an independent attorney, who certifies that a
donative gift from a dependent adult to a care custodian is
not the result of fraud or undue influence, to counsel the
dependent adult, outside 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. Revises the definition of "independent attorney"
to be an attorney with no legal, business, financial,
professional or personal relationship with the beneficiary of
the donative transfer at issue and who would not be appointed
as a fiduciary or receive any benefit as a result of the
donative instrument.
5)Increases the value of a small gift that is exempt from the
restrictions on donative transfers from $3,000 to $5,000.
6)Clarifies that the statutory presumption in this bill
supplements the common law and that this is declarative of
existing law. Provides that nothing in this bill precludes an
SB 105
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action to contest a donative transfer under the common law or
under any other applicable law.
EXISTING LAW :
1)Presumptively invalidates any provision or provisions of an
instrument that makes a donative transfer to certain
disqualified beneficiaries as the product of menace, duress,
fraud or undue influence. Disqualified beneficiaries include:
a) The person who drafted the instrument;
b) A relative, domestic partner, cohabitant, or employee of
the person who drafted the instrument;
c) A partner, shareholder, or employee of a law firm in
which the drafter has an ownership interest;
d) A person who stands in a fiduciary relationship to the
transferor, or any relative, cohabitant, or domestic
partner of the fiduciary; and,
e) A care custodian of a dependent adult who is the
transferor, or any relative, cohabitant, or domestic
partner of the care custodian.
2)Provides that the statutory presumption in 1) above can be
overcome by clear and convincing evidence, not based solely on
the testimony of the presumptively disqualified beneficiary,
that the transfer was not the product of fraud, menace, duress
or undue influence.
3)Exempts from 1), among other gifts, gifts to close relatives
of the transferor and small gifts, defined as gifts valued at
$3,000 or less if the estate is worth $100,000 or more.
4)Provides the statutory presumption in 1) does not apply if the
donative instrument is reviewed by an independent attorney who
counsels the transferor about the nature and consequence of
the gift and certifies that the gift is not the product of
menace, duress, fraud or undue influence.
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FISCAL EFFECT : None
COMMENTS : In 1993, in response to an attorney in Southern
California who had drafted wills for elderly clients that
included large gifts to himself, his family and his business
partners, the Legislature established the Donative Transfer
Restriction Statute, which created a statutory presumption that
donative gifts to the drafter of the document are the result of
menace, duress, fraud or undue influence. AB 21 (Umberg),
Chapter 293, Statutes of 1993. The presumption was expanded in
1997 to include gifts from dependent adults to their care
custodians. AB 1172 (Kaloogian), Chapter 724, Statutes of 1997.
This bill seeks to revise that presumption.
In 2006, the California Supreme Court, in Bernard v. Foley
(2006) 39 Cal.4th 794, invalidated a donative gift to alleged
friends of a dependent adult who had become her caregivers
towards the end of her life. While the Foley majority agreed
that the gift recipients were indeed caregivers who were subject
to the presumption of invalidity and that the caregivers failed
to overcome that presumption, the Chief Justice, in his
concurring opinion, invited the Legislature to make an exception
to the presumption of invalidity for friends.
That same year, the Legislature directed the California Law
Revision Commission (CLRC) to study the operation and
effectiveness of the statutory restrictions on donative
transfers to disqualified individuals and report to the
Legislature on its findings and recommendations for revision and
improvement of those provisions. AB 2034 (Spitzer), Chapter
215, Statutes of 2006. The CLRC, pursuant to its legislative
mandate, issued its report in October 2008, and this bill
incorporates most of its recommendations.
Analysis Prepared by : Leora Gershenzon / JUD. / (916)
319-2334
FN: 0005204