BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 105|
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UNFINISHED BUSINESS
Bill No: SB 105
Author: Harman (R)
Amended: 8/12/10
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 5/5/09
AYES: Corbett, Harman, Florez, Leno, Walters
SENATE FLOOR : 38-0, 5/14/09 (Consent)
AYES: Aanestad, Alquist, Ashburn, Benoit, Calderon,
Cogdill, Corbett, Correa, Cox, Denham, DeSaulnier,
Ducheny, Dutton, Florez, Hancock, Harman, Hollingsworth,
Huff, Kehoe, Leno, Liu, Lowenthal, Maldonado, Negrete
McLeod, Oropeza, Padilla, Pavley, Romero, Runner,
Simitian, Steinberg, Strickland, Walters, Wiggins, Wolk,
Wright, Wyland, Yee
NO VOTE RECORDED: Cedillo, Vacancy
ASSEMBLY FLOOR : 74-0, 8/16/10 - See last page for vote
SUBJECT : Donative transfer restrictions: care
custodians
SOURCE : California Law Revision Commission
DIGEST : This bill revises and recasts current provisions
related to restrictions on donative transfers to specified
persons that become irrevocable on or after January 1,
2011. This bill establishes an express presumption of
fraud or undue influence if the donative instrument makes a
CONTINUED
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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 provides 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.
Assembly Amendments (1) add intent language, (2) provide
that provisions apply to instruments that become
irrevocable on or after January 1, 2011, and (3) add
clarification to definitions.
ANALYSIS : Existing law presumptively invalidates any
provision or provisions of an instrument that makes a
donative transfer to certain disqualified beneficiaries.
Disqualified beneficiaries include:
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. Specifically for
instruments that become irrevocable on or after January 1,
2011, this bill:
1. Revises the statutory presumption that a gift by a
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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.
3. Revises the definition of "dependent adult" to be:
A. For a person 65 years of age or older: (1) the
person was unable to provide properly for his/her
personal needs for physical health, food, clothing,
or shelter, or (2) due to one or more deficits in
mental functions, as defined, the person had
difficulty managing his/her own financial resources
or resisting fraud or undue influence, or (3) both
(1) and (2) apply.
B. For a person age 18-64: (1) the person was unable
to provide properly for his/her personal needs for
physical health, food, clothing, or shelter, or (2)
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 (3) both (1)
and (2) apply.
4. Requires an independent attorney, who certifies that a
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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 action to contest a donative transfer under
the common law or under any other applicable law.
This bill contains various provisions intended to conform
the statutes to the changes made by SB 1264 (Harman),
Chapter 174, Statutes of 2008.
Background
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)
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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 8/17/10)
California Law Revision Commission (source)
ARGUMENTS IN SUPPORT : According to the author's office:
"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
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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."
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Block, Blumenfield, Bradford,
Brownley, Buchanan, Caballero, Carter, Chesbro, Conway,
Cook, Coto, De La Torre, De Leon, DeVore, Eng, Evans,
Feuer, Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines,
Galgiani, Gatto, Gilmore, Hagman, Hall, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,
Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller,
Monning, Nava, Nestande, Niello, Nielsen, Norby, V.
Manuel Perez, Portantino, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, John
A. Perez
NO VOTE RECORDED: Bass, Blakeslee, Charles Calderon,
Davis, Garrick, Vacancy
RJG:mw 8/17/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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