Sharing this video about trust/trustee accountings. Click on the link below for the video from Albertson & Davidson. This is an important topic for trustees and beneficiaries alike, in addition to some circumstances that require a trustee to provide other additional information about the trust and its administration.  These discussions are covered in part at California Probate Code Sections 16060-16069.  Accountings, their format, and what needs to be covered can be complicated topics. Statutes, court cases and Courts have been expanding the situations where accountings and reports of information are required, including in some circumstances retroactive accountings back to a time when accountings might not have been required.  Here is the link to the video, click here. See also discussions about trustee investment responsibilities here and here. Enjoy.

Dave Tate, Esq. – San Francisco/California – trusts, estates, conservatorships and elder abuse – trust, estate, conservatorship, elder and civil litigation, and contentious or difficult administrations.

Garcia v. Commissioner of Social Security, September 23, 2014, Ninth Circuit, Case No. 12-15686, 14 C.D.O.S. 11169

I began reading this case out of my interest in cases involving mental capacity, functioning and disability issues. As I read this case I was struck by how disappointed I was that the issue had to proceed all the way to the Ninth Circuit for determination, and that the Social Security Administration would actually pursue the issue that far and force the disability applicant to incur that cost and loss of time. It is of course more difficult for a disability applicant to pursue a case such as this for benefits, whereas the Social Security Administration on the other hand has essentially unlimited legal resources.

Briefly, Garcia appealed from the District Court’s order affirming the Commissioner of Social Security’s denial of benefits to Garcia on the basis that she was not intellectually disabled. As a minor, Garcia received Social Security benefits because of her intellectual disability. After she reached the age of 18, the Social Security Administration concluded that she no longer qualified as disabled and was therefore not entitled to further benefits. Garcia sought review by an ALJ who determined that Garcia was not intellectually disabled. The Social Security Administration Appeals Council denied Garcia’s appeal, and the District Court then subsequently affirmed the Social Security Commissioner’s denial of benefits. The Ninth Circuit reversed.

There was fairly substantial evidence presented to the ALJ. The ALJ determined that Garcia had severe impairment of borderline intellectual functioning, but that the impairment was not so severe that it met the requirements for intellectual disability. The problem was that it was legal error for the ALJ to not ensure that the record included a complete set of IQ test results. The Ninth Circuit held that the ALJ is not a mere umpire in such a proceeding, but that it is incumbent upon the ALJ to scrupulously and conscientiously probe into, inquire of, and explore all of the relevant facts. The ALJ must be especially diligent in ensuring that favorable as well as unfavorable facts and circumstances are elicited.

More specifically, in Garcia’s circumstance the ALJ considered the reports of three experts, two psychologists and one physician. Psychologist McDonald evaluated Garcia at the request of the California Department of Social Services. McDonald administered multiple tests, one of which was the Wechsler Adult Intelligence Scale, III Edition (“WAIS-III”). However, McDonald administered only the performance portion of the WAIS-III due to the constraints of time and the slowness with which Garcia completed the test. The Ninth Circuit noted that this was not the first time that McDonald had given that reason for failing to administer a complete IQ test when evaluating a patient for intellectual disability. The Ninth Circuit further held that the excuse was troublesome and that the District Court should not have accepted it in the absence of some more compelling reason. The SSA’s regulations indicate that potentially disabled individuals may take more time than others to complete an IQ test administration, and that the administrator of the test should plan accordingly. The court further held that the ALJ always has a special duty to fully and fairly develop the record and to assure that the claimant’s interests are considered. In reversing, the Ninth Circuit held that the entire WAIS-III test should have been administered and that the ALJ’s failure to develop the record to include a complete set of IQ scores was legal error.

It strikes me as almost unbelievable, and certainly disappointing and perhaps even shocking, that the disability applicant had to pursue this case all the way up to the Ninth Circuit to obtain a result that was fair and that should have been automatically provided at the initial stage when McDonald was administering the IQ examination. And yet, one of the three judges from the Ninth Circuit submitted a dissenting opinion, arguing that deference should be given to the Social Security Administration’s denial of benefits determination. That should tell you how speculative and precarious it can be to evaluate the likelihood on recovering or receiving a favorable determination in court.

Dave Tate, Esq. (San Francisco / California)

Bounds v. Superior Court (KMA Group), California Court of Appeal, Second Appellate District, No. B254505, Filed September 2, 2014.

Holding that on a demurrer to a cause of action for alleged financial elder abuse under the California Elder Abuse and Dependent Adult Civil Protection Act, for a “taking” of property to have occurred it is sufficient for the Complaint to allege that an elder had entered into an unconsummated agreement which, in effect, significantly impaired the value of the elder’s property although title to the property did not occur.  The elder had been deprived of a property right by means of an agreement because although title to the real property did not change hands escrow instructions had been signed which significantly impaired the value of the property owned by the Trust.

Dave Tate, Esq. (San Francisco and California), http://californiaestatetrust.com

This is part two of two discussions about California trustee investment and management responsibilities. This is a complicated topic. Each situation needs to be evaluated on its own. Most likely no two situations are the same. You should consult legal counsel.

Unless the trust states otherwise, the trustee should invest the trust property, preserve it, and make it productive. You can refer to Probate Code §§16000, 16006-16007 and 16046(b).

Unless the trust states otherwise, the trustee should diversify the trust investments unless, under the circumstances, it is prudent not to do so. You can refer to Probate Code §§16046(b) and 16048.

If a trust has two or more beneficiaries, the trustee should deal impartially with them and should act impartially in investing and managing the trust property, taking into account any differing interests of the beneficiaries. You can refer to Probate Code §16003.

Sometimes beneficiaries may have conflicting interests. When two or more income beneficiaries have different personal income tax brackets, generally the trustee should strike a balance between them when determining how much to invest in certain assets. However, the trustee might be allowed to prefer one class of beneficiaries over another if the trust terms direct—this can be a difficult area and cause litigation concerns. You can refer to Probate Code §16000.

Subject to the terms, intent and purposes of the trust, the trustee should follow the Prudent Investor Rule and make the trust property as productive as possible under the circumstances. You can refer to Probate Code §§16007 and 16046. Compliance with the Prudent Investor Rule is determined in light of the facts and circumstances existing at the time of a trustee’s decision or action and not by hindsight. You can refer to Probate Code §16051.

A trustee has the authority to make investment decisions as provided by the intent and wording of the trust, as provided by statute, and as required by the trustee’s legal standards of care, the interests of the beneficiaries, and the Prudent Investor Rule. You can refer to Probate Code §§16200, 16202, 16220-16244, 16040, 16046 and 16047.

Whether the trustee should use the services of a professional investment advisor is another issue to consider. It depends on the facts and circumstances. This topic also gets into prudent delegation of duties and how hiring an investment advisor could help protect the trustee from investment decision liability. This is a topic covered in other discussions. You can refer to Probate Code §16012.

Part one contains the remaining discussion.

Dave Tate, Esq., http://californiaestatetrust.com

This blog is back. Follow the new posts. For the past approx. year I have been posting my trust, estate, conservatorship and elder posts to my other blog, http://tatetalk.com. In the future, I will now be posting again to both blogs. Thank you.

In my September 8, 2013, blog post I wrote that there are no California judicial council jury instructions for standard Probate Code conservatorships, which I find somewhat amazing considering the issues and freedoms that are involved in conservatorship actions. So . . . based on statutory and case law . . . below is one attempt at a proposed jury instruction on a petition for conservatorship (note, the following proposed jury instruction only is on the issue whether the petition for conservatorship should or should not be granted and is not for an LPS conservatorship – there are also several other issues that would need to be evaluated and determined if the conservatorship is in fact granted, and in all cases the burden of proof and jury trial possibilities should be evaluated on a case by case and issue by issue basis).

Dave Tate, Esq. (San Francisco)

Proposed Jury Instruction – Probate Conservatorship

There exists a rebuttable presumption affecting the burden of proof that all people including [proposed conservatee] have the capacity to make decisions and to be responsible for their acts and decisions.

The fact that [person who filed the petition for conservatorship] has filed a petition claiming that [proposed conservatee] should be conserved is not evidence that this claim is true.

Clear and convincing evidence is evidence of such high probability, based on evidence so clear as to leave no substantial doubt and sufficiently strong to command the unhesitating assent of every reasonable mind.

The petition of [person who filed the petition for conservatorship] for the conservatorship of the person/estate of [proposed conservatee] must be denied unless [person who filed the petition for conservatorship] proves each of the following by clear and convincing evidence:

1. That [proposed conservatee] has a deficit in mental function as established by the evidence of the actions or inactions of [proposed conservatee] not based on a mere diagnosis of a mental or physical disorder;

2. That the evidence of the deficit in mental function is more than isolated incidents of negligence or improvidence;

3. That the deficit in mental function significantly impairs [proposed conservatee’s] ability to understand and appreciate the consequences of his/her actions and make decisions;

4. That as a direct result and cause of the deficit in mental function [proposed conservatee] is substantially unable to provide properly for his/her personal needs for physical health, food, clothing, or shelter [for conservatorship of the person];

5. That as a direct result and cause of the deficit in mental function [proposed conservatee] is substantially unable to manage his/her own financial resources or resist fraud or undue influence [for conservatorship of the estate];

6. That the granting of the conservatorship is the least restrictive alternative means available for the protection of the [proposed conservatee]; and

7. There is no means of third party assistance that is available as an alternative to the conservatorship.

* * * * *

In California there are proposed standard Judicial Council Civil Jury Instructions for LPS or Lanterman-Petris-Short Act conservatorships for people who are alleged to be gravely disabled due to a mental disorder/impairment or chronic alcoholism, but there are no Judicial Council proposed standard civil jury instructions for regular (non-LPS) civil conservatorships, which I have found to be at the very least surprising. A conservatorship is a court-ordered limitation or restriction on the conservatee’s liberties and decision making. As a feature in future blog posts I will be discussing specific conservatorship jury instructions.

California Probate Code §1800 importantly provides:

Section 1800.  It is the intent of the [California] Legislature in enacting this chapter [Part 3. Conservatorship – Chapter 1. Establishment of Conservatorship] to do the following:

(a) Protect the rights of persons who are placed under conservatorship.

(b) Provide that an assessment of the needs of the person is performed in order to determine the appropriateness and extent of a conservatorship and to set goals for increasing the conservatee’s functional abilities to whatever extent possible.

(c) Provide that the health and psychosocial needs of the proposed conservatee are met.

(d) Provide that community-based services are used to the greatest extent in order to allow the conservatee to remain as independent and in the least restrictive setting as possible.

(e) Provide that the periodic review of the conservatorship by the court investigator shall consider the best interests of the conservatee.

(f) Ensure that the conservatee’s basic needs for physical health, food, clothing, and shelter are met.

(g) Provide for the proper management and protection of the conservatee’s real and personal property.

Dave Tate, Esq. (San Francisco)
Trust, estate, conservatorship and elder litigation and administrations; civil, business, real estate, injury, product liability, public entity, healthcare, and professional liability litigation; dispute resolution and mediator; D&O, boards and committees, risk management and governance.