Category Archives: trust

Determining California Mental Capacity to Execute a Trust or Will

Posted on by

The mental capacity to execute a trust or trust amendment is primarily based on California Probate Code §§810-812, and the mental capacity to execute a will or will codicil is primarily based on California Probate Code §6100.5; however, in the case of a trust or trust amendment §6100.5 may apply if the provisions are more simple in nature, and in the case of a will the provisions of §§810-812 may apply if the provisions are more complicated and in the nature of a trust. Andersen v. Hunt (2011) 196 Cal. App. 4th 722; Lintz v. Lintz (2014) 222 Cal. App. 4th 1346. However, various other rules and case law also apply including that it is the intent and natural wishes of the decedent testator that should prevail, extrinsic evidence and evidence of the surrounding circumstances might be admissible to determine that testator’s intent, presumptions for and against the validity of a document apply in certain circumstances, and the validity of the document can also be attacked in various other circumstances including for example, undue influence, fraud, forgery, elder abuse, fiduciary or confidential relationship and mistake.

California Probate Code §§810-812 provide:

Section 810. The Legislature finds and declares the following:

(a) For purposes of this part, there shall exist a rebuttable presumption affecting the burden of proof that all persons have the capacity to make decisions and to be responsible for their acts or decisions.

(b) A person who has a mental or physical disorder may still be capable of contracting, conveying, marrying, making medical decisions, executing wills or trusts, and performing other actions.

(c) A judicial determination that a person is totally without understanding, or is of unsound mind, or suffers from one or more mental deficits so substantial that, under the circumstances, the person should be deemed to lack the legal capacity to perform a specific act, should be based on evidence of a deficit in one or more of the person’s mental functions rather than on a diagnosis of a person’s mental or physical disorder.

Section 811. (a) A determination that a person is of unsound mind or lacks the capacity to make a decision or do a certain act, including, but not limited to, the incapacity to contract, to make a conveyance, to marry, to make medical decisions, to execute wills, or to execute trusts, shall be supported by evidence of a deficit in at least one of the following mental functions, subject to subdivision (b), and evidence of a correlation between the deficit or deficits and the decision or acts in question:

(1) Alertness and attention, including, but not limited to, the following:

(A) Level of arousal or consciousness.

(B) Orientation to time, place, person, and situation.

(C) Ability to attend and concentrate.

(2) Information processing, including, but not limited to, the following:

(A) Short- and long-term memory, including immediate recall.

(B) Ability to understand or communicate with others, either verbally or otherwise.

(C) Recognition of familiar objects and familiar persons.

(D) Ability to understand and appreciate quantities.

(E) Ability to reason using abstract concepts.

(F) Ability to plan, organize, and carry out actions in one’s own rational self-interest.

(G) Ability to reason logically.

(3) Thought processes. Deficits in these functions may be demonstrated by the presence of the following:

(A) Severely disorganized thinking.

(B) Hallucinations.

(C) Delusions.

(D) Uncontrollable, repetitive, or intrusive thoughts.

(4) Ability to modulate mood and affect. Deficits in this ability may be demonstrated by the presence of a pervasive and persistent or recurrent state of euphoria, anger, anxiety, fear, panic, depression, hopelessness or despair, helplessness, apathy or indifference, that is inappropriate in degree to the individual’s circumstances.

(b) A deficit in the mental functions listed above may be considered only if the deficit, by itself or in combination with one or more other mental function deficits, significantly impairs the person’s ability to understand and appreciate the consequences of his or her actions with regard to the type of act or decision in question.

(c) In determining whether a person suffers from a deficit in mental function so substantial that the person lacks the capacity to do a certain act, the court may take into consideration the frequency, severity, and duration of periods of impairment.

(d) The mere diagnosis of a mental or physical disorder shall not be sufficient in and of itself to support a determination that a person is of unsound mind or lacks the capacity to do a certain act.

(e) This part applies only to the evidence that is presented to, and the findings that are made by, a court determining the capacity of a person to do a certain act or make a decision, including, but not limited to, making medical decisions. Nothing in this part shall affect the decisionmaking process set forth in Section 1418.8 of the Health and Safety Code, nor increase or decrease the burdens of documentation on, or potential liability of, health care providers who, outside the judicial context, determine the capacity of patients to make a medical decision.

Section 812. Except where otherwise provided by law, including, but not limited to, Section 813 and the statutory and decisional law of testamentary capacity, a person lacks the capacity to make a decision unless the person has the ability to communicate verbally, or by any other means, the decision, and to understand and appreciate, to the extent relevant, all of the following:

(a) The rights, duties, and responsibilities created by, or affected by the decision.

(b) The probable consequences for the decisionmaker and, where appropriate, the persons affected by the decision.

(c) The significant risks, benefits, and reasonable alternatives involved in the decision.

California Probate Code §6100.5 provides:

Section 6100.5. (a) An individual is not mentally competent to make a will if at the time of making the will either of the following is true:

(1) The individual does not have sufficient mental capacity to be able to (A) understand the nature of the testamentary act, (B) understand and recollect the nature and situation of the individual’s property, or (C) remember and understand the individual’s relations to living descendants, spouse, and parents, and those whose interests are affected by the will.

(2) The individual suffers from a mental disorder with symptoms including delusions or hallucinations, which delusions or hallucinations result in the individual’s devising property in a way which, except for the existence of the delusions or hallucinations, the individual would not have done.

(b) Nothing in this section supersedes existing law relating to the admissibility of evidence to prove the existence of mental incompetence or mental disorders.

(c) Notwithstanding subdivision (a), a conservator may make a will on behalf of a conservatee if the conservator has been so authorized by a court order pursuant to Section 2580.

* * * * * * *

Evidence In Court – Some Thoughts To Keep In Mind To Prove Your Case

Posted on by

Some thoughts to keep in mind about evidence in Court to prove your case:

-One item of evidence in Court can be sufficient to establish a fact.

-Evidence can be oral or documentary/demonstrative, or both.  Generally, documentary or demonstrative evidence is more persuasive.

-Not all evidence is admissible.  The Judge determines admissibility.

-The trier of fact, i.e., the Judge or Jury depending on the type of case, determines which of the admissible evidence is most persuasive.

-The applicable standard or standards of care, and the burden or burdens of proof, and in some cases the shifting of the burden(s) of proof, are very important on the issues of liability and which party prevails in Court.

-I view evidence as falling in three different categories: (1) evidence that already exists and that we have in hand; (2) evidence that we don’t have but we very reasonably believe exists and we know where it is, how we can get it, and that we will get it; and (3) evidence or facts that we believe or hope exists but we don’t know if we will be able to get it.

-If you can’t sufficiently describe what you did and what did occur (and hopefully support them with documents or demonstrative evidence), you run the risk that it might be decided that you didn’t do it or that it didn’t occur.

-Your story must tell, and convince the trier of fact (i.e., the Judge or Jury) why you are there in front of them.

-Evidence also relates to damages and possible recovery or payment of attorneys’ fees and costs – what damages can be established, are the damages recoverable, and what are the possibilities of a party recovering or having to pay costs and attorneys’ fees to the other side?

-Consider the above when you are evaluating the probability of your case.

Dave Tate, Esq. (San Francisco / California)

 

Sharing this video and information about trust/trustee accountings

Posted on by

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.

ALJ Duty To Obtain Complete IQ Testing In Intellectual Disability Case

Posted on by

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)

Trustee Portfolio Investment Strategy Risk Management

Posted on by

A trustee needs a portfolio investment strategy in keeping with the terms of the trust and legal requirements. 

In pertinent part California Probate Code section 16047(b) provides:

“A trustee’s investment and management decisions respecting individual assets and courses of action must be evaluated not in isolation, but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust.”

In discussing circumstances that are appropriate to consider in investing and managing trust liabilities section 16047(c)(4) also lists the role that each investment or course of action plays within the overall trust portfolio.

You should read section 16047 in its entirety, in addition to the terms of the trust and other applicable statutory and case law; however, the point is that a trustee needs to have a portfolio investment strategy. 

And there is another very important reason to have a portfolio investment strategy. Investments will naturally increase and decrease in value over time. Although facts and circumstances in each different situation will vary, assuming that there is a portfolio investment strategy and that the portfolio investment strategy and other relevant facts are appropriate for the trust and the beneficiaries, as a general rule gains and losses of different investments within that portfolio investment strategy should be netted such that the trustee gets the benefit of both gains and losses if there is an assertion or claim that the trustee breached his or her management and investment fiduciary duties. Whereas, if there is no overall portfolio investment strategy, there is more of a likelihood that the gains and losses will not be netted, and that a trustee might be chargeable with a loss in a particular investment without the benefit of gains in other investments.

And this also reinforces the need for trustees to regularly review the portfolio investment strategy and the individual investments to make sure that the investments and allocation of investments are appropriate – although gains and losses should be netted as part of an overall portfolio investment strategy, if a particular investment becomes unsuitable or unsuitable to that overall investment strategy and if time continues to pass without a reevaluation of that investment by the trustee, not immediately, but over time, and argument might arise that it might no longer be appropriate to consider that individual investment and losses or gains in that investment as part of the overall portfolio investment strategy. In that circumstance the trustee could find that a court might treat that investment as a standalone investment and also treat gains and losses in that investment in the same manner without the benefit of netting with other investments. Obviously although that situation for the trustee might turn out okay if there is a gain in that investment, it does create greater investment loss risk for the trustee. Additionally, whereas the investment might initially gain in value, is also possible that an argument might arise that a subsequent loss in that individual investment might not be netted with the prior gains in that investment.

The facts and circumstances in each situation will vary, and each situation must be evaluated based on the facts and circumstances of that trust and that situation. Additionally, different judges will have differing approaches to trustee investment duties and responsibilities. Nevertheless, having a portfolio investment strategy approach, and timely reviewing that strategy, the investments made, and the investment allocation within the context of the trust, the beneficiaries, statutory and case law, and the investment and economic environment will help manage and reduce trustee investment liability risk.

Dave Tate, Esq. (San Francisco / California) 

* * * * * * *

New California Financial Elder Abuse Case – What Is A “Taking” Of Property – Bounds v. Superior Court

Posted on by

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

 

CALIFORNIA TRUSTEE INVESTMENT AND MANAGEMENT RESPONSIBILITIES (Part 2 of 2)

Posted on by

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

 

Video – Conservatorship of G.H. & Psychological Examinations | David W. Tate – San Francisco/California

Posted on by

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.

Proposed Jury Instruction – Probate Conservatorship

Posted on by

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.

* * * * *

Conservatorship Jury Instructions – There Are No Judicial Council Instructions

Posted on by

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.