Attended the Silent Trusts Presentation – San Mateo Co. Bar Estate Planning

Yesterday I attended the monthly San Mateo County Estate Planning and Probate Section lunch presentation. This presentation was on silent trusts, presented by attorneys Paul Barulich and Matthew Matiasevich. An interesting discussion about the planning, although rather limited planning, that parents can do in California to keep an irrevocable trust private from the beneficiaries, i.e., so that the beneficiaries don’t even know the trust exists. When might trustors desire this type of privacy from beneficiaries? One scenario could be when parents want their children to strive and achieve at least into their twenties without the certain knowledge that they will be receiving substantial trust assets.  At least based on responses by attendees, not many estate planning attorneys are preparing silent trusts.

One noted tidbit of information: even if the trust is drafted as a silent trust, trustee/trust duties under California Probate Code sections 16060.7, 16061 and 16061.5 are not waivable. Thus, for example, in some situations the trustee must still provide the terms of the trust and report to the beneficiary by providing information relating to the administration of the trust relevant to the beneficiary’s interest, if the beneficiary requests the trustee to do so.  Accordingly, even if a prospective beneficiary does not know that a trust exists, i.e., because the trust is silent, a prospective beneficiary should always ask a suspected trustee to provide information about any trust in which the prospective beneficiary is a beneficiary. Upon that request the trustee must provide some information.

Enjoy.

Dave Tate, Esq. (San Francisco / California) – Civil and Estate, Trust, Conservatorship and Elder Abuse Litigation – member of the Estate Planning and Probate Section Executive Committee.

My other blog, http://directorofficernews.com.

The Dementias: Hope Through Research, from the National Institute on Aging

The following link will bring you to a publication by the National Institute on Aging entitled The Dementias, Hope Through Research. The publication provides a good overview or background to dementia including types, causes, diagnosis, treatment, etc. For the publication, Click Here.

Dave Tate, Esq. (San Francisco/California)

My other blog, D&O, audit committees, boards, officers, risk management, compliance and governance, http://directorofficernews.com.

Study Finds Antipsychotic Drugs For Dementia Patients Increase Risk of Death

An interesting article discussing a finding that antipsychotic drugs for dementia increase the risk of death. I find equally interesting the numbers of elderly who are receiving antipsychotic drugs.  Click on the following link for the article, Click Here.

Dave Tate, Esq. (San Francisco)

My other blog for directors, boards, audit committees, officers, CEO’s, CFO’s, risk management, governance and compliance: http://directorofficernews.com

Alzheimer’s Cause Might Be Tau Protein – But At Law The Issues Are Mental Capacity, Natural Wishes, Fraud and Undue Influence

The following is an article about a new Mayo Clinic study, that the primary cause of Alzheimer’s might not be what has generally been thought:

“Amyloid – a sticky, toxic protein found in the brains of Alzheimer’s patients — has been the focus of research and diagnosis for decades. But a new Mayo Clinic study published in the journal Brain shows that another toxic protein, called tau, may be a bigger culprit in cognitive decline and Alzheimer’s over the lifetime of the disease.”

Click on the following link for the article: Click Here.

Many of my cases involve cognitive impairment or decline, whether it be diagnosed or called Alzheimer’s, or dementia, or traumatic brain injury, or lack of mental capacity, or cognitive impairment, or otherwise.

In conservatorships the issue isn’t the diagnosis, but whether the prospective conservatee has the ability to take care of and understand financial and/or daily living tasks and to resist fraud and undue influence?

And in will and trust contests or disputes, the issue is whether the decedent understood his or her assets and the effect of the provisions in the will or trust, and whether the will or trust provisions are what the decedent would have naturally wanted if the decedent had the mental capacity to understand his or her actions and the will or trust provisions, and to resist fraud and undue influence?  One additional comment: there is case law that you might not need to wait until after someone dies to contest or seek to invalidate a will or trust – this is an area of law that is developing and that is a positive development.

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

Upcoming Presentations – (1) Probate Court Litigation; (2) Elder Abuse and Protection

Upcoming presentations:

(1) Probate Court litigation, for a group of estate planning attorneys, caregivers and fiduciaries, March 26, 2015.

(2) Elder and Dependent Adult Abuse and Protection, for the Riverside estate planning bar, April 16, 2015.

Dave Tate, Esq. (San Francisco and California)

Admissibility of Hearsay Evidence of a Decedent’s Will or Trust

In will and trust contest actions the person who signed or who supposedly signed the will or trust is usually deceased.  Statements that the decedent previously made are considered hearsay, i.e., a statement made out of court that is being admitted for the truth of the statement, and are not admissible in evidence unless a hearsay exception applies. California Evidence Code section 1260 provides an important possible hearsay exception that may apply in will and trust contest cases; however, the applicability of section 1260 depends on a determination by the Judge in the case and applicability can vary from case to case and from Judge to Judge.

California Evidence Code section 1260 provides as follows:

Section 1260.  (a) Except as provided in subdivision (b), evidence of any of the following statements made by a declarant who is unavailable as a witness is not made inadmissible by the hearsay rule:

(1) That the declarant has or has not made a will or established or amended a revocable trust.

(2) That the declarant has or has not revoked his or her will, revocable trust, or an amendment to a revocable trust.

(3) That identifies the declarant’s will, revocable trust, or an amendment to a revocable trust.

(b) Evidence of a statement is inadmissible under this section if the statement was made under circumstances that indicate its lack of trustworthiness.

And, in an action involving a claim or demand against an estate of a decedent, California Evidence Code section 1261 also provides an additional possible hearsay exception in appropriate circumstances as determined by the Judge in the case.  Section 1261 provides as follows:

Section 1261.  (a) Evidence of a statement is not made inadmissible by the hearsay rule when offered in an action upon a claim or demand against the estate of the declarant if the statement was made upon the personal knowledge of the declarant at a time when the matter had been recently perceived by him and while his recollection was clear.

(b) Evidence of a statement is inadmissible under this section if the statement was made under circumstances such as to indicate its lack of trustworthiness.

Dave Tate, Esq. (San Francisco / California)

Will and Trust Undue Influence in California

Undue influence is typically proven by inference or circumstantial evidence, not limited to the actual time that the will or trust was executed but also based on facts relevant to the issues both before and after execution. Estate of Franco (1975) 50 Cal. App. 3d 374, 382; Estate of Baker (1982) 131 Cal. App. 3d 471, 481.  To make the determination more difficult, different law and standards can apply depending on whether the document in question is a will or trust, different judges will apply different standards and approaches, and there can be a presumption that a signed will or trust that isn’t a forgery is valid and effective. On the other hand however, a presumption of undue influence can apply in certain statutory, fiduciary, and confidential relationship situations.  The facts and evidence in each case need to be carefully evaluated particularly when the will or trust contains provisions that are not natural to what the testator would have wanted and in cases where there are significant sudden or significant changes.

Undue influence consists of conduct that causes the testator to make a disposition of his or her property that is different from that which he or she could have done had he or she been permitted to follow his or her own inclination. Estate of Baker (1982) 131 Cal. App. 3d 471, 480-81.

Pursuant to California Civil Code §1575, undue influence exists upon any one of the following separate and distinct criteria:

(1) the use, by one in whom confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him;

(2) taking an unfair advantage of another’s weakness of mind; or

(3) taking a grossly oppressive and unfair advantage of another’s necessities or distress.

There is no fixed definition or inflexible formula – rather the question is whether from the entire context it appears that the testator was induced or his decision making was induced to do or forbear to not an action which he or she would not do, or would do, if left to act freely. Keithley v. Civil Service Board (1970) 11 Cal. App. 3d 443, 451.

Under Cal. Civ. Code §1575(2) the weakness of mind can be temporary and need not be incapacitating. Odorizzi v. Bloomfield School District (1966) 246 Cal. App. 2d 123, 131. Under Cal. Civ. Code §§1575(2) and (3) the use of over-persuasion is often accompanied by certain characteristics examples of which might be: discussion of the transaction at an unusual or inappropriate time; consummation of the transaction in an unusual place; insistent demand that the event be finished at once; emphasis on the untoward consequences of delay; the use of multiple persuaders; the absence of third-parties; or statements that there is no time to consult others. Odorizzi v. Bloomfield School District (1966) 246 Cal. App. 2d 123, 133.

Although fraud and undue influence are separate grounds for setting aside a will, and undue influence can be found without any fraud, undue influence also can be a species of fraud or constructive fraud as undue influence and fraud can be closely related and fraud may be considered in determining whether there was undue influence. Estate of Garibaldi (1961) 57 Cal. 2d 108, 114; O’Neil v. Spillane (1975) 45 Cal. App. 3d 147, 158 (undue influence as a species of constructive fraud); Stewart v. Marvin (1956) 139 Cal. app. 2d 769, 775 (undue influence as a species of constructive fraud); Estate of Newhall (1923) 190 Cal. 709, 718; Estate of Ricks (1911) 160 Cal. 467, 480; however, see also, Hagen v. Hickenbottom (1995) 41 Cal. App. 4th 168(a showing of false or fraudulent statement is not a necessary element of undue influence).

The California elder abuse statutes provide yet another statutory definition of undue influence.  California Welfare and Institutions Code section §15610.70 provides the following definition:

15610.70. (a) “Undue influence” means excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity. In determining whether a result was produced by undue influence, all of the following shall be considered:

(1) The vulnerability of the victim. Evidence of vulnerability may include, but is not limited to, incapacity, illness, disability, injury, age, education, impaired cognitive function, emotional distress, isolation, or dependency, and whether the influencer knew or should have known of the alleged victim’s vulnerability.

(2) The influencer’s apparent authority. Evidence of apparent authority may include, but is not limited to, status as a fiduciary, family member, care provider, health care professional, legal professional, spiritual adviser, expert, or other qualification.

(3) The actions or tactics used by the influencer. Evidence of actions or tactics used may include, but is not limited to, all of the following:

(A) Controlling necessaries of life, medication, the victim’s interactions with others, access to information, or sleep.

(B) Use of affection, intimidation, or coercion.

(C) Initiation of changes in personal or property rights, use of haste or secrecy in effecting those changes, effecting changes at inappropriate times and places, and claims of expertise in effecting changes.

(4) The equity of the result. Evidence of the equity of the result may include, but is not limited to, the economic consequences to the victim, any divergence from the victim’s prior intent or course of conduct or dealing, the relationship of the value conveyed to the value of any services or consideration received, or the appropriateness of the change in light of the length and nature of the relationship.

(b) Evidence of an inequitable result, without more, is not sufficient to prove undue influence.

The facts and evidence in each case need to be carefully evaluated.

Dave Tate, Esq. (San Francisco / California)