An estate plan may be created to do almost anything a person desires. For example, a will can distribute the decedent’s personal and/or real property; passing on specific items to a relative, friend, or organization. A trust can hold specific property or funds for a designated beneficiary; any and all terms of which may be determined by the trustor. While drafting these estate planning documents, it’s important to keep in mind restrictions that state laws impose on to whom transfers can be made. In California, an important restriction is outlined in Probate Code section 21350.
Section 21350 outlines California’s limitations on transfers to “drafters, care custodians, and others.” Specifically, provisions that make donative transfers (i.e. gifts) to (1) the person who drafted the instrument, (2) any person who has a fiduciary relationship with the transferor, or (3) a care custodian, among others, are strictly prohibited. Despite the statute’s clear restrictions, there have been issues relating to who exactly qualifies under these categories. In Estate of Austin, 188 Cal. App. 4th 512 (2010), the Fifth District California Court of Appeal needed to decide whether a former stepdaughter should be considered a “care custodian” under the statute and thus disqualified from receiving gifts. The former stepdaughter took her former stepfather to his doctor appointments, prepared meals for him, and helped out whenever she could after he broke his hip and while he recovered from triple bypass surgery. Decedent’s daughter filed a lawsuit seeking to disqualify her former stepsister from receiving gift transfers totaling about $185,000.
Earlier in the case, the Fresno County Superior Court ruled that the gifts to the former stepdaughter were valid. The Appellate Court affirmed. A care custodian is defined by California case law as someone who provides care or services to elders or dependent adults, whether paid or as a result of preexisting personal friendship. Health or social services were defined as including cooking, gardening, running errands, assisting with banking, and driving to doctor’s appointments. The Appellate Court found that the former stepdaughter’s “services” could not be reasonably characterized as providing substantial, ongoing health or social services and she was thus not a care custodian. Further, the decedent made the gift transfers to the former stepdaughter while he was residing in a nursing home, when the former stepdaughter was not providing any services to him. Therefore, the gift transfers were valid and the former stepdaughter was not disqualified from receiving them.
Statutes do not always clearly define who falls into certain categories, the courts are able to make decisions based on specific factual scenarios. If you care for an elder relative and think you may be considered a care custodian, an attorney can help clarify what, if any, impact this may have on your ability to inherit from that relative. If you are interested in learning more about individual gift transfers or estate planning, please contact the San Jose estate planning attorneys at Lonich Patton Erlich Policastri, LLP. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.