New provisions that went into effect in California on Jan. 1, 2011 have put the spotlight on an estate-planning issue that’s often overlooked, but can lead to a legal quagmire if it’s not handled precisely: the bequeath in a will, trust or other estate planning document of a gift to a non-related caregiver.

The new provisions strengthen and clarify an amendment to California’s Probate Code, enacted in the early 1990s, that was put into place to protect testators—especially the elderly—from unscrupulous caregivers and drafting counsel. Many other states have similar protections in their state probate codes.

When the caregiver isn’t related to the testator or falls into the category of certain other “disqualified persons” (for example, the person who drafted the document), the amendment required a certificate of independent review proving that a separate attorney had verified that the testator was aware that he was giving the gift and was doing so freely. The certificate was considered clear and convincing evidence validating the gift to the caregiver, above and beyond the testimony of the drafting attorney and the recipient of the gift.

Not surprisingly, independent attorneys have been leery of participating in issuing these certificates of review for fear of being drawn into litigation over the validity of the caregiver gift. The 2011 provisions have relaxed this requirement a bit, allowing drafting attorneys to sign a certificate of independent review when the recipient of the gift is a “care custodian,” as opposed to a “disqualified person.”

Nevertheless, drafting documents that include a gift of appreciation to a non-related caregiver must be approached with caution and a full understanding of the associated laws. Otherwise, the gift transaction may be negated, which could result in legal action taken by the jilted caregiver against the drafting attorney. This is a no-win situation, with the testator failing to achieve his donative intent, the caregiver losing out on the intended gift and the drafting attorney facing litigation.

Impact of the New Provisions
As is almost always the case when a legal code is clarified or expanded, the 2011 statutory changes to California’s Probate Code raise questions about how the changes will impact both existing and newly created estate-planning documents. The following are two of the issues being raised.

Does a testator who made a caregiver bequest before 2011 need to obtain a new certificate of independent review?

It appears that a new certificate will indeed be required. So if a testator got a certificate of independent review from an independent attorney before 2011, he may now have to get a new one from either a different (third-party) attorney or if the gift is to a care custodian, from the drafting attorney. Section 21355(a) of the California Probate Code states that the previous rules apply to instruments that become irrevocable prior to 2011. By extension, it makes sense that independent review certificates are also affected in this way. So, for example, if a testator included a caregiver gift in a revocable trust in 2005 but doesn’t die until 2012 (making the trust irrevocable), it seems that the former rules—as well as the certificate issued before this year’s new provisions became official—don’t apply.

Will substantial compliance in a pre-2011 gift satisfy the new statute?

The answer remains to be seen, as no court has yet answered this question.

Clearer Definitions

While the 2011 provisions raise many questions and present further challenges to the proper drafting of caregiver gifts, those provisions include many positive aspects, including defining and clarifying some key terms.

For instance, the provisions define “care custodian” as a person who provides health or social services to a dependent adult. They include in that definition those who provide services without remuneration if they had a personal relationship with the dependent adult at least 90 days before providing those services, at least six months before the dependent adult’s death and prior to the time the dependent adult was admitted to hospice care.

The provisions also define “dependent adult,” drawing a clear distinction between individuals who are ages 18 to 64 and those who are 65 and older. The definition says that individuals under age 65 must suffer from “substantial difficulty” managing their own financials resources or resisting fraud or undue influence. But it deletes the word “substantial” in the definition for individuals age 65 or older. In addition, the provisions define “independent attorney” as a lawyer with no pecuniary interest in the beneficiary of the donative transfer at issue.

While the new provisions discussed here are in the California Probate Code, the same message applies to attorneys drawing up estate-planning documents in any state: When a client expresses a desire to bequeath a gift of appreciation to a non-related caregiver, you must tread carefully and apply the appropriate laws and statutes to the letter.