FILIPINA CAREGIVER GETS $ 225,000 GIFT FROM TRUST ESTATE
By Roman P. Mosqueda, Esq.
After a whole-day mediation on November 14, 2003, the Trustee of the Trust Estate of Isabella Hurst Logan agreed to settle the gift claim of a Filipina caregiver for $225,000, free and clear of estate taxes.
A lawful permanent resident, the Filipina caregiver, a certified public accountant in the Philippines, was a live-in caretaker of Mrs. Logan from November 16, 1998 to August 29, 2002, when she died at 93 years of age.
By a notarized Third Amendment to her Trust dated November 7, 2001, Mrs. Logan gave her old house at 2786 Monte Mar Terrace, Los Angeles, California 90064 to the Filipina caregiver, whose identity is withheld to protect her privacy. The Trustee, the niece of Mrs. Logan, objected to the gift after her death.
Presumption of Invalidity
of Gift to Caregiver:
Under Section 21350(a)(6) of the California Probate Code, any donative transfer or gift by a dependent adult to his/her care custodian is invalid, to protect the giver from fraud, menace, duress or undue influence.
Exceptions to the presumption of invalidity are provided as follows:
1. The transferor (giver) is related by blood or marriage to, or is a cohabitant with, or a registered domestic partner of, the transferee (beneficiary), per Section 21351(a) of the Probate Code;
2. A certificate of independent review by an attorney who counsels the client (transferor) about the nature and consequences of the intended transfer and attempts to determine if there was fraud, menace, duress or undue influence, per Section 21351(a) of the Probate Code; and
3. Finding upon clear and convincing evidence by a probate judge at a hearing that there was no fraud, menace, duress or undue influence exerted on the dependent adult for the transfer or gift to the caretaker, per Section 21351(d) of the Probate Code.
The transfer or gift may be given outright in cash or check or the physical object or the use thereof, during the giver’s lifetime, or in his/her trust instrument or will, effective upon his/her death or some other time.
In whatever form or manner the transfer or gift is given, the presumption of invalidity attaches, unless overcome by the exceptions stated above.
Thus, it is recommended that the dependent adult giver be subjected to an independent review by an attorney who counsels the giver of the nature and consequences of the transfer, and determine whether the transfer or gift is freely and voluntarily given; and an affirmative certificate be issued by aforesaid attorney to overcome the presumption of invalidity.
Psychological Evaluation
Recommendation:
It is further recommended, especially if the transfer or gift is substantial in value and the giver is elderly, that the transferor (giver) be psychologically evaluated and tested by a psychologist or a psychiatric on his/her mental, emotional and physical capacity to give the transfer or gift, as well as his/her free will and voluntariness.
A psychological evaluation report, finding an elderly giver with mental, emotional and physical capacity, as well as free will and voluntariness in giving the transfer or gift, has more evidentiary weight than a certificate of independent review by an attorney, who may not be an expert evaluator.
Even so, the California Legislature preferred such an independent review by an attorney over psychological evaluation by a psychologist or psychiatrist who is a medical doctor, to overcome the presumption of invalidity.
Lacking such a certification of independent review by an attorney, the caregiver-beneficiary can still prove lack of fraud, menace, duress or undue influence by clear and convincing evidence before a probate judge, in order to receive or keep the transfer or gift.
Another way of validating the transfer or gift is to obtain a stipulation or agreement from all the other beneficiaries and/or heirs of the giver that the transfer or gift was knowingly, freely and voluntarily given; and file such stipulation or agreement on distribution of the transfer(s), gift(s) and/or inheritance with the probate court for approval.
Caregiver’s Gift
Settled:
The objection to the house gift by the Trustee of the Trust Estate of Mrs. Logan was based on the presumption of invalidity of the gift discussed above.
Unfortunately, the attorney for Mrs. Logan who prepared the Third Amendment to her Trust, giving her house to the Filipina caregiver, failed to obtain a certificate of independent review by an attorney.
Instead, aforesaid attorney had Mrs. Logan psychologically evaluated by a psychologist about twelve (12) days after the execution of the Third Amendment to her Trust which was duly acknowledged by her before a notary public; and a psychological report generated thereon.
But the same attorney, acting as attorney for the Trustee, subsequently objected to the house gift to the Filipina caregiver.
A prior attorney of the Filipina caregiver advised her to accept a $50,000.00 settlement offer, without specifying whether estate taxes would be deducted therefrom. She refused and obtained the services of the author.
After numerous exchanges of correspondence and briefs, the Trustee and the Filipina caregiver agreed to mediate their dispute. Retired probate attorney, Jan Stone, was chosen as mediator to be paid by the Trustee for her services.
Considering the fair market value of the old house, the estate taxes thereon estimated at one-third of its value, the risks involved in an evidentiary hearing, requiring clear and convincing evidence, and other factors, the Trustee and the Filipina caregiver agreed to settle at mediation for the sum of $ 225,000, free and clear of estate taxes, to be approved by a probate judge.
(The Author, Roman P. Mosqueda, personally represented the Filipina caregiver and obtained the $ 225,000 settlement for her).