Frequently Asked Questions About "Disqualified Beneficiaries"
Who Is A Disqualified Beneficiary?
California law, specifically California probate code sections §§21360-21392, provides that certain transfers (such as gifts made t death by will or trust) are presumed invalid. Subject to certain exceptions, the following are each presumed invalid:
- a gift to the person who drafted the instrument;
- a gift to a "fiduciary" (such as an agent under power of attorney) who transcribes the instrument (or causes it to be transcribed);
- a gift to a care custodian of a dependent adult;
- a gift to a person related to or associated with any such person.
Are there any exceptions to this?
Yes. The most important exception is that these presumptions do not apply to beneficiaries who are related within the fifth degree to the donor, the person who executed the will or trust. Gifts of $3,000.00 or less are also excepted.
Does the presumption that the gift is invalid apply even if I don't pay my care custodian or if my care custodian is a long-time friend?
Yes, according to a recent court decision. The court ruled that the presumption that a gift to a care custodian is invalid applied whether or not the care custodian is paid and whether or not the care custodian had a pre-existing friendship with the donor.
How can I leave money to a person who is presumptively disqualified?
The easiest way is to obtain a "Certificate of Independent Review" from an independent attorney. The attorney will review the will or trust with you, and if the attorney determines that the transfer is "not the product of fraud, menace, duress, or undue influence," he or shill will execute a one-page certificate with that conclusion. A properly executed "Certificate of Independent Review" overcomes the presumption of invalidity and can help protect your estate plan.
Can I safely name a disqualified person as my Trustee when I die?
California probate code section 15642 provides that, if the Successor Trustee you have named would be a disqualified beneficiary under the statutes pertaining to gifts, that Trustee is subject to removal by the court. A separate "Certificate of Independent Review" can also be executed to protect your selection of a Trustee.
Where can I find out more?
The probate code, as well as other state codes, can be accessed at Http://www.leginfo.ca.gov/calaw.html .