While several financial elder abuse cases involve family members, there are many that include caregivers. Caregivers often spend many hours alone with vulnerable dependent adults. As the law currently stands, a lifetime gift or beneficiary provision in a will or trust made by a dependent adult to a “care custodian” is presumed to be a result of fraud or undue influence. However, there are exceptions. In particular, spouses, domestic partners, and cohabitants who receive the gifts are exempt from the presumption of undue influence. This leads to the possibility that a strategic caregiver could marry the dependent adult to avoid the presumption of fraud.
The new law introduced as Assembly Bill No. 328, signed by Governor Newsom on June 26, 2019 and effective January 1, 2020, expands the presumption of fraud to include coverage for: (1) omitted spouse claims by caregivers, and (2) donative gifts to caregivers.
Under the law, a dependent adult is defined as an adult of any age who cannot provide properly for his or her basic needs, has difficulty managing his or her financial resources, or is unable to resist fraud or undue influence.
Omitted Spouse Claims by Caregivers
As the average age in marriage increases, it is not uncommon for single persons to have an estate plan and not get around to updating it when they get married or remarried. As a result, California existing law provides that if a married person passes away without providing for their spouse in their estate plan, the surviving spouse may claim a part of the estate, even if they were not named in the will or trust. This is called a “omitted spouse” claim.
Existing law provides that if the surviving spouse is not provided for in his or her will or trust after the execution of the document, absent an exception where the surviving spouse is provided for or agrees otherwise, the omitted spouse is required to receive one-half of the decedent’s community property and a share of the separate property.
While this law on its face is simple enough, a caregiver could financially abuse an elderly adult by marrying him or her near the end of their lifetime and then make a claim for a portion of the decedent’s estate as an omitted spouse.
To address this type of financial of abuse by caregivers, the new law prohibits a surviving spouse from receiving a share of the decedent’s estate as an omitted spouse if (1) the spouse was a caregiver of the decedent who was a dependent adult and the marriage commenced while the caregiver was providing services or within 90 days after those services were last provided, and (2) the decedent dies less than 6 months after the date of marriage.
In order to overcome the new presumption under the law, a spouse can prove by clear and convincing evidence that the marriage was not a product of fraud or undue influence.
Expansion of Presumption of Fraud in Gifts to Caregivers
California law has presumed that a dependent adult who signs an instrument benefitting a caregiver does so as a result of fraud or undue influence. Under Probate Code 21380, there is a presumption of fraud or undue influence when a dependent adult makes a will, a trust, or a donative transfer or gift to the person who is the caregiver; as a result, the gift is presumptively invalid.
However, there are exemptions to this law. For example, existing law exempts spouses and cohabitants of the transferor from the presumption of fraud or undue influence. To take advantage of the exemptions to the law, some conniving caregivers have married dependent adults to take advantage of the marriage exemption and avoid the presumption of fraud.
Assembly Bill 328 expands the presumption of fraud to caregivers who marry a dependent adult while providing services to the adult, or within 90 days after those services were last provided to the dependent adult if the donative transfer occurred, or the instrument was executed less than six months after the marriage started.
The presumption of invalidity is rebuttable. If a caregiver can prove by clear and convincing evidence that the gift was not the product of fraud or undue influence, then a court will validate the gift. However, to deter caregivers from making fraudulent claims, if the caregiver is unsuccessful in attempting to rebut the presumption, the caregiver will be responsible for all costs of the proceeding, including reasonable attorney’s fees.