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Beneficiary of a Trust or Will: Can a Caregiver be one?

Is it legal to name a caregiver as a beneficiary of a Trust or Will? The answer is… maybe. Here are the things you need to know about naming a caregiver as a beneficiary of a Trust or Will in California:

When a Caregiver is Named as a Beneficiary of a Trust or Will, A Legal Presumption of Undue Influence or Fraud is Created

Certain groups of people, including caregivers, are considered “prohibited transferees” under the California Probate Code.[1] This means that if a caregiver is named as a beneficiary of a Trust or Will, there is a presumption that the Trust or Will was the product of fraud or undue influence. This presumption makes it easier for a disgruntled heir to file a lawsuit to attack the validity of the Trust or Will in court.

In addition, if someone does attack or contest the validity of the Trust or Will in court, the caregiver will have the burden of proving that he or she did not use fraud or undue influence to coerce the client into designating him or her as a beneficiary—a difficult standard to meet in most cases.

Furthermore, if the caregiver is unable to prove to the court by clear and convincing evidence that the Trust or Will was not the product of fraud or undue influence, the court may order the caregiver to pay the costs and expenses of the court proceedings, including attorneys’ fees. That means the stakes are high for any caregiver looking to defend their gift under a Trust or Will.

There are Exceptions to the Presumption of Undue Influence by a Caregiver

In certain situations, the presumption of undue influence or fraud by a caregiver may not apply. The following situations may be considered exceptions:

  • The caregiver was related by blood or marriage to the person executing the Trust or Will.
  • The caregiver did not receive payment for caregiving services.
  • The caregiver was personally acquainted with the person who executed the Trust or Will prior to executing the Trust or Will for a period of 90 days.
  • The gift given to the caregiver is valued at $5,000 or less.
  • The Trust or Will was not executed during the time frame when the caregiver was providing services (or within 90 days before or after that period).

Advice for Caregivers

If you are a caregiver and your client wants to leave a portion of his or her estate to you, do not try to influence your client in any way. Do not arrange for an attorney to effectuate the drafting of a Trust or Will. Excuse yourself from any discussions involving the disposition of your client’s property. Do not, under any circumstance, draft a Will or Trust for a client yourself, or attempt to transcribe your client’s wishes into a Will or Trust.

Advice for Anyone Creating a Trust or Will

If you are planning on leaving a portion of your estate to a caregiver, have an attorney draft the Trust or Will and discuss your concerns with your estate planning attorney. Obtain a, “Certificate of Independent Review,” from a separate attorney. In addition, you may want to have physician evaluate your cognitive functioning and sign a letter which states that you have the mental capacity to make financial decisions. Let your family members know you wish to leave a portion of your estate to a caregiver and express that you are doing so intentionally and independently. Understand that your family members may become upset and wish to challenge such a gift in court.

Advice for Beneficiaries

If your parent or relative created an estate plan which leaves a portion of his or her estate to a caregiver, and you believe the gift was the product of undue influence or fraud, contact an attorney who specializes in Trust and Estate litigation and/or financial elder abuse. It is likely that the Trust or Will can be overturned in court.

[1] California Probate Code §§ 21360- 21392