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California
Legislation
In January, 2006, a new filing fee schedule was imposed on all civil matters filed in any Superior Court in California. While the new fees are now uniform between all counties and have been "simplified" to remove various add-on fees which had previously been imposed, the result is that costs for probate fees in Santa Clara County have increased substantially. The base filing fee for probate, trust, conservatorship, guardianship, and all other matters handled by the probate court is now $320.00, with the filing fees increasing for probates and trusts (that are contested or require court supervision) in relation to the size of the estate. For example, a gross estate of just one million dollars now requires a filing fee of $1,135.00. With the rising fees, the importance of having trust documents becomes even more clear. SB-1061: Nursing Home Admissions Determined advocates have finally won a hard-fought battle. Beginning January 2, 2006, nursing homes in California will be required to utilize a new, standardized admission agreement. This new agreement will protect consumers in several ways. For instance, the agreement clearly outlines the rights and obligations of both the nursing homes and the residents. It also provides that no representative of a resident can or will be held financially liable for signing the agreement on behalf of that resident. Furthermore, under this new California Advocates for Nursing Home Reform (CANHR)-sponsored bill, the practice of including a provision for mandatory arbitration as part of a nursing home’s admission agreement will no longer be possible, nor will nursing homes be able to require residents to sign separate agreements for arbitration in order to be admitted or continue in a given facility. All nursing homes doing business in California must use the standard agreement, including skilled nursing facilities (SNFs), intermediate care facilities (ICFs), and distinct part skilled nursing facilities and intermediate care facilities. If you would like to read the standard admissions agreement and regulations, please visit the California Advocates for Nursing Home Reform website, located at www.canhr.org Trustee Changes Several changes have been made to the code which directly impact the duties and options available to those persons serving as trustees. One such change allows for Affidavits of Change of Trustee. County recorders, while required to record documents impacting real property where a change of trustee occurred as a result of a death, were not required to record documents documenting a change of trustee in other circumstances (for instance, incapacity or resignation). The inability to record a change of trustee document in these situations had frequently caused difficulties if the property needed to be sold or refinanced. The new law, a welcome reform, will now require the recording of such documents. Accounting review time for a trust accounting has been shortened to 180 days. This new section ensures protection from liability (after the 180-day period has run) to a trustee who has made a full disclosure of all material facts. Notice must be given regarding the 180-day period. Trusts providing for a shorter period of time will now use the 180-day period. Trustees will now have the option of utilizing a Trust Notice of Proposed Action. Similar to the Notice of Proposed Action allowed in probate actions, a trustee may give notice of an action he/she wishes to take in order to obtain consents, thereby gaining some protection for liability for those actions. This is an optional statute and cannot be used to confirm trustee or attorney compensation, settlement of accountings, preliminary or final distributions, and a variety of self-dealing actions. As the notice period is 45 days, the use of this Notice provision may be limited; in certain circumstances, however, it can provide some needed assurances for the trustee. Trustee Registration: Trustees are required to register with the statewide registry if they serve as trustees for more than six trusts at a time. This legislation has been modified to exempt those trustees who were trustees for a single trust which then split into six sub-trusts. With the advent of so many reproductive technologies, the law has needed to "catch up" to cover children conceived after the death of a biological parent. It is now crucial, for estate planning purposes, that your attorney be aware of any "genetic reproductive material" which has been deposited with a sperm bank or other reproductive facility and which may be used for posthumous conception. We would ask any clients who find themselves in this situation to notify us immediately. It will now be possible to deposit a copy of an Advance Health Care Directive in a registry with California's Secretary of State, once that registry is established. The Secretary of State will charge a fee to maintain the registry and will issue ID cards to those who deposit their AHCD's. The registry's purpose is to require certain hospitals and medical professionals to check the registry for the AHCD. (Requests must be honored by the close of business on the next business day.) It is unclear at this point how useful this registry will be; and we have not yet received information on the status of the registry's establishment, but please alert us if you are interested in registering your AHCD. We will provide more information as it becomes available. In general, however, it is best to give your doctor (and all agents named within the document) a copy of your AHCD. Governor Schwarzenegger signed Assembly Bill 1629 increasing nursing home subsidies, a matter which is of grave concern to both AARP and CANHR (California Advocates for Nursing Home Reform). Mike Moreno, an AARP lobbyist, says his group opposed the bill because it lacks language guaranteeing patient rights or improving patient care. Pat McGinnis, director of CANHR, worries that "there are no penalties for outfits that game the system and put in fraudulent cost reports." Both groups concur with Senator Charles Grassley, Chairman of the Senate Finance Committee, who believes the nursing home inspection system is "just plain broke." He sees the system as "corrupted" by unscrupulous people and feels many quality of care deficiencies are minimized, altered or dismissed. A full copy of the Senator's letter is posted at www.canhr.org. Would that California were immune to these problems, but it is not. Ineffective complaint investigations are of particular concern. One retired state inspector said she "had to fight tooth and nail to get action against facilities." Some California residents can't seem to get complaints investigated at all. Media reports show lack of manpower keeps many DHS (Department of Health Services) district offices from following up promptly on any but the most serious complaints. Since delayed investigations are far less effective, this is a problem, and consumer advocates doubt that AB 1629 will improve nursing home accountability in this regard. Clearly, consumers need to hold the system accountable themselves. Lengthy delays violate state law requiring DHS to begin investigations no more than 10 days after a complaint or in 24 hours if imminent danger of death or serious harm is involved. You can help by contacting Mike Connors at CANHR (415-974-5171) with any systemic difficulties you encounter. Also, be sure to follow up on complaints made to DHS by letting the assigned investigator know you are aware of the time limits set by state law and that you expect compliance. If he or she is unresponsive, the District Administrator for the DHS District Office would be next in line, followed by Brenda Klutz, DHS Deputy Director and Sandra Shewry, DHS Director. Calling California legislators, the long term care ombudsman, legal services, the governor or the media may help shine a light on your situation too. Recent changes to the California Probate Code require County Recorders to record additional documents relating to trusts, including Affidavits of Change in Trustee and Certifications of Trust. Previously, County Recorders had refused to record such documents, citing that no authorization in the code would require such recording. This created procedural issues when trustees changed by virtue of resignation or incapacity. At times, on the incapacity of a trustee, as an Affidavit could not be recorded for this purpose, a court order was required, resulting in added expense for the trust. Also, since no mechanism existed for recording a change in trustee upon a resignation, we previously had to skirt the County Recorders' restrictions by preparing Grant Deeds to transfer title from one trustee to another. The new changes to the probate Code (in AB 1848) allow greater flexibility when transferring real property held in trust from one trustee to another and will greatly ease issues which arise when trustees become incapacitated. You can't turn on the news these days without hearing the latest on gay marriages. Even if these "marriages" are rescinded, California has passed a Domestic Partners law, effective January 2005. Issues involved may spark legislation or constitutional amendments and will likely play a role in the upcoming elections. We will focus here solely on the recently enacted Domestic Partner legislation and hope this information is not out of date before the printing of this newsletter. The California Domestic Partner Rights and Responsibilities Act of 2003 creates broad rights. While not authorizing marriage per se, it essentially grants spousal status in most matters to those registered as domestic partners. Under California law, this Act will give rights and obligations which are currently only available to spouses, such as: community property rights/obligations, the spousal privilege rights (not to testify against the other), housing rights, authority for making arrangements when a partner dies rights, and state-provided benefits rights (such as worker's compensation). The Act also gives jurisdiction over dissolutions of domestic partner relations to the courts, creating divorce and custody proceedings similar to marriage. Under the Act, as it is State law, domestic partners will neither be able to file joint income tax returns nor assert spousal rights under the ERISA statutes. Starting June 30th of this year, the Secretary of State will be required to notify currently registered domestic partners of the change in the law, providing an opportunity for them to "de-register" if desired. Effective July 1, 2003, the intestate inheritance rights of a domestic partner will be the same as those of a spouse. The statute will not apply, however, unless the domestic partners were registered as such at the date of death. Registration must be made with the California Secretary of State, and the requirements for registration include that neither partner be married, that they have a common residence, and that they be the same sex, unless one partner is 62 or over. This legislation offers some protection to registered domestic partners, but it is not an adequate alternative to a good estate plan A new section has been added to the California probate code to prohibit trustees from requiring a beneficiary to release the trustee from liability as a condition for making a trust distribution. However, the code section does not prohibit the trustee's right to keep a reserve of trust funds, seek a voluntary release of trustee liability from the beneficiary, seek indemnification from third party claims, withhold funds which are in dispute, or seek court approval of the accounting. In view of the liability trustees face and the requirements under the probate code, many trustees opt to obtain court approval for all actions. While avoidance of court action is often a motivating factor in executing a trust for the settlor, trust abuses foster an environment where trustees seek protection through court orders. Ultimately, this may result in many trusts being administered through the courts, despite the settlor's desire to avoid court involvement. A new law was enacted to force conforming admission requirements in nursing homes. Code changes now require prospective patients to be provided with written schedules of fees, billing and payment information, and a summary of patient rights. These regulations were backed by CANHR (California Advocates for Nursing Home Reform) to make California admission agreements more uniform. However, CANHR reports that abuses still exist and is seeking persons who have had trouble dealing with a nursing home due to poorly written/confusing admission documents. If this describes you, please call CANHR at (800) 474-1116. New legislation has been passed to protect seniors from life insurance industry abuses. Any purchaser of life insurance who is 65 or over will be given a 30-day examination period to review the policy and can void the contract within that time period. Also, penalties for violating provisions relating to marketing and sales of insurance to seniors have increased. Providers of annuities and insurance to elders must complete special training by 2005 and are charged with ensuring that policies truly benefit the seniors purchasing them. Selling products to seniors at home is also subject to new restrictions. Increase in Filing Fees Governor Gray Davis found a way to bring more money into the California budget without "raising taxes." His 2003 Budget Act, signed into law on August 2, 2003, raised court fees dramatically! In addition, there are add-ons by each county to pay for such things as court reporters. Fees for probates, some trust petitions and conservatorships have seen the greatest increases. The filing fee for a conservatorship in Santa Clara County is now $249.50, with an initial (required) investigation fee of $740.00. The fees for probate actions and some trust actions are now set up on a sliding scale, depending upon the size of the estate. For estates valued at less than $250,000.00, the filing fee in Santa Clara County will be $249.50, but as estate size increases, so does the filing fee. Estates valued between $750,000.00 and $1,000,000.00, for instance, will pay $596.00 in filing fees, and estates over $3,500,000.00 will pay $3,500.00 plus 0.2% of any amount over $3,500,000.00. Don°t forget that these fees are in addition to publication costs (which now run on the average $350.00), appraisal fees and, of course, attorney and executor fees. Given the substantial increase in fees, we have to wonder about equal access to the courts and the problems advancing such fees can pose to those who are least able to afford them. Elder Law Changes Two changes: First, nursing homes are now required to make a reasonable effort to notify the "contact person" of the resident/patient within 24 hours of any significant change in health status. Second, the Department of Health Services is in the process of drafting regulations which would implement the 1993 transfer regulations enacted under the Omnibus Budget Reconciliation Act (OBRA). These regulations would require that California begin utilizing the rules enacted under OBRA and would change some of the Medi-Cal planning and eligibility requirements. Tax Withholding on Real Property Sales On a sale of real property in California, a recent change to California's Revenue and Taxation Code has provided for the withholding of three and one-third percent of the full sales price of the property for resident taxpayers. The only exceptions from the withholding requirement include the sale of a personal residence, property sold for less than $100,000, like-kind exchanges, installment sales, sales by estates, and sales by irrevocable trusts. This forced withholding can amount to some unfair situations, notably in cases where no tax would be due as a result of the sale (taxpayer can't get funds back until tax return is filed), or in cases where little cash is in fact received (where property is sold with high mortgage). Thus, even if your net proceeds are less than three and one-third percent, you still must deposit excess cash to the escrow account to be forwarded to the Franchise Tax Board. Although you can claim a refund on your annual state income tax return for any excess tax paid, in essence this withholding amounts to a "loan to the state treasury," without payment of interest back to the taxpayer. These drawbacks have given rise to a movement to "fix" the new law with additional legislation. However, the solutions proposed thus far appear to be even less viable than the existing law. Feel free to phone us with any concerns. We will keep you posted on the situation. Domestic Partner Legislation Effective July 1, 2003, the intestate inheritance rights of a domestic partner will be the same as those of a spouse. The statute will not apply however, unless the domestic partners were registered as domestic partners as of the date of death. Registration must be made with the California Secretary of State, and the requirements for registration include that neither partner be married, that they have a common residence, and that they be the same sex, unless one partner is over the age of 62. Partners who are already registered with the Secretary of State should receive notice from the Secretary regarding this change in the law. This new legislation, while providing some protection to a registered domestic partner, should only be considered as a back-up to a good estate plan and not as an alternative. Powers
of Attorney Enforcement
of Elder Abuse No-Contest
Clauses New
Probate Avoidance Method Conservatorship
and Guardianship Changes Elder
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