Protecting Your Elder Client’s Testamentary Intentions

It’s good to be an American. Americans are living longer and living more of their life in better health. As a society, we take better care of our bodies by eating better, working out more, and taking advantage of modern medicine. As a consequence, our elder population is growing exponentially.

Studies show that a man reaching age 65 today can expect to live until age 84. A woman turning 65 today can expect to live until age 86. This same data also suggests that about one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.

However, there is an assumption in California that people over the age of 65, who can reasonably expect to live another 20 years, are feeble and need extra protection from those who would seek to take advantage of them. Indeed, California has an entire statutory scheme dedicated to protecting individuals who are 65 or older from financial abuse, fraud, and undue influence. This body of law is predicated on the antiquated assumption that people in this age group are susceptible to undue influence or having their free will overcome by another. The unintended consequence is that these laws may impair their rights to control their own lives.

The reality is that many of the assumptions we make about this demographic are now outdated. For example, it’s not uncommon to see people over the age of 65 thriving in the workplace, participating in marathons, and taking up hobbies that are intellectually challenging. No one would ever suggest that my 65 year old law partner is mentally or physically weak. He litigates “bet the company” cases and regularly participates in yoga, pilates, swimming, and spinning classes. The same is true of my client who at 80 years young obtained her pilot’s license and purchased her own airplane.

The bottom line is that our clients are now living longer and, as a consequence, are making important personal and financial decisions, including creating or amending their estate plans, later in life. This means that as trusted advisors, we must be cognizant of the laws in our state that allow disgruntled individuals to challenge estate planning instruments simply because they were created or amended after the person was over the arbitrarily selected age of 65.

There is no question that many elders in California have been victims of physical, mental, and emotional abuse. However, the laws that seek to prevent these abuses fail to take into consideration that many people who are over the age of 65 aren’t victims. To the contrary, they are physically and mentally strong and the decisions they make about what should happen to their wealth after they pass are reasoned and intentional.

Economists estimate that nearly 30 trillion dollars will be transferred from the baby boomer generation down to their Generation X and Millennial children over the next few decades. Given this reality, here are eight things to consider when assisting our elder population with the transition of their wealth from one generation to the next. These suggestions all presuppose that the advisor believes that the client has the capacity to make independent decisions about the disposition of his or her estate.

  1. Avoid using or encouraging the use of estate plans that are acquired off of the internet or from online document preparation services. These generic, one size fits all estate plans do not take into consideration the age of the person creating or amending the estate plan, family dynamics, the personalities of the beneficiaries involved, or the likelihood that these instruments will be contested.
  2. Consider obtaining a capacity declaration from a geriatric psychiatrist to establish the elder’s mental acuity. The presumption in California is that people have capacity when they execute their estate planning documents. However, the presumption does not prevent a contestant from claiming that the elder’s mental capacity was diminished such that they were susceptible and subjected to undue influence. A capacity declaration can be strong evidence to refute allegations of undue influence.
  3. Does the person who is seeking to create or amend their estate plan have any medical issues? Medical issues affecting one’s cognitive abilities aren’t the only red flag when it comes to creating or amending an estate plan. Physical ailments that require dependence on others for normal daily living activities can be problematic; especially if one of the beneficiaries is also the person primarily assisting the elder.
  4. Is someone else coordinating the creation of the plan? Active participation in the preparation or execution of an estate planning instrument is an important factor that court’s consider in determining whether an instrument was procured by undue influence.
  5. If the elder is amending an estate plan, how radical of a departure is the requested change from the prior plan(s)? Radical changes like disinheriting a child or treating siblings differently when they have historically been treated the same are more likely to be contested than amendments that are consistent with the elder’s longstanding testamentary objectives.
  6. When making changes to estate plans that the elder knows will be controversial, take steps to make sure that the elder’s intentions are well documented at the time that the estate planning instrument is executed.
  7. Consider retaining a separate attorney to provide a certificate of independent review if you believe that a particular estate planning instrument may be challenged. Independent witnesses who do not have an interest in a dispute carry a significant amount of weight in the Courtroom.
  8. Retain an established and reputable estate planning attorney. A good estate planning attorney will take into consideration things like the age of the person creating the estate plan, the personalities of the potential beneficiaries, and whether there are ways to establish, objectively, that the wishes set forth in the estate plan are the person’s true testamentary intentions.

While these tips are particularly important for protecting the testamentary intentions of someone who is 65 years of age or older, they are equally applicable to those who are under 65. No one wants their death to be the catalyst for family discord, and consideration of these principles can be the key to ensuring a smooth transition of wealth from one generation to the next.

Please do not hesitate to contact me at rlee@ecjlaw.com or (310)281-6333 to further discuss this post or if you have any questions.

Rodney C. Lee, Litigation Partner

Today’s Taste: The State of Washington produces some exceptional Bordeaux-styled wines and Andrew Will Cellars is one of my favorites. The 2007 “Two Blondes” is showing really well right now. It is a smooth blend of 49% Cabernet Sauvignon, 34% Cabernet Franc, 19% Merlot, and 7% Malbec which creates a velvety, full bodied feel across the palate. The wine was terrific on its own and even better after being accompanied with some food.

Admittedly, I was intrigued by the name of this wine so here is some free trivia: the vineyard that produces the grapes for this particular wine is named “Two Blondes” after the winemakers wives who are both blonde.

On Writs and Wine is the blog of ECJ’s Litigation Department, featuring our takes on a variety of litigation-related issues, plus a wine recommendation for your palate’s delight. Your feedback—on both the takes and the wine—is much appreciated. Enjoy!