Can the court appoint a conservator over the estate and over the person?
The court may appoint a conservator of the person or the estate, or both, for an adult. The court may appoint a conservator of the person for a minor who is married or whose marriage has been dissolved, but the financial affairs of such a person are subject to a guardianship, not a conservatorship.
In a conservatorship of the estate, a court-appointed conservator manages the financial affairs of a person who is substantially unable to manage his or her own financial resources or to resist fraud or undue influence. The conservator’s primary responsibility is to conserve, manage, and use the conservatee’s property in California for the benefit of both the conservatee and those whom he or she is obligated to support. The conservator must use ordinary care and diligence.
A conservatorship is a protective court proceeding. In a conservatorship of the person, a court-appointed fiduciary, the conservator, manages the personal care of a person who cannot properly provide for his or her personal needs for physical health, medical care, food, clothing, or shelter.
The conservator decides where the conservatee lives and may be required to decide whether the conservatee should live at home or in an institution. The conservator must make sure that the place selected is the “least restrictive” appropriate alternative that is available and necessary to meet the individual’s needs but does not control the conservatee’s right to receive visitors, telephone calls and personal mail, nor other “personal rights,” unless personally limited by court order.
With some rhetorical license, the White House fact sheet describes IRC §1014 as the “trust fund loophole” and goes on to suggest that it may be “the largest single loophole in the entire individual income tax code.” Section 1014 provides that “the basis of property in the hands of a person acquiring the property from a decedent or to whom the property passed from a decedent … be the fair market value of the property at the date of the decedent’s death.” The basis of an appreciated asset is said to be “stepped-up” at death.
The fact sheet describes a situation where a person inherits stock worth $50 million. Working with that example, if at a mother’s death she passes that stock to her daughter, the daughter’s basis in the stock will be $50 million. Under current law, if the daughter immediately sells the stock no capital gains tax will be paid because the basis was stepped-up at the mother’s death. The fact sheet fails to point out that the estate of the mother would pay somewhere between $15.6 million and $20 million in federal estate tax at a 40 percent rate, depending on the availability of the deceased mother’s unified credit against estate tax available. And in any one of 19 states (and the District of Columbia), the mother’s estate would owe state estate tax as well. Under President Obama’s proposal, the mother’s death would not only trigger the payment of estate tax, but it would be a realization event giving rise to possible capital gains tax.
After the American Taxpayer Relief Act of 2012 (ATRA-2012) (Pub L 112-240, 126 Stat 2313), many in the estate planning community thought that tax law dealing with estates and trusts was settled for some time. President Obama’s earlier budget proposals calling for a higher rate and a lower exemption (among other changes) and the Republican support for the repeal of the estate tax were seen by many as pro forma budgetary proposals. But on January 17, 2015, President Obama released his tax relief proposal for middle class families. Included in the plan are expanded child care, education, and retirement tax benefits and other tax credits to support working families. To pay for these provisions, the President proposes to:
Eliminate the “stepped-up” basis rules in the Internal Revenue Code, treating bequests and gifts as realization events subject to capital gains tax;
Increase top capital gains and dividend tax rates; and
Impose a fee on the liabilities of large U.S. financial firms.
Recognized indications of undue influence include
- Provisions that are unnatural, cutting off from any substantial bequests the natural objects of the decedent’s bounty;
- Dispositions at variance with the decedent’s intentions, expressed before and after the document’s execution;
- Relations existing between the chief beneficiaries and the decedent that afforded the former an opportunity to control the testamentary act;
- A testator whose mental and physical condition was such as to permit a subversion of his or her freedom of will; and
- A chief beneficiary under the will or trust who was active in procuring the execution of the instrument.
Factors that must be considered to determine whether a result was produced by undue influence include the vulnerability of the victim, the influencer’s apparent authority, the actions or tactics used by the influencer, and the equity of the result Evidence of an inequitable result, without more, is not sufficient to prove undue influence.
For purposes of will and trust contests, “undue influence” means “excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity.”
The statutory definition of undue influence supplements the common-law meaning of the term, without superseding or interfering with the operation of that law. Under the common law, undue influence is conduct that subjugates the testator’s or settlor’s will to that of another, causing a disposition different from that which the testator or settlor would have made if permitted to follow his or her own inclinations.Undue influence is established when it is shown that a testamentary disposition was brought about by undue pressure, argument, entreaty, or other coercive acts that destroyed the testator’s freedom of choice so that it can fairly be said that the testator was not a free agent when making his or her will. Proof of general influence or opportunity to influence is not enough; there must be proof that the influence was used directly to procure the instrument.
In the Due Process in Competence Determinations Act, the legislature states that a person who has a mental or physical disorder may still be capable of performing a variety of actions with legal consequences. Accordingly, the Act’s purpose is to ensure that a judicial determination that a person should be deemed to lack the legal capacity to perform a specific act be based on evidence of a deficit in one or more of the person’s mental functions rather than on a diagnosis of the person’s mental or physical disorder.
The Act applies to determinations that a person is of unsound mind or lacks the capacity to make a decision or do a certain act, expressly including the incapacity to contract, make a conveyance, marry, make medical decisions, vote, or execute wills or trusts.
This legislation had its origins in efforts to set limits on competence determinations in conservatorships and other protective proceedings. There is, however, nothing in the Act that prevents its application in will and trust contests and, as noted above, it expressly applies to the actions underlying such proceedings.
A competent testator or settlor may dispose of his or her property as he or she wishes, without regard to the desires of prospective beneficiaries or the views of anyone else, as long as the document’s terms are not prohibited by law or contrary to public policy.
The testator is presumed sane and competent and the contestant has the burden of proving by a preponderance of the evidence that the testator lacked testamentary capacity at the time the will was signed.
The same general presumption of competence exists with respect to the execution of trusts.If a testator had a mental disorder but had lucid periods, there is a presumption that the will was executed during a period of lucidity.
Once it is shown that testamentary incompetency exists and that it is caused by a mental disorder of a general and continuous nature, the inference is reasonable (and might even be a presumption) that the incompetency continued to exist at the time the instrument was signed.