Because reports of elder financial abuse continue to rise, the California Legislature enacted the Donative Transfer Restriction Statute. It ensures the validity of written gifts – also called donative transfers – made to people who provide older adults with legal advice, personal care or other support. The statute’s purpose: Eliminate gifting that may heighten accusations of undue influence or financial fraud.

This law was passed after a California attorney inherited millions of dollars from clients residing in the same retirement community. Many of the wills and trusts the attorney prepared bequeathed him large sums of cash, stocks and even real estate. He defended his inheritances as donative transfers from people who not only saw him as their legal advisor, but also as their good friend.

Criminal charges ensued, and the Legislature enacted strict legal protections for clients who wanted to make donative transfers to their attorneys. Due to increasing allegations of elder financial abuse, those rules now also apply to healthcare workers and care providers of people aged 65 and above. Such transfer restrictions do not apply to their spouses, domestic partners or relatives.

Under current law, a legal document is presumed to be invalid if it authorizes a gift to the person who drafted or prepared it, or provided the donor with needed care. Because of this presumption, the named beneficiary of a donative transfer has the burden of proving it is legally sound. 

The donative transfer restriction will not be imposed if a second – and independent – attorney certifies the gift’s validity.  That attorney must discuss the transfer’s implications with the donor and then sign a formal certification that evidence of fraud or undue influence does not appear. As an additional protection, the independent attorney cannot have a business, financial or personal relationship with the beneficiary named to inherit. 

Donative transfer rules will not be imposed on inheritances to care providers if the transferring documents were prepared and signed more than 90 days before or after care services were received. Unlike other donative transfers, those made to care providers do not have to be certified by an independent attorney but can be approved by the same attorney hired to prepare or amend the will or trust.

One last note: Donative transfer rules only apply to gifts valued at more than $5,000.  

 

Because reports of elder financial abuse continue to rise, the California Legislature enacted the Donative Transfer Restriction Statute. It ensures the validity of written gifts – also called donative transfers – made to people who provide older adults with legal advice, personal care or other support. The statute’s purpose: Eliminate gifting that may heighten accusations of undue influence or financial fraud.

This law was passed after a California attorney inherited millions of dollars from clients residing in the same retirement community. Many of the wills and trusts the attorney prepared bequeathed him large sums of cash, stocks and even real estate. He defended his inheritances as donative transfers from people who not only saw him as their legal advisor, but also as their good friend.

Criminal charges ensued, and the Legislature enacted strict legal protections for clients who wanted to make donative transfers to their attorneys. Due to increasing allegations of elder financial abuse, those rules now also apply to healthcare workers and care providers of people aged 65 and above. Such transfer restrictions do not apply to their spouses, domestic partners or relatives.

Under current law, a legal document is presumed to be invalid if it authorizes a gift to the person who drafted or prepared it, or provided the donor with needed care. Because of this presumption, the named beneficiary of a donative transfer has the burden of proving it is legally sound. 

The donative transfer restriction will not be imposed if a second – and independent – attorney certifies the gift’s validity.  That attorney must discuss the transfer’s implications with the donor and then sign a formal certification that evidence of fraud or undue influence does not appear. As an additional protection, the independent attorney cannot have a business, financial or personal relationship with the beneficiary named to inherit. 

Donative transfer rules will not be imposed on inheritances to care providers if the transferring documents were prepared and signed more than 90 days before or after care services were received. Unlike other donative transfers, those made to care providers do not have to be certified by an independent attorney but can be approved by the same attorney hired to prepare or amend the will or trust.

One last note: Donative transfer rules only apply to gifts valued at more than $5,000.