Monday, May 26, 2014

The Perils and Frustrations of Making a Child a Successor Trustee of Your Trust

Often our clients in the process of preparing their estate plan determine that the best person to carry out their wishes as Trustee of their Trust and Executor of their Will is an adult child of theirs.  It seems like a reasonable determination, but often leads to problems once the Testator is deceased.  Very often it is much more difficult for the Successor Trustee to handle the tasks, understand the rules and follow through with the fiduciary obligations of a Trustee, than it was for the original Trustee, who only had to continue with his or her life as they had before without accounting to anyone for their actions or failure to act.  Thus, when it comes time to being a fiduciary for all of the beneficiaries of the Trust, once the Settlor has passed, the situation can become grim and overwhelming.

Even in a relatively small estate, certain actions are required of a Successor Trustee, such as providing Notice to all the heirs and beneficiaries of the Trust, giving Notice of death of the original Trustee, or a joint tenant and providing the Government with the required statutory notices, as well as and providing the proper bookkeeping and Accountings required of a Successor Trustee.  Often, it is unclear as to what needs to be done if certain assets have not actually been transferred to the Trust and if certain Beneficiary Designations have not been changed to accommodate the wishes of the decedent upon completion of the estate plan.
Managing brokerage accounts and understanding how to distribute funds to beneficiaries whether human or otherwise can also be difficult and confusing.  Selling real property and making sure the property is properly in the Trust and the proper notices have been recorded can also be complicated and extremely time consuming.  Therefore, often times, professional help is necessary, if not preferred.  Very commonly, this new Successor  Trustee thinks that he or she can handle the affairs of their mother or father’s Trust without the need to involve an attorney, which they perceive as being an unnecessary expense.  However, rather than it being an unnecessary expense, doing the right thing in the first place will most often save the Trust money and save the relatives and other beneficiaries the aggravation and anxiety of wondering whether their beneficial interests in the Trust assets are being properly looked after.
Having spent many years advocating for the rights of such beneficiaries, it seems clear to me that it is only a foolish Trustee who does not look for an advice of a probate attorney and a financial advisor and/or accountant, who are equally versed in the tax laws pertinent to probate and estate matters.  Certainly, when presented with your new role as Successor Trustee, it would be prudent and most beneficial to, at the very least, make an appointment with a probate specialist, whether an attorney, accountant and/or financial advisor, to go over what needs to be done for that particular estate and what the potential cost would be to the Trust estate. 
Should you be interested in discussing such issues with one of the member of Cooper-Gordon, please contact us for an initial consultation.
By: Frieda Gordon, Esq.

Alternative Dispute Resolution – the Good, the Bad and the Ugly

Many people come to us claiming to want to avoid Court, avoid the high legal costs and emotional expense of the trial experience and utilize ADR, or Alternative Dispute Resolution, to resolve the issues and their case.  Many types of cases can properly utilize mediation or arbitration to resolve their issues without a court trial.  Family Law and Probate are,  in particular, commonly areas of the law in which ADR may be the best method of resolving the issues, especially, since the court system has been so severely curtailed due to the economic problems plaguing the court system in the state.

However, what people tend to forget is that the reasons that brought you to the point of disagreement, are often the reasons that will keep you from resolving your matter easily with an impartial third party, especially if you choose to be unrepresented in such proceeding.  Very often the parties are not of equal stature in one sense or another.  One might be better able financially to make decision without regard or with little regard to cost.  Sometimes the parties are of different educational backgrounds or expertise in certain important areas.  Sometimes, there is great conflict over control over the children or control over the assets.  Sometimes, there is domestic violence involved.  Sometimes the fighting between siblings or intergenerational disputes are so seriously out of control that  the use of a mediator who knows little about those particular problems and cannot advocate for any side, is not only useless, but damaging, both to the spirit and the financial purses of those involved.
It is hard for an attorney who is experienced in mediation, collaborative law and arbitration to advise the client that ADR may not be right for them.  This is not just because the attorney may not wish to seem to be advocating vigorously for a forum that would force the parties to litigate to the hilt in an attempt to earn more money from such representation.  On the contrary, it is much better for an attorney to have a satisfied client and earn less money knowing that he will be paid than to have a huge bill that the client cannot or will not pay and for which the attorney cannot go after.  So, therefore it is in the attorney’s best interest to look for the best way to resolve the matter that is the most cost effective and will be the most satisfying to all Parties, because satisfied clients will refer other business and will pay their bill.
Given the above rationale, I want to reiterate that only in rare circumstances is it necessary or important that the Parties attempt mediation rather than simply hire a good lawyer with good negotiating skills who is also trained as a mediator and in collaborative law, who can move the case forward and understand the workings of the court, as well as give legal advice and keep the matter on course towards settlement rather than litigation.  If you have interest in looking at the different ways that your matter can be concluded most reasonably, please come in for an initial consultation and we will discuss all options with you once we understand what the circumstances are.  We look forward to serving you in the near future.
By: Frieda Gordon, Esq.


1.    Attend Therapy. Divorce is an emotional time and it is not easy to make important decisions about one’s family and assets while embroiled in emotional pain. Often, clients seek emotional support from their divorce attorney, who bill them at a rate much higher than a therapist would cost. See a therapist to deal with the emotional issues and allow your divorce attorney to counsel you through the important financial and family decisions which will affect the rest of your life.

2.  Prioritize. Decide what issues are most important to you and compromise on the rest. Every issue that you cannot agree on with your spouse comes at a cost to resolve.

3.    Be Honest. Be honest with your lawyer. If you cannot trust them with the true details of your home and financial life, find a new attorney. Often, the facts you are most concerned with revealing do not end up making or breaking your case. And if it is something that needs to be dealt with, better to face it right away.

4.    Keep it short. The longer your divorce continues without resolution the more expensive it will be. Likewise, writing long rambling letters and emails to your attorney regarding every issue you are dealing with and everything you can think of that is wrong with your spouse or significant other is not an efficient way to resolve your case.

5.    Be Ready to Change Your Lifestyle. A lot of clients expect to maintain their standard of living even though they are dividing their household into two. Begin to reimagine and reinvent your life considering the realities of your situation. For assistance, see tip #1.

by: Drorit Bick Raiter, Esq.


As an attorney who has been practicing in the area of Trusts and Estates for over 35 years, I find that one of the most commonplace disputes which leads to sometimes unnecessary litigation and is the source of numerous  issues which cause so many problems is the self-caused  act of modifying and amending  Wills and Trusts. 

Legally, Wills cannot be technically “amended” or revised. Rather, all changes made to a Will are accomplished via the preparation of what is customarily referred to as a “codicil.”  Codicils are written for the express purpose of modifying or making changes to an existing Will. 
As is the case with Wills, in California, Codicils can be entirely handwritten or they may be typed up and witnessed.  Legally, the signing of Wills requires at least two witnesses.  By law, a typed up Will must be witnessed as well as signed by the testator (the person of whose Will it is).  However, California Law also provides for Wills to be written (instead of typed) entirely in the handwriting of the Testator. Such Wills are legally referred to as “Holographic” Wills.

Holographic Wills do not require witnesses.  In order to be a valid, a holographic Will must be written on plain paper, it must be dated, it must be entirely in the handwriting of the Testator and it must be signed.   As written above, holographic Wills do not require witnesses. In fact, the witnessing of such a will might in fact act to disqualify such a will as being “holographic.”
The same holds true for a Holographic Codicil.  Like Wills, Holographic Codicils must satisfy the same standards but should not be witnessed.  On the other hand, if a Codicil is typed up, then witnesses will once again (as is the case with Wills), be required.

Problems arise when instead of preparing and executing a Codicil (Holographic or typed) a Testator attempts to make changes on their existing Will through cross outs, handwritten interlineations and so on. 
These “changes” to the Will create problems for numerous reasons.  Often times, the changes (while legible to the person who made them) are confusing to later readers.  There are also questions as to exactly “who” made those changes and when they were made.  Sometimes, Testators attempt to “date” the changes or initial them.  Attempting to amend a Will in this manner is obviously very dangerous.  It creates conflicts within the Will and many times the changes are confusing and cannot be understood or even read.  Most importantly, sometimes the changes will dramatically affect the original intent of the Testator.  Thus, it obviously makes sense to see a lawyer before attempting to make any changes to a Will or Codicil.

The situation is the same with respect to Trusts.  However, unlike in the case with Wills, Trusts are changed by “amendment.”  There is no such thing as a “Codicil” to a Trust.  Thus, when Trusts are amended, they are amended through a first, second or third, etc., amendment.  As is the case with Wills, amendments to Trusts can also be handwritten.  Unlike the case with Wills, however, Trusts do not need to be witnessed.  However, customarily, Trusts are executed before a Notary Public in order to ensure that the person who actually executed the Trust (or any amendment to the Trust) is in fact the person who created the document in the first place.  Persons who execute amendments to their Trust (or original Trust documents) who do not have their signing notarized jeopardize the efficacy of the document and open the document to questioning from a skeptical omitted beneficiary as to whether or not the amendment was actually signed by the creator of the Trust (commonly referred to either as a “Trustor” or as a “Settlor”). 
When Trusts are amended, the writer of the amendment usually chooses between creating a simple amendment to the Trust or “restating” the Trust.  An Amendment format is usually used when there is only a minor change to the Trust.  By way of example, the changing of the originally named “successor Trustee” from one person to another person or a minor change in one of the bequests would utilize and require a simple amendment. 

Problems arise, however, when amendments become too “long” or too many in number.  For example, it often becomes quite difficult to actually read a Trust when there are five or six amendments to it.  These amendments will require the reader to go back to each of the prior versions and try to integrate them all in order to make sense of what the fifth or sixth amendment actually means. 
In those types of cases (when there are multiple amendments) or, where the amendments are complex, it only makes sense to “re-state” the Trust by ostensibly creating a new Trust, but not terminating the entity, thus superseding the earlier versions of the Trust as well as earlier amendments and consolidating all of them into one document known as a “First Restatement of Trust”.  In this manner, one need not worry about assets from the original Trust being taken out of trust by operation of law and then having to affirmatively change title of all the assets to be in the name of the Trustee of the new trust.  It remains the same trust, as restated on a new date.

In summary, therefore, when making amendments to a Trust instead of interlineating those changes or doing them on a “self-help” basis, it is best to seek an attorney in order to ensure that the changes that are being made are truly what the writer wishes to accomplish and in order to ensure that the Trust, Will and or any of its amendments or codicils will eventually be enforced and followed.
We here at Cooper-Gordon are available to assist you with any amendments, restatements or codicils that you would like to make.

By: Avery M. Cooper, Esq.

Thursday, February 27, 2014

Protecting Your Privacy

I was hacked today.

I thought I was smart enough to see the hacker emails, but I was wrong. As soon as I realized they had asked me for my password, I should have known. But I just wasn't thinking and it really seemed like a legitimate email.

Remember to always check the email address out, even though it has the name of someone you know. You will see that it is not right. That's what I forgot to do. Then, I later realized that I had to change my password and luckily I do have different passwords for all of my accounts, which is a pain, but believe me is so worth it.

Of course, keeping track of these passwords in a password protected file is also a big pain. I always thought no one would want to hack into my personal information. Why would they want it? Who are these people? Nevertheless, I have to look with my eyes open and operate as if my privacy is really worth protecting.

Monday, November 4, 2013

CG LLP Newsletter Fall 2013

Welcome to the Fall 2013 edition of our newsletter.

Cooper-Gordon LLP is maintaining its robust practice, specializing in the areas of Family Law, Estate Planning, Estate and Trust Administration and Estate and Trust Litigation. So far this year has been filled with a number of interesting family law and estate administration cases, some going to trial, and some settling. In particular, the attorneys at Cooper-Gordon LLP have been involved in some interstate dissolution matters as well as several family law-estate litigation crossover cases in which dissolutions and a Party’s estate become intertwined in often convoluted ways.

Whether your case is complex or simple, at Cooper-Gordon LLP, each client and matter has the benefit of the Partners’ combined sixty years of experience along with the associates’ attention and cost-effectiveness.

In addition to their practice in Southern California, Cooper-Gordon LLP founding partners Avery and Frieda have been operating a satellite office in the Central Coast area. Avery and Frieda welcome new clients from Paso Robles in the North County through all of San Luis Obispo County, in addition to their clients from Santa Barbara County as well as all points south to the Mexican Border. If you wish to set up an appointment in San Luis Obispo County, please contact them at 1-800-561-6322 to set up an initial consultation.


Christine Donald, our trusted and longest serving employee, continues to interface with new clients, assist the attorneys with their litigation and transactional practices and generally keeps the office running smoothly and efficiently. In addition to her busy work life, Christine has had an exciting year, peppered with bicycle races all over the state, wine tasting along the central coast, and she plans to take a trip to Michigan this season to see friends and family. We are thankful for her continuous hard work and dedication to the practice.


Yana Rozovskaya, our paralegal who works primarily for Frieda, continues to be a substantial asset to the firm, as she is the first contact with clients and potential clients, sets all of the appointments and prepares much of the forms, transmittals and other documents for the attorneys who handle Frieda’s case load as well as for their own case loads. Recently, Yana traveled with her son to Montreal, Canada, for a wedding. When not busy assisting the attorneys at Cooper-Gordon, Yana enjoys taking her dogs, Tyson and Daisy to a local park near her house.


Avery, has been busy with various matters including estate planning, estate and trust administration and family law matters. Avery was also recently nominated to serve on the board of the Family Law Section of the Los Angeles County Bar Association. Despite Avery’s substantial caseload and additional commitments, he consistently assures that his clients’ needs are met. Communication is key and Avery strives to keep his clients informed regarding the status of their cases. In his spare time, Avery enjoys spending time with his yellow Labrador, Mickey, playing basketball, bicycle riding and collecting and consuming fine wines. He has also been busy with his book club and co-chairing a wine club. Additionally, he travels back and forth to his Central Coast home and office and this year, after a hiatus of several years, was able to go back to Europe for a wonderful vacation in Germany and the Czech Republic.


Frieda has been busy managing the firm as well as her own her case load. The attorneys here keep long hours, but also find the time to meet their personal needs, including spending time with family and maintaining active lifestyles. This balance gives the attorneys an opportunity to recharge and be at their best when it comes to taking care of their clients. When it comes to work-life balance, Managing and Founding Party, Frieda, is no exception. In her spare time, Frieda shares most of Avery’s extracurricular pursuits. In addition, she enjoys playing with her 5 year old granddaughter, caring for her 89 year old mother and spending time with her two lovely and talented daughters. Frieda also enjoys gardening, yoga, knitting, studying languages and photography and playing and listening to classical music. Most of all, she enjoys hiking along the Central Coast of California with her dog Mickey.
Avery and Frieda recently took a trip to Berlin and Cologne, Germany and Prague and Czeny Krimlov (pictured below) in the Czech Republic. While there, they had many remarkable experiences, including visiting many museums which provided them with a great deal of historical education, eating in some of the great restaurants of the world, drinking excellent wines and beers, meeting the lovely people of the region and walking all over the cities they visited. Frieda has authored an article on some important advice when preparing, updating and safeguarding Advance Health Care Directives, which is set forth in a separate blog.


In her spare time, our Senior Associate, Katherine Su O’Connor, spends time with her French Bulldogs, Sarge and Lola. She has also been busy moving into and decorating a new home and spending time with family. Over the summer, she traveled to Massachusetts and Upstate New York for a long overdue visit with her in-laws and visited with other extended family in Utah. She has tried to stay active as well, running her tenth half-marathon in April, finishing ninth in her division, and hiking the Subway and Angels Landing trails in Utah’s Zion National Park. She and her husband Brian are expecting their first child in early December. Katherine has been busy assisting with the preparation of a number of estate plans, starting new divorce matters and handling several complicated Probate litigation cases. She has written an article which is set forth below.

The Marriage of Green: Are Funds Used to Purchase Premarital Retirement Credits and the Benefit from that Purchase Community Property?

Some fortunate employees are given the option of purchasing additional retirement credits for years of service rendered to another employer. The added retirement benefits for exercising such options are oftentimes far more substantial than the cost of purchasing the additional credits, and thus, is a very appealing offer for many employees.

However, when people divorce, they may be surprised as to what their rights are when they or their spouses have exercised this valuable right. The Marriage of Green case which dealt with this issue was decided this year. The Marriage of Green provides that retirement credits attributable to employment by a spouse prior to marriage are that spouse’s separate property, and remain that spouse’s separate property even if community funds are used to purchase those additional years of service. In such case, the community may be entitled to reimbursement only for the funds used to purchase the retirement credits and the community is not entitled to any interest in the actual added benefit of the purchase. In Marriage of Green, Husband served in the military prior to his marriage. At the time he married Wife, Husband was employed as a firefighter and participated in the California Public Employees’ Retirement System (CalPERS) Plan. Husband was given the option of purchasing an additional four years’ retirement credits in his CalPERS Plan for his years of military service rendered prior to marriage. After Husband married Wife, Husband chose to exercise his option of purchasing four years’ of additional retirement credits for his premarital military service, choosing to pay for the purchase of the credits via an installment plan, under which twice monthly payroll deductions were made from Husband’s paycheck. At the time the Parties separated, $11,462.56 of community funds had been used to pay for the purchase of the premarital retirement credits. The added value to Husband’s CalPERS Plan of the additional retirement credits far outweighed the cost of purchasing the credit. At trial, the court held that the purchased service credit was Husband’s separate property, found that the community was entitled only to reimbursement for its payments towards the acquisition of the service credits, and ordered Husband to pay Wife one-half of the community funds used for the purchase, plus 6% interest. The community was not otherwise given any interest in the four years of additional service purchased by Husband. Wife successfully appealed and the Court of Appeal concluded that “because the military service credit was purchased with community funds during the parties’ marriage, it was community property.” 

Thus, it determined that Wife was entitled to one-half of the increased benefit resulting from the purchase of the four years of additional retirement credit. Thereafter, Husband appealed and the California Supreme Court ultimately agreed with Husband and the trial court and reversed the Court of Appeal. 

The California Supreme Court reiterated the principal that whether pension and retirement benefits are characterized as separate property or community property is determined in accordance with the employee spouse’s marital status at the time the services are rendered. Thus, despite the fact that the four years’ worth of additional service were purchased partly with community funds and were purchased during the marriage, the Court found that the four years’ worth of purchased retirement credit for Husband’s premarital military service was entirely Husband’s separate property. The Court then went on to find that the trial court had properly exercised its discretion in limiting the community to reimbursement only for its contributions towards the purchase of the retirement credit, plus interest. The community (and Wife) were not entitled to any of the increased benefits attributable to the four years of additional service credit purchased with community funds.


When not working on dissolution of marriage or probate cases, associate Drorit Bick Raiter has been spending time with her husband, Shay, their toddler, Naveh and their dog, Boston (a.k.a. Bobo). This summer, they enjoyed hiking in Solstice Canyon and Runyon Canyon, spending time with relatives visiting from Israel (many of whom were meeting Naveh for the first time), and traveling to Henderson, California, to visit with cousins. Drorit has been drawing on her experience volunteering at the domestic violence clinic in the Santa Monica courthouse in several new cases brought to the firm which, sadly, involve domestic violence allegations.  Drorit writes: 
It is clear that there are cases of real domestic violence and abuse that require protective orders. However, unfortunately, protective orders are sometimes being used for litigation purposes, rather than real protection. It is an economic strain on the Courts and law enforcement officials, both entities which are already suffering from economic cut-backs, to be forced to issue and enforce restraining orders that have been sought under false pretenses and for less than honest purposes. In more and more cases, Parties to a dissolution of marriage action abuse the restraining order process in order to try to obtain some sort of leverage in their divorce. Although the bar for granting Temporary Restraining Orders is often quite low, a low bar makes good public policy sense: the Court has not had a full Hearing on the matter and the alleged abuser is ostensibly “only” losing his right to be free from restraining orders for a period of 21 days, at the most. However, upon a full Hearing on this matter, the Petitioner must be held to a higher standard of proof. Specifically, the Petitioner must show that there exists reasonable proof of a past act or acts of abuse, with corroborating evidence.

Additionally, Drorit has recently authored an article about the level of mental capacity needed to obtain a dissolution of the marriage. Her article is set forth below.

The Capacity To Divorce: How “With It” Do You Need to Be to Get Divorced?
This past summer, in the case of In re Marriage of Greenway (2013) 217 Cal.App.4th 628, the California Court of Appeal affirmed the Trial Court’s decision which held that the level of capacity required to end one's marriage is, much like the capacity required to start one’s marriage, subject to a relatively low bar. In Greenway, Joann Greenway appealed the Trial Court’s ruling which found that her husband, Lyle Greenway, was mentally capable of filing for divorce. The Parties had been married for 48 years and Lyle was 76 at the time, and in poor health. 
Nevertheless, Lyle filed legal separation from Joann based on irreconcilable differences. Joann objected to ending the marriage or dividing the marital estate valued at several million dollars. She argued that Lyle was not mentally competent to maintain a dissolution of marriage action. After reviewing written arguments and hearing testimony from the Parties, their three adult children, and four healthcare professionals who had evaluated Lyle’s mental state, the Trial Court concluded that Lyle was mentally capable of making a reasoned decision to end his marriage and granted his request for status-only dissolution.
In her appeal, Joann argued, inter alia, that the evidence of Lyle’s capacity to enter into a dissolution of marriage was insufficient to support the Trial Court’s ruling. In making its decision, the Court of Appeal pointed out, “The experts all agree that Lyle...has [at least some level of] dementia. The question is, however, not whether Lyle has dementia, but whether his impairment is such that he no longer has the capability of making a reasoned decision to end his marriage.”
The Court of Appeals observed that the determination of a person’s mental capacity is fact specific and must be measured on a sliding scale depending on the issue at hand. On the high end of the scale is the mental capacity required to enter contracts, followed by testamentary capacity, and, at the low end of the scale, marital capacity. Id at 637. The Court of Appeals noted that there is a “...large body of case authority reflecting an extremely low level of mental capacity needed before making the decision to marry or execute a will.” 

Although marriage arises out of a civil contract, case law has recognized that marriage is, “...a special kind of contract that does not require the same level of mental capacity of the parties as other kinds of contracts…” Id at 640. Further, the Court of Appeal points out that, “...even a person under a conservatorship, who is generally without contractual power, may be deemed to have marital capacity.” Id at 640 (citing Prob. Code § 1900). Likewise, the Court of Appeals also pointed at that Probate Code § 810 provides that there is a, “...rebuttable presumption affecting the burden of proof that all persons have the capacity to make decisions and to be responsible for their acts or decisions."
Thus, the burden of proof required to determine that a person lacks the capacity to marry or dissolve their marriage, is quite high. Greenway has taken the holding in Andersen v. Hunt, 196 Cal. App. 4th 722 (2011) one step further. In Anderson, the Court held that the standard of capacity to marry cannot simply be a set of facts that are plugged into a route equation, and that in evaluating mental capacity to marry, a Court should evaluate the person's ability to "appreciate the consequences of the particular act he or she wishes to take." The Greenway case takes this reasoning and applies it to the standard of capacity required to dissolve ones marriage, as well.
Greenway is an important case because it highlights the fact that the right to marry is an important fundamental right which the Courts aim to protect. This case underscores the concept that the capacity required to make the decision to divorce must be, like the capacity required to make the decision to marry, held to a very low standard. The Courts and the legislature have again and again upheld the notion that proving incapacity to marry, and now incapacity to divorce, must be explicitly proven.


Our associate, Erin Louria Zivic found time to travel last summer with her husband and sister-in-law to Costa Rica to volunteer with Globe Aware, an organization that serves various factions of local communities throughout the world. While in the Orosi Valley of Costa Rica, Erin and her family helped revitalize a local elementary school by planting a butterfly garden and medicinal plant garden, worked with a local ecological society to build worm boxes for composting, and harvested produce on a women-run organic farm. Erin was nominated as Globe Aware’s Volunteer of the Month in August.

Erin has also been busy with her Family Law, Estate Planning and Administration caseload. She has been working on a number of interesting Estate Litigation and Family Law matters. 

Specifically, Erin has been involved in a Post-Judgment family law matter in which one Party has accused the other of breaching a fiduciary duty and is thus seeking to be compensated for same. While that case was pending, the Court of Appeal issued an opinion in the recent case, Leslie v. Georgiou, which dealt precisely with the issue of fiduciary duties following a Judgment of dissolution. Erin has written a brief article on that case which is set forth below.

The Marriage of Georgiou v. Leslie: A Review of the Applicability of Family Code § 1101 (Breach of Fiduciary Duty) to post-Judgment Dissolution Proceedings

In the recent case of The Marriage of Georgiou v. Leslie, Leslie appealed the Family Court’s granting of summary judgment in favor of Georgiou and determination that, once a judgment in a dissolution of marriage has already been entered, a party could not later bring an action against the other party under Family Code § 1101 for breach of a fiduciary duty when the parties litigated the particular issue in question and the judgment fully adjudicated the asset.

On appeal the Court of Appeal, Fourth Appellate District, found that Family Code § 1101 for breach of a fiduciary duty did not authorize Leslie’s action because the issue which she was litigating had already been fully litigated and adjudicated. The Court further found that Leslie could have sought relief under a different statute, but that statute of limitations passed and thus any such action would be untimely.

Accordingly, the Court of Appeal affirmed the Family Court Order. Byron Georgiou and Maria Leslie married in 1985 and separated in 2003 and Byron filed for dissolution that same year. Byron is an attorney and in 2000, prior to the parties’ separation, he became “of counsel” at a law firm. In that position, in 2002, Byron secured a client for the firm and became entitled to a 10 percent referral fee in a class action litigation lawsuit. In a contingency fee agreement between the firm and the lead plaintiff, the agreement provided that attorneys’ fees would be between 8-10 percent of the recovery.

In 2005, the marital status was terminated in a bifurcated Judgment. In 2007, two years after the marital status was terminated, Byron and Maria entered a marital settlement agreement (“MSA”). Maria knew about Byron’s contingency fee agreement with his firm and the lead plaintiff. Maria also knew that the firm recovered approximately $7.2 billion in settlement and she had received a copy of the fee agreement from Byron. Maria had deposed a partner at Byron’s firm regarding the contingency fee agreement. She also learned through Byron’s settlement conference brief that Byron’s referral fee could be between $9 million and $33 million. She was also aware that the firm intended to seek fees in excess of $330 million and that Byron intended to “vigorously argue” that he was entitled to a 10 percent fee. The MSA divided the referral fee unevenly, with Maria receiving 10% of the fee, in exchange for $7 million in other assets including the family home, among other assets, which was Byron’s separate property. Byron received 90% of the fee, life insurance policies, loan receivables, business interests and significant debt.

The MSA was incorporated in a judgment of dissolution which was entered on December 12, 2007. In 2008, the federal district court granted Byron’s firm’s fee request, awarding the firm $688 million in fees. That same month, Byron negotiated a 9 percent referral fee with his firm and paid Marie $4 million for her 10 percent share of the fee. Maria realized that Byron was entitled to a fee larger than she originally anticipated, i.e. over $33 million dollars. She later learned that she was entitled to an additional $1.56 million based upon her award of 10 percent of Byron’s actual recovery, which was approximately $62 million. Three years following the MSA, on December 13, 2010, Maria filed an action under Family Code § 1101 for Byron’s breach of his fiduciary duty of disclosure. She alleged that Byron led her to believe he would receive between $9 million and $33 million, that he did not provide her with a copy of the fee agreement with the firm’s client and that he fabricated or exaggerated a dispute he had with the firm regarding the fee. She argued that if she knew the terms of the fee arrangement, she would have been able to calculate the fee. Maria sought either one-half or 100 percent of Byron’s referral fee based on his alleged breach. In response, Byron moved for summary adjudication, arguing that Maria’s action was not timely. On its own accord, the Court found that Maria could not seek relief for breach of a fiduciary duty under Family Code § 1101 because such relief “is not legally available in a post-marital dissolution judgment action.” 

Instead, the Court found that relief could be sought under Family Code § 1101 either, “(1) during an intact marriage; (2) in conjunction with a dissolution proceeding; or (3) after the death of a spouse.” The Court reasoned that spouses have a fiduciary duty to each other during the marriage. As stated in Family Code § 721, “in transactions between themselves, a husband and wife are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other.” Additionally, Family Code § 1100 provides, “ Each spouse shall act with respect to the other spouse in the management and control of the community assets and liabilities in accordance with the general rules governing fiduciary relationships . . .” This duty extends throughout the dissolution of marriage up to and including the distribution of the community and quasi-community property. Each Party’s duty extends through preparing and serving of a Final Declaration of Disclosure which contains “all material facts and information regarding the valuation of all assets that are contended to be community property.” (Family Code § 2105, subd. (b)(2).) 

Each spouse’s fiduciary duty includes updating and supplementing that disclosure if there have been any material changes. Because Maria filed a post-Judgment action in this case, there was no longer (1) an intact marriage, (2) a current dissolution proceeding between the Parties, and (3) no spouse passed away. Therefore, Maria could not file for relief under Family Code § 1101. Maria could have sought relief under Code of Civil Procedure § 473 to set aside the Judgment based on mistake, inadvertence, surprise, or excusable neglect.

Additionally, Family Code § 2122 provides relief under limited circumstances, including actual fraud, perjury, duress, mental incapacity, mistake (in stipulated or uncontested judgments), and failure to comply with the disclosure requirements. In the instant case, although Maria may have sought relief based on the failure to comply with disclosure requirements, she did not timely bring her action. The statute of limitations is one year from the Party’s date of actual or implied discovery of the failure to comply. In September of 2008, Maria discovered the amount of Byron’s referral fee, yet she did not file her action until December of 2010.

The purpose of having Statutes of Limitation is to promote California’s strong public policy of assuring finality of Judgments within a reasonable time. The Court of Appeal found that in the instant case, Byron disclosed the asset, it was a substantial issue in the negotiations for the MSA and the Judgment fully adjudicated the issue. The Court further found that it was not required to determine whether section 1101 never authorizes a post judgment action for breach of fiduciary duty. Instead, it found that it did not apply in this case where the issue was fully litigated and determined. 

The Court further stated that Maria “cannot take the benefits of the judgment and also obtain 50 percent or 100 percent of the referral fee.” To do so would ignore the policy in favor of protecting the finality of Judgments. Since Maria’s only remedy was under Family Code § 2122 and she did not timely file an action, the Court lacked jurisdiction over the matter and summary adjudication was proper.


We thank all of you for your generous referrals throughout the past year. 

If you have questions or comments about any of the news provided here or about anything related to family law and/or probate and estates, please send us an email, call or blog us and we will respond right back. 

As always, it is a pleasure to serve our community.

Wednesday, October 30, 2013


Quite often we represent someone who does not have close family or friends to make medical decisions on their behalf if they cannot speak for themselves. We see clients who have neither siblings nor children who, once informed about the possibility of such, may wish to hire a professional fiduciary to take on this daunting but crucial responsibility. This is, in fact, what we arrange for these clients to do.  We have very caring and competent professional fiduciaries prepared to assist in such situations, if and when the time comes.  Usually they also are appointed conservator and trustee to be able to handle the estate smoothly and seamlessly.
Clients would much rather pay a professional, with whom they get to know, to make these types of decisions. That way the client has an objective decision-maker working for him or her, based upon the priorities previously discussed prior to any incapacitation.
Sometimes a friend will agree to be the decision-maker, but they are often about the same age. If the client dies within five years or so, that may be alright. But after that, what will happen? With people living longer and families having fewer children, this may become a growing issue.
A 2006 study reported that 16 percent of people in intensive care units have no designated decision-maker and no identifiable family who could fill that role. [New York Times, October 24, 2013, Paula Span, “Hiring an End-of-Life Enforcer.”] Some geriatric social workers are proposing a new type of professional, the healthcare fiduciary. Drawn primarily from retired social workers or nurses, clergy, or paralegals, they would be trained and certified to navigate the health care system. Fiduciaries are often associated with law firms which specialize in estate planning and/or elder law. They would charge perhaps close to $100 an hour, much less than an attorney or even most geriatric care managers would charge.
Fiduciaries are often a desirable option even for people who have relatives close by. Maybe they do not want to burden their close friends or family members. Maybe they worry about how to pick one child over another to make such important decisions.  Maybe they are estranged from their relatives. Maybe they worry that in a crisis, relatives will not be able or willing to honor their instructions. Maybe it is just too hard to deal with the whole subject. After all, sadly, despite being told over and over again to prepare for the future and create advance health care directives, most people still do not.
On another point relative to this issue, I have read that health care professionals very often encounter the frustration of a patient declaring that, yes, he or she does have a signed AHCD, but, no, the patient does not have it with him or her and cannot remember where the copy is.  Sometimes the original is locked up in the safe deposit box along with the will.  [New York Times, October 17, 2013, Paula Span, “Where’s That Advance Health Care Directive?”] What if the patient arrives at the ER unconscious or incoherent? By the time family members are contacted and able to locate and produce the document, it may very well be too late. I read a funny/sad story about a 67-year-old man who came in to the emergency room with pneumonia. He, too, had an advance directive, which was stored at his attorney’s office.  The Patient Ombudsman at the hospital tried to get in touch with his lawyer.  However the firm could not fax a copy of the directive, because the man’s lawyer carried it around with him in a briefcase in his car and he was out taking a deposition. Hours passed before the lawyer could return the call, and even then he was on the road and not near a fax machine. I cannot presume to know what possessed that lawyer to keep originals of anything belonging to a client in his briefcase; but I do know that would never happen at Cooper-Gordon.
We at Cooper-Gordon LLP do not keep original documents in our office. They go home in a nice notebook with the clients. We scan all original documents and provide our clients and any professional fiduciaries with the scanned copies. We tell the clients to forward the scanned documents to all named agents, trustees, executors and conservators. It is always essential that all primary health care providers, including doctors (cardiologists, neurologists), hospitals, clinics, medical labs and imaging centers, have copies of the AHCD.  It seems evident that the time has come to also encourage everyone to carry a thumb drive with these important documents on them. Even those with little computer knowledge can ask someone (including the lawyer who has prepared all the documents) to copy the documents onto the flash drive.
Most of the time, patients who have advance directives somewhere and do not bring them to the hospital have simply left them at home. But lawyers’ offices and safe deposit boxes are also popular locations. All of which are useless if a person cannot direct his own care, or if family members are at odds, or they are spending time the patient usually does not have rummaging through drawers and files looking for the paperwork while the ER staff stands by.
The more copies there are in circulation, the better the odds that one will materialize at the hospital when you need it.