The Family Times, Spring 2004

Help in the Hardest of Times
James F. Cote, Esq.
Published in The Family Times, Spring 2004

I have followed with painful interest the news story out of Florida about Terri Schiavo, the young woman who has been in a coma for 13 years.  Her husband wants to let her die; her parents want to keep her alive.  Lawyers, judges, the Florida State Legislature, and even Governor Jeb Bush have played parts in this sad drama.  Terri Schiavo is still alive today and the legal ending to her story is not yet known.  My interest in this story is threefold.  

First, I watched my father suffer for three years as he battled to a slow but inexorable death from ALS, commonly known as Lou Gehrig’s disease.  Our family faced a seemingly never-ending stream of difficult health care decisions.  Like the Schiavo family, we have been there. 

Second, as a son, a husband and a father, I can know all too well the emotions on both sides of the Schiavo story.  Sometimes we want to keep a loved one alive because we are afraid to face the pain of loss; time spent with a loved one we know will die soon is so precious, we want every last possible minute of time in their presence, no matter their medical condition.  On the other hand, I remember when I prayed for God to let my father’s suffering end. 

Third, as an estate planning attorney, I know the Schiavo saga never had to go this far.  Regardless of which side you were on in this saga, a simple health care directive could have let her family and the world know exactly what she would want done for her now.  The story would never had become a prolonged national news item.

California Health Care Directive Law

On July 1, 2000, the California Health Care Decisions Law (“the Law”) became effective. Probate Code Sections 4600 - 4805.  (All references in this article will be to the Probate Code.) The Law allows each of us to expressly give instructions regarding our health care, including the nature and extent of care we want, and do not want, if we are seriously injured or suffering from an incurable disease.  We can also designate someone to act on our behalf in making health care decisions, either an Agent or a Surrogate, and who we would like to be appointed as our conservator.

The Public Policy

Most Californians are probably unaware of the powerful public policy which the Law proclaims in Section 4650:

(a)     . . . an adult has the fundamental right to control the decisions relating to his or her own health care, including the decision to have life-sustaining treatment withheld or withdrawn.
(b)     . . .  prolongation of the process of dying for a person for whom continued health care does not improve the prognosis for recovery may violate patient dignity and cause unnecessary pain and suffering, while providing nothing medically necessary or beneficial to the person.
The Documents
“Health care instructions” are defined as “a patient’s written or oral direction concerning a health care decisions for the patient.”  Section 4623.
A “power of attorney for health care” is “a written instrument designating an agent to make health care decisions for the principal.  Section 4631.
An “Advanced Health Care Directive” (Sections 4670 through 4678) can be either an individual health care instruction, or a power of attorney for health care (Sections 4680 and 4690).  Section 4605.  However, most Directives contain both instructions, the designation of an Agent, and the designation of a conservator.  (Section 4701 contains a statutory  form with these three options.)
A directive does not grant any authority regarding any of your assets, only your health care decisions.
Unless expressly stated otherwise, the authority of an Agent is not effective until the patient lacks capacity to make his/her own decisions.  Section 4682.
The Actors
An Agent is “an individual designated in a power of attorney for health care to make health care decisions.”  Section 4607. 
A Surrogate is someone other than a designated Agent (Section 4643), whom the patient designates  by personally informing the supervising health care provider, either orally or in writing, to make health care decisions.  Section 4711(a). 
You can designate anyone you trust with your ultimate decisions - your spouse, significant other, domestic partner, adult children, or close friend.
The Scope of Authority Permitted
Under Section 4617, the Law grants authority for all health care decisions, including:
     (a)  Selection and discharge of health care providers and institutions.
     (b)  Approval and disapproval of diagnostic tests, surgical procedures, and programs of medication.

     (c)  Directions to provide, withhold, or withdraw artificial nutrition and hydration and all other forms of health care, including cardiopulmonary resuscitation.
While Section 4653 specifically proscribes “mercy killing, assisted suicide, or euthanasia,” it goes on to state that this restriction does not encompass “withholding or withdrawing health care pursuant to an advance health care directive . . . so as to permit the natural process of dying.”  

Period of Effectiveness of Designation
The designation of an Agent in a Directive has no statutory limit on the period of effectiveness.  Section 4686.   CAUTION: Directives or Powers of Attorney for Health Care executed prior to July 1, 2000, were only effective for seven years from the date of execution.
The designation of a Surrogate is only good for the lesser of (1) “the course of treatment or illness or during the stay in the health care institution when the surrogate designation was made” or (2) 60 days.  Section 4711(b).
Immunities and Liabilities of the Agent
A health care provider is immune from liability for complying in good faith with instructions from an Agent or Surrogate (Section 4740(a)), for declining to comply “based on a belief that the person then lacked authority” (Section 4740(b)), or for following health care instructions assumed to be valid (Section 4740(c)).
An Agent or Surrogate who acts in good faith is provided full immunity from civil or criminal liability.  Section 4741.  
A health care provider who intentionally ignores an instruction is subject to civil liability of $2,500 or actual damages, whichever is greater, plus attorney’s fees.  Section 4742(a).
Anyone who alters or forges a Directive in order to have health care withheld or withdrawn, which results in the patient’s death to being hastened, is subject to prosecution for homicide.  Section 4743.
Limitations on Judicial Intervention
Judicial intervention in health care decisions is disfavored.  Section 4750.  There are limits on the individuals who may file a Petition regarding health care (Section 4765).  The purposes of such a Petition are limited to the following: determining whether the patient has capacity, whether the Directives is in effect or terminated, whether the acts or proposed acts are consistent wit the patient’s instructions, and/or to terminate the authority of a Surrogate.  Section 4766.
With my father we were lucky: Unlike Terri Schiavo, my father was able to communicate with us, although with increasing difficulty, until the day he died.  For patients like Terri Schiavo who cannot communicate, the family can make and be comfortable with difficult health care decisions if a Directive clearly states the patient’s desires.
I routinely prepare Advance Health Care Directives for nearly all of my estate planning clients.  Our discussions on the topic are sometimes uncomfortable.  Many clients often have to ponder the difficult issues raised for some time before I can finalize their Directives.  I know the day will come when the Directive will prove to be the single most important estate planning document a client has signed, because it will provide critical help in the hardest of times.  

Santa Barbara Law Journal 2003

Death, Taxes, and Child Support
James F. Cote, Esq.
Published in the Santa Barbara Law Journal, December 2003

We all know that death and taxes are inevitable.  But how many attorneys know their impact on child support?  The issues can be as complicated and confusing as death itself.  This article will discuss using child support obligations as a deduction for estate tax purposes.
Let us use the following facts: Husband and Wife enter into an MSA, which is promptly incorporated into a Judgment.  They have a 14-year-old, Son.  Husband agrees to pay the following child support: Monthly support of $2,000, until Son is 19 years old; and all expenses for Son to go to college - tuition, books, room, board, transportation, etc.  

When Son is 15 years old, Husband dies and leaves a substantial estate. So, how much of the child support is deductible for estate tax purposes?

Child support obligations survive the death of the supporting spouse.  Taylor v. George (1949) 34 Cal.2d 552, 556.  They are asserted as a Creditor’s Claim against the estate.  Dobler v. Arlak Med. Ctr Indis. Group (2001) 89 Cal.App.4th 530, 540.

Once the amount of the Claim is established, the estate will want to maximize the Claim as a deduction for estate tax purposes.  The test to determine whether this Claim is deductible is this: How much of the support obligation could have been ordered by the court, and how much of it was really a gift?  Further, under IRC §2516, when an MSA is approved by the court within three years after it is signed, the child support payments are deductible if they are a  “reasonable allowance for the support of issue of the marriage during minority.”

Monthly Support:  Under Family Code §§3900 and 3901(a), the duty of support continues until the age of 18, or, if the child “is a full-time high school student, and who is not self-supporting, until the child completes the 12th grade or attains the age of 19, whichever occurs first.”  Assuming Son will turn 19 after high school graduation, the post-graduation monthly payments will be a gift because they are not “during minority” and could not have been ordered by the court.  

College Expenses:  A California parent is not legally obligated to put a child through college.  Therefore, these expenses are generally not deductible. Rosenthal v. Commissioner of Internal Revenue(1953) 205 F2d 505; Estate of Wiedeman v. Commissioner of Internal Revenue, 26 TC 565, 569-570 (1956). However, if Wife “bargained for” the college expenses, and gave up some of her own property and/or support rights to obtain that support, then the extra payments are supported by “adequate and full consideration” and are deductible. Leopold v. United States, 510 F2d 617 (1975); Glen Est. v. Commission of Internal Revenue, 45 TC 373 (1966).

The amount of the deduction is limited to the value of the property and support rights released by Wife.  For example, in Glen Est. v. Commission of Internal Revenue, supra, the wife relinquished rights worth $333,000.  The present value of the payments to her was $190,131.  The difference of $143,202 was allocated toward the value of the “extra” payments due her three adult children.  The balance of the payments in excess of $143,202 was considered a gift.  Id. at 345-347.

In conclusion, if an MSA calls for child support beyond high school graduation, care should be exercised to document the bases for that support.  Upon the death of a supporting spouse, attention must be given to maximize the deductibility of such payments for estate tax purposes.

Santa Barbara County Bar Association Publication: Santa Barbara Lawyer, October 2010

What Happens to Your Law Practice When You 

(Gulp) Become Incapacitated or Die?

Santa Barbara County Bar Association Publication: Santa Barbara Lawyer

October 2010: Issue 457


James F. Cote, Esq.

    We lawyers are always so busy taking care of our clients’ problems that we often can’t find the time to make our own plans.  Investment plans, business plans, vacation plans, estate plans, fire escape plans  -  the list goes on and on and on. 


    How many of us have a plan in place for what would happen to our active legal practice if  we unexpectedly became incapacitated or died?  Probably not many.  The whole idea is so uncomfortable to think about that our reaction is one of convenient avoidance.  The need for a plan is even more important for sole practitioners, because we do not have partner already in place to cover for us.


    I procrastinated on this topic as long as anyone, even though I should know better: For more than a decade my practice has focused on estate planning, probate, and trust administration.  But when my sister (a retired estate planning attorney and accountant) gently prodded me on the subject recently, I had to admit: I had no plans.  That has now changed, and it is much easier to do than you might think.


    The purpose of this article is to briefly discuss the applicable law and to urge you to promptly draft and sign two short documents that can protect you, your family, your clients, and your practice from the emergency of your unexpected absence from practice.


Two Codes at Play


    Both the Business & Professions Code and the Probate Code have provisions that will cover the management of your law practice if you become incapacitated or die. The B&P Code focuses primarily on protecting your clients, while the Probate Code also provides important provisions to protect your law practice as a valuable asset.


“Closing Down” Under the B&P Code


    Under B&P Code §§6180 and 6190, the State Bar or the Superior Court can assume control over your law practice by selecting and appointing a “Practice Administrator”.  The job of a Practice Administrator appointed under the B&P Code is to protect your clients  -  by ending your client relationships and closing down your practice.  To put salt in the wound,  if you are found to be incapacitated, your license will automatically be placed on inactive status and you will then have to seek reinstatement before you could return to practice, if there is any practice left.


    “Continuance” Under the Probate Code


    The powers granted a Practice Administrator under PC §§ 2468 and 9764 are greater than those allowed under the B&P Code, because here the goal is not to just close down your practice, but to continue and preserve it, so you can return to it once you are able, or so your estate can properly market it.  BP §6185(a)(7).


    Your conservator (PC § 2468) or executor (PC § 9764) can petition for the appointment of a Practice Administrator.  If the authority granted your Agent in your Advance Health Care Directive specifically references the law practice, a conservator may not need to be appointed.  (See PC §2468(a) which allows any “other person interested in the estate” to seek the appointment of a Practice Administrator.)  The advantages go on.


    The court shall appoint the lawyer you have nominated (see sample Nomination of Practice Administrator, below) unless it would be “contrary to the best interest of the estate or would create a conflict of interest”.  PC §2468(f) and PC §9764(f).  If immediate action is necessary, the court can waive notice for the appointment.  PC §2468(b) and §9764(b).  The powers granted under PC §6185 can be greater than those allowed under BP Code §§6180 and 6190.


The Malpractice Issue


    I should add that failing to adequately plan for protecting our clients’ interests in the event of your incapacity or death could be malpractice, because we each owe continuing duties of loyalty, confidentiality, and service to our clients.  These duties follow us unrelentingly into our sickbeds and then even into our graves!  


Friendly Advice


    As my sister told me: If I unexpectedly became incapacitated or died, it would be much better for everyone involved if my law practice was managed under the Probate Code, by a Practice Administrator I carefully chose in advance.  


    So, I am telling you: Make an emergency plan for your law practice by signing both an Advanced Health Care Directive and a Nomination of Practice Administrator.  Do it now, before your sister brings it up.


James F. Cote has been a lawyer in Santa Barbara for 31 years.  His practice focuses on estate planning, probate and trust administration.  His sister, Christine Gress, now in Santa Barbara and working with her brother part-time, is a retired estate planning attorney with an LLM in tax, and an accountant.





    I, Prepared Lawyer, am licensed to practice law in the State of California and currently practice at Law Office of Prepared Lawyer, located in Santa Barbara, California (“my law practice”).  


    In the event of my disability or death, I hereby nominate ______ and ______, in the order named, to serve as the Practice Administrator of my law practice, and to take control of my law practice during the period of my disability and/or for the course of the administration of my estate.  Probate Code Sections 2468 and 9764.

    The authority granted hereunder shall be sufficiently comprehensive to allow the Practice Administrator to take control of my files and the assets of my law practice and to speak for me in matters regarding my law practice, including petitioning the Santa Barbara Superior Court for appointment as Practice Administrator.  Probate Code Section 2468(a).  In the event of my disability, one of the purposes of such an appointment will be to avoid the need for the appointment of a conservator.


    I hereby ask the Santa Barbara Superior Court to appoint the Practice Administrators nominated above, unless to do so would adversely impact my clients or other persons interested in my practice or my estate.  Probate Code Sections 2468(f) and 9764(f).  I also ask that the Practice Administrators be granted all of the powers provided in the Business & Professions Code Section 6185.





                        Prepared Lawyer, Attorney at Law


[Add Notarial Acknowledgment]