San Jose Attorney - Almaden Times Articles

Just What Is A "Fiduciary Relationship" Anyway And Why Is It Important?

This week's question:

Every once in a while I come across the term "fiduciary duty" or "fiduciary relationship". This seems to apply to several different situations. What does "fiduciary" mean? Does it really apply to different situations or is this just my imagination?

/s/Jennifer J.

Almaden Valley

Dear Jennifer:

First of all, the easy part. No, it definitely not just your imagination. The term "fiduciary duty" or "fiduciary relationship" arises in a broad variety of situations and legal relationships. You will recognize many of those situations and see right away why they are called "fiduciary relationships".

For example, let's assume you are the Administrator of your father or mother's estate. Instead of managing the estate account properly, you take the money to Reno and gamble it away, hoping to double the account for yourself as well as your brother and sister. Stand by for a huge law suit for breach of fiduciary duty.

Or let's assume that as Administrator of that estate you found an account that you "forgot" to report to the Court and "forgot" to mention to your brother and sister. Instead, you put the money in your pocket. Once again, stand by for a suit for breach of fiduciary duty.

My copy of Black's Law Dictionary, Seventh Edition, a well regarded treatise in the field of law, has several excellent definitions in this area dealing with a "fiduciary".

Black's defines "fiduciary" as "one who owes to another the duties of good faith, trust, confidence, and candor. For example, the corporate officer is a fiduciary to the shareholders."

A fiduciary is one who must exercise a high standard of care in managing another's money or property. An example of that would be when a beneficiary of a trust sues the fiduciary for investing in speculative securities and wasting all of the trust fund.

A "fiduciary relationship" is defined by Black's Law Dictionary as "a relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of the relationship, such as trustee-beneficiary, guardian-ward, agent-principal, and attorney-client."

Fiduciary relationships usually arise in one of four situations:

(1) When one person places trust in the faithful integrity of another, who as a result gains superiority or influence over the first;

(2) When one person assumes control and responsibility over another;

(3) When one person has a duty to act for or give advice to another on matters falling within the scope of the relationship, or

(4) When there is a specific relationship that has traditionally been recognized as involving fiduciary duties, as with a lawyer and a client or a stockbroker and a customer.

"Fiduciary duty" is defined by Black's as "a duty of utmost good faith, trust, confidence, and candor owed by a fiduciary, such as a lawyer or corporate officer, to the beneficiary, such as a lawyer's client or a shareholder. Also, "a duty to act with the highest degree of honesty and loyalty toward another person and in the best interests of the other person, such as the duty that one partner owes to another."

The California Family Code in §721 provides for general rules governing fiduciary relationships between a husband and a wife, the same fiduciary rules that 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."

If, for example, an attorney would breach his or her fiduciary duty to the client, the client could have grounds for a suit called "breach of fiduciary duty".

If that would arise, the judge might instruct the jury as follows, based upon California Jury Instructions CACI #605:

"An attorney has a fiduciary duty to the client. A fiduciary duty is the duty of good faith and undivided loyalty. The Plaintiff claims that Defendant Attorney harmed the Plaintiff because the Attorney breached his/her fiduciary duty of confidentiality [for example]. To establish this claim, Plaintiff must prove all of the following:

* That the Attorney breached the fiduciary duty of confidentiality [for example];

* That the Plaintiff was harmed; and

* That the Attorney's conduct was a substantial factor in causing Plaintiff's harm.

So, you can see, Jennifer that the word "fiduciary" is a

very important concept, and fiduciaries must act with utmost care and the highest of standards. And these principles do in fact apply in a large variety of situations.

/s/Donald J. DeVries

Almaden Valley

Donald J. DeVries is an attorney practicing law in the Almaden Valley. Past Almaden Times articles since 1986 can be accessed through his web site: www.almadenvalleylawers.com . If you would like him to answer your question in his next Almaden Times column, you can reach him by email at don@almadenvalleylawyers.com, with "Almaden Times" in the subject line, fax at (408)268-6502, telephone at (408)268-9500, or mail at DeVries & Horowtiz, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. Mr. DeVries writes this column to provide you with general information about important legal matters affecting California residents-not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.

You May Be Able To Leave A List For Passing On Special Items

This week's question:

In case I pass on, I want to leave my wedding rings to my daughter, Rebecca. Shall I put that in my will? However, what if I change my mind? Or what if something happens to Rebecca? Will I have to go to the lawyer's office and change my will? This can get way too expensive, and maybe even cost more than the rings are worth! Is there any way around this?

/s/Dana D.

Almaden Valley

Dear Dana:

This has been a problem for many years. Many of us want to leave certain items to our family but to list them in a will or living trust becomes much too cumbersome. Our wishes change over the years as does the list of items and intended beneficiaries of the gifts.

If all of these items are listed in a trust or will, it often becomes quite expensive for the law office to list them and then when changes to the list are made, a new legal bill is generated for the new legal work. And this does not make for happy clients. And no wonder. But I may have some good news for you, Dana.

Now, there is a good way around this. As of January 1, 2007, a new law went into effect that allows consumers to refer in their will to a list that will be found at their death. The law is California Probate Code §6132.

The following are some of the key provisions of this relatively new law:

A will may refer to a writing [or list] that directs disposition of tangible personal property not otherwise specifically disposed of by the will, except for money that is common coin or currency and property used primarily in a trade or business. A writing [such as a list] directing disposition of a testator's [i.e., will maker's] tangible personal property is effective if all of the following conditions are satisfied:

* An unrevoked will refers to the writing.

* The writing is dated and is either in the handwriting of, or signed by, the testator [i.e., the will maker].

* The writing describes the items and the recipients of the property with reasonable certainty [for example, my wedding rings shall pass to my daughter, Rebecca].

The writing [i.e., the list] may be written or signed before or after the execution of the will and need not have significance apart from its effect upon the dispositions of property made by the will.

A writing that meets the requirements of this section shall be given effect as if it were actually contained in the will itself, except that if any person designated to receive property in the writing or list dies before the testator, the property shall pass as further directed in the writing and, in the absence of any further directions, the disposition shall lapse.

The testator [will maker] may make subsequent handwritten or signed changes to any writing, such as a list of personal property items. If there is an inconsistent disposition of tangible personal property as between writings, the most recent writing controls.

There are special rules covering the situation where a list may not be dated and if the testator [will maker] lacked legal capacity to make a will or the list.There are also limits as to the total value of items on the writing or list. The total value of tangible personal property identified and disposed of in the writing shall not exceed twenty-five thousand dollars ($25,000). Also, if the value of any particular item of tangible personal property described in the writing exceeds five thousand dollars ($5,000), that item shall be disposed of pursuant to the remainder clause of the will and not according to the list.

"Tangible personal property" means articles of personal or household use or ornament, including, but not limited to, furniture, furnishings, automobiles, boats, and jewelry, as well as precious metals in any tangible form, such as bullion or coins and articles held for investment purposes.

The term "tangible personal property" does not mean real property, a mobilehome, intangible property, such as evidences of indebtedness, bank accounts and other monetary deposits, documents of title, or securities.

"Common coin or currency" means the coins and currency of the United States that are legal tender for the payment of public and private debts, but does not include coins or currency kept or acquired of their historical, artistic, collectable, or investment value apart from their normal use as legal tender for payment. In other words, it would not work to have normal money on the list but it would work to have historical and collectable coins.

You can read California Probate Code §6132 for yourself by going online with your favorite search engine. Enter California Probate Code §6132 and it will be on your screen in about a half a second, along with lots of advertising. Or use one direct link: http://law.onecle.com/california/probate/6132.html.

So, there you have it, Dana. I hope this helps in dealing with those wedding rings and anything else that might be placed on a list to be found at your passing. Of course, you will want to consult with your own attorney about your will and living trust for the complete picture of all issues involved, including the list. Please remember that you need to have a will that refers to the list. You cannot just make a list without a will to comply with California Probate Code §6132.

/s/Donald J. DeVries

Almaden Valley

Donald J. DeVries is an attorney practicing law in the Almaden Valley. Past Almaden Times articles since 1986 can be accessed through his web site: www.almadenvalleylawers.com . If you would like him to answer your question in his next Almaden Times column, you can reach him by email at don@almadenvalleylawyers.com, with "Almaden Times" in the subject line, fax at (408)268-6502, telephone at (408)268-9500, or mail at DeVries & Horowtiz, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. Mr. DeVries writes this column to provide you with general information about important legal matters affecting California residents-not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.

Child And Spousal Support May Be Based On Average Income

This week's question:

My husband and I are not getting along that well. We are thinking about parting ways. We have three children, 15, 13, and 10. Here is my problem: his income is very sporadic since he is in sales for a major Silicon Valley firm. It seems like it is feast or famine. How can the court set child support and spousal support under these circumstances?

/s/Anna A.

Almaden Valley

Dear Anna-

In a marital dissolution or separation proceeding, the court will look at each party's total financial situation. One of the key documents that you are required to complete and file with the court is called an Income and Expense Declaration. All of your finances need to be shown on that document.

Of course, your situation is not unique if one spouse's income fluctuates from month to month. This happens often in the real world, and yet child support and spousal support are still resolved.

An interesting case was decided about three years ago, entitled In re Marriage of Riddle. In that case from Orange County, Susan and Tracy Riddle obtained a divorce. Tracy worked as a commissioned financial adviser for a major investment firm. Susan was, by her own description, a stay-at-home mom with no income.

There were four components to Tracy's income, including (1) the forgiveness of debt on an advance received by his employer during the marriage; (2) the forgiveness of the interest on the debt; (3) a monthly draw of $2,340; and (4) the variable part, the fluctuating amount of commission income Tracy earned for a given month.

The trial court set temporary child support at $3,619 per month plus 16% of any income in excess of $21,950 in a month. It also set temporary spousal support at $4,338 per month plus 20% of any income in excess of $21,950 per month. This was based on Tracy's gross monthly earnings of $21,950.

Tracy filed an appeal of the trial court's orders. The Court of Appeal for the Fourth District agreed with Tracy and held that the time samples had to be fair and representative to determine Tracy's fluctuating income. So, in summary, support cannot be based on unfair or non-representative average income.

The Court of Appeal discussed California Family Code §4060 that provides as follows:

§4060. Computing Monthly Net Disposable Income. The monthly

net disposable income shall be computed by dividing the annual

net disposable income by 12. If the monthly net disposable

income figure does not accurately reflect the actual or

prospective earnings of the parties at the time the

determination of support is made, the court may adjust the

amount appropriately.

In this particular case, the Court of Appeal found that the trial court did not adjust the amount appropriately, especially in view of California Family Code §4064, that provides as follows:

§4064. Adjustment of Child Support Order Where Income of Parent Seasonal or Fluctuating. The court may adjust the child

support order as appropriate to accommodate seasonal or

fluctuating income of either parent.

The Riddle case also stands for the proposition that the court must arrive at a "stable number" in order to make a support order, even if income does fluctuate from month to month. And the "stable number" is necessary to have a reasonable predictor of what each spouse or parent will earn in the immediate future.

The time period on which income is calculated must be long enough to be representative, as distinct from extraordinary. It would probably be error for the Court to take so small a sliver of time to figure income that the determination essentially becomes arbitrary.

In Riddle, the Court of Appeal found that the trial court erred when it selected only the last two months of income to determine Tracy's income for support purposes. This was arbitrary according to the Court of Appeal, since two months is too short for predicting the annual income of a commissioned salesperson who works in the financial markets. Particularly in this case, said the Court of Appeal, where Tracy's income for the previous 14 months, previous calendar year, and immediately preceding 12 months were all fairly consistent among each other, but inconsistent with the two month period utilized by the trial court.

You can read the Riddle case for yourself by going to your favorite search engine and entering: In re Marriage of Riddle. I did it with Google and it was on my screen in .29 seconds along with a few thousand related articles. As always, you will want to consider this case with your own attorney to see how it may apply or not apply to your situation.

Good luck, Anna. I'm sure you will find a solution to the fluctuating income problem.

/s/Donald J. DeVries

Almaden Valley

Donald J. DeVries is an attorney practicing law in the Almaden Valley. Past Almaden Times articles since 1986 can be accessed through his web site: www.almadenvalleylawers.com . If you would like him to answer your question in his next Almaden Times column, you can reach him by email at don@almadenvalleylawyers.com, with "Almaden Times" in the subject line, fax at (408)268-6502, telephone at (408)268-9500, or mail at DeVries & Horowtiz, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. Mr. DeVries writes this column to provide you with general information about important legal matters affecting California residents-not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.

Obtaining Copies Of Your Medical Records Should Not Be All That Difficult

This week's question:

I was seriously injured in an auto accident recently. I went to my doctor's office to get copies of my medical records and the office receptionist said that it was their "policy" to keep all medical records in their office. Is there any way I or my attorney can get a copy of those records? And how about other, previous, records pertaining to me and my medical history? And how much can they charge per page for the copies?

/s/David D.

Almaden Valley

Dear David-

I cannot understand why it is so difficult to obtain copies of your medical records from your own doctor's office. You might want to contact your doctor in writing about that, since it is pretty clear that a patient has a right to obtain copies of those records by signing a simple authorization. Maybe the receptionist was new and did not understand.

California Evidence Code §1158 has been around for some time. It provides in part as follows:

"Whenever prior to the filing of any action or the appearance of a defendant in an action, an attorney at law or his or her representative presents a written authorization therefore signed by an adult patient, by the guardian or conservator of his or her person or estate, or, in the case of a minor, by a parent or guardian of the minor, or by the personal representative or an heir of a deceased patient, or a copy thereof, a physician and surgeon, dentist, registered nurse, dispensing optician, registered physical therapist, podiatrist, licensed psychologist, osteopathic physician and surgeon, chiropractor, clinical laboratory bioanalyst, clinical laboratory technologist, or pharmacist or pharmacy, duly licensed as such under the laws of the state, or a licensed hospital, shall make all of the patient's records under his, hers or its custody or control available for inspection and copying by the attorney at law or his, or her, representative, promptly upon the presentation of the written authorization."

What many law firms do is to fill out a requisition with a professional copy service. They then go to the doctor's office with a portable copier and make the copies. California Evidence Code §1158 goes on to state:

"No copying may be performed by any medical provider or employer enumerated above, or by an agent thereof, when the requesting attorney has employed a professional photocopier or anyone identified in §22451 of the Business and Professions Code as his or her representatives to obtain or review the records on his or her behalf. The presentation of the authorization by the agent on behalf of the attorney shall be sufficient proof that the agent is the attorney's representative."

What if the doctor's office fails to provide the records for copying? Good question, and that is covered by Evidence §1158 as well:

"Failure to make the records available during business hours, within five days after the presentation of the written authorization, may subject the person or entity having custody or control of the records to liability for all reasonable expenses, including attorney's fees, incurred in any proceeding to enforce this section."

Of course, the patient or attorney needs to pay the reasonable cost of the copies. The cost limits are also set out in Evidence Code §1158:

"All reasonable costs incurred by any person or entity enumerated above in making patient records available pursuant to this section may be charged against the person whose written authorization required the availability of the records."

Good rule, but what if people try to play games with the meaning of "reasonable" costs. That is covered also by §1158:

"Reasonable costs," as used in this section, shall include, but not be limited to, the following specific costs: ten cents ($0.10) per page for standard reproduction of documents of a size 8 1/2 by 14 inches or less; twenty cents ($0.20) per page for copying of documents from microfilm; actual costs for the reproduction of oversize documents or the reproduction of documents requiring special processing which are made in response to an authorization; reasonable clerical costs incurred in locating and making the records available to be billed at the maximum rate of sixteen dollars ($16) per hour per person, computed on the basis of four dollars ($4) per quarter hour or fraction thereof; actual postage charges; and actual costs, if any charged to the witness by a third person for the retrieval and return of records held by that third person."

And a final point is also covered by §1158:

"Where the records are delivered to the attorney or the attorney's representative for inspection or photocopying at the record custodian's place of business, the only fee for complying with the authorization shall not exceed fifteen dollars ($15), plus actual costs, in any, charged to the record custodian by a third person for retrieval and return of records held offsite by the third person."

So, there you have it, David. Good luck with getting copies of your medical records.

/s/Donald J. DeVries

Almaden Valley

Donald J. DeVries is an attorney practicing law in the Almaden Valley. Past Almaden Times articles since 1986 can be accessed through his web site: www.almadenvalleylawers.com . If you would like him to answer your question in his next Almaden Times column, you can reach him by email at don@almadenvalleylawyers.com, with "Almaden Times" in the subject line, fax at (408)268-6502, telephone at (408)268-9500, or mail at DeVries & Horowtiz, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. Mr. DeVries writes this column to provide you with general information about important legal matters affecting California residents-not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.

Form Wills Online May Create Issues Of Misunderstanding

This week's question:

I keep seeing ads on TV and online about LegalZoom.com and Quicken Will Maker. The Legal Zoom ad talks about wills for $69. That sounds like a pretty good deal to me, but I was wondering what you think about it. It seems to me you can't really go wrong with $69.

/s/Lori L.

Almaden Valley

Dear Lori-

In order to make a long story short, Lori, I do not think very much of any $69 will. I will be happy to explain just why I feel that way. Then you make your own decision.

A will is obviously an important legal document, one of the most important legal documents most consumers have during their lifetime. And if things are not done properly, disastrous results can happen to the consumer.

I guess it comes down to whether you are buying a product or a service when you are talking about wills. You actually need much more that a packet of papers that you fill out and then hope that it works. You as a consumer need general advice from a qualified legal representative and only your own attorney can help you with this.

For example, let's say you buy that will packet for $69. You fill it out exactly as the instructions say to do, with two witnesses and the whole thing. You read all the disclaimers. It even says that it's a good will for California residents. You sign it and the witnesses sign it and you think you are all set to pass on. You, like all of us, eventually do in fact pass on.

Your son then comes in to see me with the form will and explains the situation. The first question is about the house you had in joint tenancy. You were totally unaware that joint tenancy passes by operation of law to the surviving joint tenant and that surviving joint tenant is your daughter and not your son. Your will said one-half of everything to your son and the other half to your daughter. There is nothing I can do about joint tenancy. So, I have to say to your son, sorry, the house goes to your sister. There is nothing I can do.

Or let's say that you sign that $69 dollar will and think that everything will be fine. You die and everything in your name must go through probate court at 191 North First Street, San Jose, Department 15 at present. That is if you live in San Jose. The probate procedure will take 1-2 years in all probability to finish and along the way your family will have thousands of dollars in probate attorney's fees, administrator fees, bond fees, and related items. Does that $69 will still sound like a good deal?

Now, had you invested in a living trust you would have avoided all of the probate fees, lost time, stress, and other problems. In the short run you may have thought that $69 will was a good deal but in the long run I'm not so sure.

And if that is not enough, talk with your CPA or tax advisor about the dangers of capital gains tax with joint tenancy property that is not covered by the will. Don't take my word for it. Your $69 will that you thought was such a bargain may cost you big time in capital gains tax. Perhaps thousands of dollars.

These are just a few examples of why it is so much better for the consumer to invest a little more money in competent legal service. When you are thinking about your will or trust, you are not buying a product but investing in a service for your own best interests. If you think that I am just trying to drum up business for the legal profession, I am sorry you feel that way. But I do need to be honest and tell it like it is. I would of course say the same thing for my family and friends everywhere.

I am not saying that all will or trust packages are bad. Some may be OK, I am not sure. I just know that what is best for you is good legal service. Try to resist the temptation to do it the cheapest way. Strive for excellence in your will or trust planning.

I hope it all works out well for you, Lori. Best wishes in your decision-making.

/s/Donald J. DeVries

Almaden Valley

Donald J. DeVries is an attorney practicing law in the Almaden Valley. Past Almaden Times articles since 1986 can be accessed through his web site: www.almadenvalleylawers.com . If you would like him to answer your question in his next Almaden Times column, you can reach him by email at don@almadenvalleylawyers.com, with "Almaden Times" in the subject line, fax at (408)268-6502, telephone at (408)268-9500, or mail at DeVries & Horowtiz, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. Mr. DeVries writes this column to provide you with general information about important legal matters affecting California residents-not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.