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Dear Quentin,
We live in Texas. My father has lived in my home for 23 years, and I’ve taken care of him. Two years ago, he gifted me $20,000, and a vehicle. The money was put into a savings account, and I told my dad I would not touch it until he passes, in case he needs the money later.
He has no bills, and has a decent checking account that is in his name alone. I pay for everything out of my pocket, including his medications, but out of respect I have not touched the money in the savings account. Both the car and the bank account are under my name alone.
Have we done enough? When my dad passes, can my siblings contest these two gifts?
Anonymous in Texas
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.
Dear Anonymous,
You’re right to ask the question — and you’re better off asking now while your father is still alive. Clearly, your father wants to make sure you don’t have to worry after he’s gone, and you are doing the responsible thing by not touching the money in case there are unexpected medical expenses.
Some 44% of people say they would not have the money for a $1,000 emergency medical expense, according to this poll carried out on behalf of the American Heart Association.
“Surprise medical bills are a major driver of financial anxiety and disruption for families nationwide that are already straining under the weight of an ongoing pandemic,” Mitchell Elkind, professor of neurology and epidemiology at Columbia University said.
From what you say, he is of sound mind and you have a good relationship over a long period of time and a track record of taking care of him — three factors in your favor should one of your siblings decide to contest these gifts.
Another factor in your favor: “The burden of proving that a gift made by a decedent prior to death was made because of fraud, duress, diminished mental capacity and/or undue influence falls upon the party disputing the lifetime gift,” according to the law firm Hanlon, Niemann & Wright.
“When a beneficiary claims entitlement to this gift because of a verbal promise, or action taken by the decedent, or an incapacitated person prior to death, his or her proof must be clear and convincing,” it adds.
As Hanlon, Niemann & Wright puts it: “Tortious Interference with an expected inheritance claim when a logical beneficiary is excluded from receiving all or a portion of the estate or receives a disproportionately small inheritance.”
So what do you do? Your father could put his wishes down on paper in his will, or a gift letter that is witnessed by a third party. You are his caretaker and the $20,000 was transferred into a separate account in your name, thus avoiding any confusion of a joint account.
Your siblings, should they decide to cry foul, would need to prove undue influence and/or if the donor is dependent on the beneficiary for companionship, mobility, care and even affection. Still, taking action now to make your father’s intent crystal clear could help avoid litigation later on.
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