Giving your wife a vacuum when she didn’t ask for one is a bad gift. So is giving anyone a sweater that lights up and plays Jingle Bells. What’s even worse is giving someone a house or money if the gift is not given the right way, because a gift like this can cause far worse headaches than standing in line to return the proverbial ugly sweater.
Without the appropriate documentation, both the gift-giver and recipient are at risk of pitfalls that may severely impact their living situations and financial stability. Here are a few examples of such pitfalls and how they could have been avoided.
1. Home wreckers
The gift
A dad wanted to give a nice gift to his daughter, so he gifted a house to her and her husband, who was a Navy dentist.
The pitfall
The daughter and her husband ended up taking out a line of credit on their house. Shortly after, the husband drained the line of credit, cheated on his wife, and then left her. She was left with a house with no equity, and the entire gift was blown in five years.
Avoiding the pitfall
The dad should have placed the house in a protective trust so that the daughter and her husband didn’t have access to all of the equity at once. That additional step could have helped to make sure that the gift was actually there when his daughter needed it.
2. Losing long-term care benefits
The gift
Like many parents, this mother and father wanted to make sure their adult child had everything she needed. And so, they made a promise to gift her their home on the condition she and her family moved in with them. When the time was right, they would formally gift her the house.
The pitfall
After the daughter and her family moved in, her mother developed Alzheimer’s and the need for long-term care seemed inevitable. It was then that the house was formally gifted to the daughter. Meanwhile, her father did his best to take care of her mother at home, but the task overwhelmed him. Soon, he fell ill with pneumonia and was no longer able to provide the necessary care. As the daughter and her family continued to care for mom, the burden caused the daughter to get sick and things nearly ended in divorce for the daughter. After that scare, mom had to move into a nursing home. Long-term care is not cheap, and often, public benefits like Medicaid are necessary to help cover a family’s cost. But because of the way the house was gifted to the daughter, Medicaid would not support the mother’s care.
Avoiding the pitfall
Medicaid requires documentation as to why a gift is made and certain conditions surrounding the family’s situation. This family did not provide that information. One major detail that would have been included in that documentation is that the daughter provided a nursing home level of care for her mother for about two years before mom had to be moved to a nursing home. Had this been documented properly, mom’s long-term care benefits would have remained intact. Recently, because of State of Illinois budget shortfalls, its Medicaid agency looks at these gifts with even more scrutiny and is even flatly denying any gifts.
Even if your family doesn’t have this situation, you should still seek the skills of an elder law attorney to make sure your gift is documented thoroughly and correctly, so you don’t lose out on benefits.
3. Too close for comfort
The gift
Close, trusting relationships can form between the elderly and a younger relative, friend, or caregiver. Sometimes, this younger, trusted person can become influential enough to convince the older person to make a sizeable financial gift to them.
The pitfall
Unsurprisingly, this can cause concern among other members of the aging or dying person’s family and may lead to them accusing the trusted confidant of undue influence.
Undue influence occurs when the older person is isolated from others or when the trusted person uses their influence to take advantage of the elder’s diminished cognizance. If a court finds that undue influence was a factor in the gift-giving, the gift will be revoked.
Avoiding the pitfall
If you are a trusted loved one or caregiver of an elderly person who wants to give you a gift, or if you want to make a gift to someone you trust, there are a variety of steps that must be taken to prove that there was no undue influence. It can get complicated, but that’s where Generation Law attorneys can help. We’ll make sure the right evidence is presented so the gift remains with the intended person, or that the money is returned to the family if undue influence did occur.
Keeping in the spirit of the season, think of our attorneys as your gift-giving elves. We’ll make sure your gift gets given the right way, so you and your loved ones can enjoy both giving and receiving.
