You’ve taken care of your elderly mother for years – taking her to doctor’s appointments, grocery shopping, even helping her around the house – just making sure she has a good quality of life. As a thank you, your mother has gifted you money and a car that she no longer uses.
Seems reasonable, right? Under the law, it may not be, and it could cost you.
What is a confidential relationship?
Legally, taking care of an elderly or vulnerable person can create a “confidential relationship,” which exists between two people when one enjoys the confidence and trust of the other, and purports to act on the trusting party’s behalf, without any self-interest. It is similar to the concept of a fiduciary, who, by law, must act solely in a beneficiary’s best interest without regard to their personal needs.
Practically speaking, if you are taking your elderly parent to the doctor, helping with their medicine, or even simply paying their bills every month, to the extent that the recipient comes to rely on these services, you have likely entered a confidential relationship.
While a court will look at the age, mental condition, education, and business experience of the vulnerable party, a gift given in the context of a deteriorating memory and/or a physical disability is the most persuasive evidence that a dominant party has taken advantage of a vulnerable party. This matters because you may be required to return a gift given to you during a confidential relationship unless you can prove that it was equitable under the circumstances. That may not be as easy as it sounds, if, for example, the gift is not challenged until the vulnerable party has died.
How could this play out in real life?
Back to mom. Imagine that she is widowed and still lives in the home where you grew up. She is 82 with several medical conditions, and has trouble going up and down the stairs. Mom is seeing several doctors, and you have started missing work to take her to medical appointments. Her memory is not great and you spend several hours a week looking in on her, helping her with her prescriptions, and buying her groceries.
You have a sister, but she lives in California and only comes to visit a few times a year. Mom understands the sacrifices that you are making and decides to give you money for the down payment on a new house, which you accept because of the imposition mom’s care has created.
When mom dies, your sister believes that you took advantage of her, claiming it’s unfair that you received a large monetary gift for simply taking mom shopping from time to time. You could end up in nasty litigation having to defend receiving a large sum of money from someone with memory problems. You may even have to return the money.
How can you prevent potential issues?
There are perfectly legitimate reasons to give and receive gifts, even large ones, during a loved one’s elder years. And the best way to avoid a situation like this, which happens more than you think, is to see a lawyer and make sure that all gifts are documented and everything is done transparently. While there is no guarantee that this will eliminate hurt feelings and family tension, it will go a long way to reducing your legal risk in a public dispute.
Bill Goldberg represents beneficiaries, trustees, and personal representatives in estate litigation involving their rights and obligations under trusts and wills, claims of undue influence, and lack of capacity. For more information, contact him at 301-907-2813 or [email protected].