Challenging transfers of real estate to a child based on “Caregiver” agreements.
BUT I WAS TAKING CARE OF DAD!
In recent months I have been asked to become involved in some highly volatile estate disputes which have arisen from so-called “caregiver” agreements, whereby an elderly person transfers real estate to one of their children in exchange for an agreement by the child to care for them. Once the elder dies or becomes too incapacitated to explain the circumstances of the transfer, the other children learn of it and question whether the “transferee” child used undue influence to persuade his/her parent to make the transfer.
Caregiver agreements are in fact a recognized tool in Medicaid planning; that is, attorneys often draft such agreements as a means of getting an elder’s principal residence out of their name so that the house is not an asset that can be reached by states providing Medicaid assistance. However, just because a caregiver agreement has been signed between an elder and a child does not mean that it will escape scrutiny under principles governing undue influence.
For example, consider the plight of an 80-year-old widower who has developed very early stage Alzheimer’s Disease. The gentleman has some difficulty with short-term memory and no longer drives. Three days a week his son drives him to an adult day care center, where he enjoys participating in activities. The son does not live with him and apart from driving his father to adult day care, stops in to “check up” on him 3-5 times a week. The son occasionally cooks meals for dad, monitors his medication, and helps him pay his bills. The son works a full-time job but has not had to reduce his hours in order to take care of his father,
After undertaking this routine for several months, the son requested that dad transfer title to his house to the son’s name. Dad complied with the request and signed over the deed, which the son prepared using a form he obtained from the Internet. The house is valued at $300,000. Some six months after this transfer was made, the father entered a skilled nursing facility when it appeared that his Alzheimer’s had progressed.
The father has two other children, who, upon learning of the transfer, asked their brother to transfer the property back to their father. The brother refused.
Unfortunately this scenario plays itself out quite often.
While Medicaid recognizes the validity of caregiver agreements, the law of undue influence scrutinizes them carefully, and transfers can be voided on several grounds. One of the primary factors to take into account in examining these agreements is the “consideration” that is provided by the child in exchange for receiving property. Above all, the bargain must be fair. In the above scenario the son received a $300,000 house in exchange for agreeing to periodically “check up” on his dad and to drive him regularly to adult day care. In all likelihood, the transfer would be declared void by a judge or jury because the son didn’t give “value” that was equivalent or anywhere close to $300,000. Had the son quit his job or dramatically reduced his hours, he could have made a better argument that the transfer was valid. However, children are generally expected to make sacrifices for their parents and the extent to which the son helped out the father was hardly extraordinary for a child who loves a parent.
Attorney Alan Fanger is a Greater Boston probate attorney concentrating in will contests and other probate matters. Alan serves the entire Greater Boston and Boston metro west region including Arlington, Boston, Braintree, Brookline, Cambridge, Canton, Concord, Dedham, Dover, Framingham, Lexington, Milton, Natick, Needham, Newton, Norwood, Quincy, Sherborn, Sudbury, Waltham, Wayland, Wellesley, and Weston, Massachusetts.