Beware of Improvident Gifts

When one believes his or her estate is in jeopardy because of an imminent prospect of placement in a long-term care nursing facility, improvident decisions are often made out of fear, or upon erroneous, but well intentioned advice. The costs of nursing home placement can be devastating to any estate, costing between $60,000 to $90,000 per year. So there is reason for concern,

A recent case in Ohio illustrates the dangers of gifting upon

bad, or no, legal advice. Bertha and Harry Goldman were married and each had children from a previous marriage. The couple transferred a large sum of their money to Mr. Goldman's children. The reason for giving this money was so, they hoped, they would be covered by Medicaid if they needed to enter a nursing home.

After Mrs. Goldman died, her estate filed a claim against the children, arguing that they wrongfully claimed ownership of the money Mr. Goldman gave them. The children argued the money was a gift. The trial court agreed, and the estate appealed, citing a letter from one of the children that stated that if Mr. and Mrs. Goldman wished the return of the money, the children would return it in the form of a gift.

An Ohio appeals court decided that money transferred by the decedent in order to be eligible for Medicaid is a gift that money did not have to be returned to the estate. Estate of Goldman v. Goldman (Ohio, Sept. 20, 2009).

It is probable that the Goldman's never intended to favor one family member over others. In fact, their Wills expressed an intent to share the estate equally among ALL children. But, a gift is a gift under the law. Once made, there must be sufficient evidence to prove the gift was not intended to be permanent.

The Goldman's made their decision to gift a large sum of money out of panic over the prospects of paying for costs of nursing home placement. They did not seek legal counsel to discover whether there was a better way to achieve the goal of protecting their assets, or whether making such a large gift was even necessary.

It is more likely the Goldman's wanted the large sum to be held by the child for safekeeping until their deaths, or until the threat of nursing home placement had been removed. Their desire to "protect" their estate is understandable. Their method was improvident. Legal tools and strategies are available that can avoid results like that found in this case.

Beware of involving your children in holding money for you.