By Craig Watson
Don’t let this financial scenario happen to you…Paula was an 80-year-old woman in average health. Paula had a daughter named Jackie who was divorced, unemployed, and needed a place to live while she sorted out her life. At her mother’s invitation, Jackie moved back home. Paula’s health gradually declined as she aged. As she needed more and more care, Jackie lovingly cared for Paula’s every need. Paula’s many health problems eventually left her unable to walk, drive, bathe, or cook without assistance. She became completely dependent on Jackie for all of her care. Paula was able to stay in her home and avoid moving to a nursing home solely because of the presence of Jackie.
Jackie never got a break: no vacations, no holidays, and was always on call. Paula’s needs were unending. Elder care/sitter companies are required by state regulations to limit their caregivers to shifts of no more than 12 hours. Although Jackie had several siblings, they never helped care for their mother. Jackie’s siblings disliked her. They believed she lived off her mother and took advantage of her. One time Jackie asked her sister to come keep her mother for a few days so she could get a break, but her sister refused. Jackie provided this level of 24 hour care for her mother for several years.
Paula appreciated how hard Jackie worked and decided to give her house to Jackie. According to the appraisal district, the market value of her house was $300,000. Instead of consulting with an elder law attorney, Jackie decided to save money and printed off a deed form she found on the internet. She took her mother to a bank and had a notary sign the deed.
A few years later, Jackie suffered health problems and had to be hospitalized. This forced Paula’s other children to take turns staying with her to provide care. While they were living in the house, they discovered that Paula had given the house to Jackie. They became very angry at Jackie. With age, Paula had become weaker and was susceptible to the influence of her strong-willed children. They quickly tired of providing the daily high level of care that she required, so they convinced her to move into an assisted living facility. Even though Paula had enough money to pay for the assisted living fees for three years, her other children convinced Paula to sue Jackie to take the house back, ostensibly to raise money to pay for the assisted living center charges. They also convinced her to change her will to exclude Jackie. They found a “no fee unless successful” personal injury attorney who was more than willing to sue Jackie to get the house back for a 40% contingent fee. Paula was very feeble and simply wanted to be left alone, so she agreed to sue Jackie. Not long after suit was filed, Paula died. Jackie had no money so she couldn’t find an attorney to defend her. Despite caring diligently for her mother for the past several years, she faced the prospect of losing the house. She was devastated.
Under Texas law, Jackie was considered an informal fiduciary for Paula. A fiduciary relationship is one where the beneficiary of the relationship has placed trust and confidence in the fiduciary. Normally, one must be formally appointed as Executor, Power of Attorney, or Trustee to be considered a fiduciary. However, even though Paula didn’t have a Power of Attorney, the fact that Paula depended on Jackie for her care was enough to qualify Jackie as an informal fiduciary. The law prohibits formal fiduciaries from using the Principal’s funds to benefit themselves. With respect to Paula’s gift of her house to Jackie, as an informal fiduciary, Jackie was required to prove that the transaction was fair. Local elder care companies charge $19 per hour for round the clock care. They provide a sitter to assist with cooking, bathing, toileting, etc. That adds up to $456 per day, $12,768 per month and $166,440 per year. Luckily, Jackie was able to find an elder law attorney to defend her in court. He was able to prove that the transaction was fair.
What could Jackie have done to prevent the expensive, terrifying, stressful court battle? She should have taken her mother to consult with an elder law attorney to advise her and document the transaction. This could have greatly decreased the likelihood of an expensive lawsuit. It is always cheaper to stay out of court as opposed to winning in court.
Craig Watson’s law practice focuses on Estate Planning, Probate, Guardianship and Elder Law. He is Board Certified in Elder Law by the National Elder Law Foundation as recognized by the Texas Board of Legal Specialization. Formerly a CPA, he has 25 years of experience. Call 903-813-8500 or go to Craigwatsonlaw.com.
