Q. I am the trustee of my parents’ trust. They have now both passed away. My brother helped perform minimal long-distance caregiving for them over the last five years, and he spent about a year and a half toward the end as a live-in caregiver in their home in Virginia Beach.
I was taken aback when, after the funeral for my father, my brother sent me a huge bill for his caregiving services. He said that the bill was based on a verbal agreement he had with my parents before they died that they meant to put in the estate planning documents but never got around to doing. He also said that our parents told him that he could remain in the house for the next three years, until his son graduates from the high school that he started when he and his family moved in with our parents.
My brother sending me a bill to be paid by the estate was the first I heard of any agreement that my parents would compensate him for his caregiving services. The whole time I thought he was doing this out of the goodness of his heart. Does the estate have an obligation to my brother in this situation, since this alleged caregiving agreement was never put in writing? I want to do the right thing, but I don’t know what that is. We also have a sister who doesn’t want to get involved in this squabble, and I’m worried that if I do pay my brother for his caregiving services, then my sister could come back and claim I did the wrong thing. Please help!
When There Are No Valid Documents
Although noble, the act of providing a parent with caregiving services does not give the caregiver child any automatic right to be paid or to receive a larger portion of the parent’s estate.
Many parents may actually intend to have the caregiver own the house or be able to stay in the house for a period of time or receive a larger portion of the estate, but, as your brother described, never get around to creating or updating legally effective estate planning documents.
Below are some of the types of agreements that exist and the validity of each of them in the context of your question, and some suggestions for how to deal with this situation.
Verbal Agreements
It is possible for a parent and a family caregiver to enter into a valid agreement that entitles the caregiver to a portion of the parent’s estate in return for the caregiver’s services. Verbal agreements that are properly formed and acted upon can be legally enforceable. However, if this issue were to be fought in court, the strength of your brother’s claim will depend upon his ability to prove the existence of a verbal contract.
- If your brother feels he entered into a verbal agreement with your parents that is valid, he can file a lawsuit against the estate. But in approximately 20 states (including Virginia, Maryland, and DC), there exists what is generally called a “Dead Man’s Statute,” which prohibits someone from recovering a civil judgment based solely on his own uncorroborated testimony that a deceased person said something. In states that have abolished the Dead Man’s Statute, a dishonest person is able to testify that a deceased person promised something, and it is up to the trier of fact (meaning the judge or the jury) to determine whether the witness is telling the truth. In states with a Dead Man’s Statute, a person claiming the existence of a verbal contract, such as your brother, can’t simply walk into court and prevail just by testifying that “my parents said I’d get paid because I took care of them.” He must provide other evidence that there was an oral contract and generally must be able to provide details as to the specific terms of the verbal contract.
- Where an oral contract involves real estate, the person seeking to prove the existence of the oral contract must also overcome the state’s statute of frauds, which requires that all contracts for the sale of real estate must be in writing. Virginia’s statute of frauds is here. Maryland’s statute of frauds is here. DC’s statute of frauds is here.
Vague Agreements
Statements such as “you won’t have to worry when I’m gone” or “you’ll be taken care of when I’m not around” are too vague to be enforceable. Even if it is proven without any doubt that the parent made these statements, it will still be very difficult for the caregiver to collect.
- One reason is that the caregiver’s opinion of how much money is needed to satisfy these requirements can differ greatly from the parent’s opinion, but only the caregiver is available to express his or her opinion.
- It may also be found that the parent was making similar remarks to others, even those who did not provide personal care, which makes the parent’s intention to enter an agreement by those words seem less likely.
Even with more clear statements such as “you can have my house when I’m gone,” there will still be difficulty in enforcing the agreement unless it’s in writing, due to the statute of frauds mentioned above.
Caregiving Agreements
Often the best way to approach this situation is to draft a caregiver agreement spelling out the types of services to be provided and the amount of time to be devoted to these tasks on a daily basis. Compensation can be monetary payments, free or reduced room and board, or a combination of both. Involve the whole family if possible, so you are able to keep everything open and transparent.
A caregiver agreement is also not something that you should do on your own, or you risk running afoul of Medicaid and IRS rules. Rather, this type of agreement should only be done as part of a comprehensive Asset Protection Plan prepared and supervised by an experienced Elder Law Attorney such as myself. Click here for my blog post on what should be included in a caregiver agreement.
How to Resolve Disputes about Estates and Inheritances
If an inheritance is in question, or if someone feels they should get a larger portion of an inheritance because of their caregiving duties or other reasons, this is a source of potential conflict, as in your situation. These battles frequently occur when estate planning documents are not in place or have become out of date. They can even occur in cases when reasonable estate planning measures have been taken.
You are correct to be worried about your sister claiming that you did the wrong thing by paying your brother for caregiving services that were not subject to a written contract. As the trustee of your parents’ trust, you owe a fiduciary duty to all of the trust beneficiaries, so if you distribute extra money to your brother as compensation that he is claiming is due, your sister could sue you for breaching your fiduciary duty to her as a beneficiary.
Disputes about inheritances can be ideal cases for family mediators. A family mediator’s job is able to analyze these situations fairly and objectively and help families find areas of common ground. Mediation can be the best way to maintain your relationships with family members. Lawsuits are expensive and they can destroy family relationships quickly, and often irrevocably.
A mediator helps family members who are at odds see past their emotions. They can also offer a rational, unbiased opinion of each party’s case and make creative suggestions for settlement. While going to court often leaves one or both parties angry and upset, those who resolve their claims in mediation have a much higher chance of maintaining their original relationships. Visit mediate.com to find a mediator near you.
Plan in Advance to Reduce Family Conflicts
Money inequality among siblings — perceived or otherwise — can introduce even further complexity, affecting relationships. Read today’s Critter Corner for some things you can keep in mind when doing your estate planning documents, in an effort to minimize conflict among your children.
Get Your Estate Planning in Order and Be Sure to Keep It Up-to-Date!
As you can see, it’s important to have your estate planning documents in place and to ensure that they are up-to-date. If you or members of your family have not done your estate planning or have not had it reviewed and updated in the last five years, please contact us to make an appointment for a consultation:
Fairfax Estate Planning: 703-691-1888
Fredericksburg Estate Planning: 540-479-1435
Rockville Estate Planning: 301-519-8041
DC Estate Planning: 202-587-2797
About Evan H Farr, CELA, CAP
