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Sunday, August 13, 2006

DRIVEN TO DISTRACTION

As older people's health begins to falter, often their adult children must step in to manage their financial affairs. The more complicated the situation, the more challenging it becomes for multiple siblings to sort things out so that their parents are cared for and so that whatever assets remain after both parents die are distributed fairly and according to the parents' wishes.

As many adult children know firsthand, caring for an ailing parent can be an exhausting, time-consuming endeavor. It's easy to get caught up in the concerns of the moment and not look ahead. As a result, some details of how their parents wanted their assets to be handled may not have been discussed thoroughly enough to avoid confusion or strife among sibling heirs.

If the siblings have a good relationship, such details can be worked through with little acrimony -- "You take the china, I'll take the silver." But when sibling relationships are already strained, minor details can escalate into painful controversies.

A reader from the Southeast wrote to me about the recent death of her father. After a stroke, her father had become very ill and incapacitated. My reader, the middle of his three daughters, became his primary caretaker and also gained power of attorney over his affairs. She began to work with her father to ensure that all of his assets would be distributed equally to his three daughters.

Immediately prior to his stroke, her father had paid $25,000 in cash for a new car.

"My father didn't drive much," my reader writes, "and was obsessive about keeping his car immaculate."

The stroke intervened, however, and he could no longer drive a car. Because she had been charged with putting her father's affairs in order, my reader decided that it would be best to ask her father if she could buy his new car and transfer ownership to her name. He agreed.

When they went to the Division of Motor Vehicles to transfer ownership, however, she was told that they had to list a purchase price, a detail on which they had not settled previously.

On the spot they agreed upon "an obligatory $1," she writes. "It was not discussed again."

It was only after their father's death that the other two siblings learned that the car actually belonged to the middle sister. They were furious, but the probate lawyer told my reader that she did not owe her siblings any money for the car and should simply keep it.

Her younger sister still insists that she stole the car.

"Did I?" my reader asks. "Do I owe them their third of what the resale value of the car would have been at the time?"

The right thing for her to do is to follow the probate lawyer's advice. Her father named his price when they traveled to the DMV to transfer ownership. If he had wanted her to pay him more for the car, he would have told her then or, most likely, before they reached the DMV. Her father may have had any number of reasons for wanting her to have the car. As his primary caretaker, for instance, she needed the car to drive him to doctor's appointments and other destinations.

Regardless of his specific intentions, however, so long as their father was in his right mind and was not unduly influenced in making the decision to sell, the other two sisters have no claim upon a share of the car's value. The sale was made between the father and the middle daughter, and the low agreed-upon price doesn't change that.

It would have saved my reader some grief if her father had told his other daughters that he had sold the car to the middle sister, but that oversight doesn't diminish her rightful place in the driver's seat.

5 comments:

Anonymous said...

Are they kidding? They're willing to lose their sister over money?? What, are they never going to make anymore money in their lifetime? They'll never be able to make another sister, that's for sure! Their names must be Richard and Tom because they sure are Petty! Get it? Richard Petty -- Tom Petty. Okay, that was a stretch, but, come on siblings! Do the right thing, and get your priorities in order!

Scott Manas
Miami, Florida

Anonymous said...

what author of this article left out was that EACH of the sisters received $l50,000 from dear old dad when he died. I know this family.

Anonymous said...

August 13, 2006

Dear Mr. Seglin:

Although I agree with your observations with few exceptions, and believe I gain much from your wisdom, Sunday was an exception.

The daughter's receiving Dad's new car worth $25, 000 for $1 and ignoring that in settling Dad's estate after his quick death may be technically correct but is woefully unfair to her sisters. Choosing a $1 sales price without forethought was, in retrospect, a rash decision. Most states won't permit it.

Yes, being primary caregiver/executor entitles her to extra compensation, but that is usually stated explicitly in Dad's will prelude. Many decline any compensation or accept only modest remuneration.

Only if Dad's worth was very, very great would a $25,000 "extra" not be perceived as unfair among "equals"..................even if they are saints.

If my position is in the minority I'll probably hear no more............but I suspect a clamor will instead result.

--admirer Don

Wendy Hagmaier said...

I bet those sisters weren't that anxious to pitch in for Dad's care.

The burden of caring for a stroke victim can be tremendous. The fact that he could no longer drive suggests the caretaker's duties were probably pretty tough.

I agree, if Dad wanted her to have the car for $1 then she paid for it and it was no longer part of his estate.

I would have suggested, in the interest of transparency, that she should have told her sisters about such a significant transaction when it took place. This would have eliminated the animosity after the fact. It would have also allowed them to make similar requests of their father while he was alive.

Anonymous said...

Dear Mr. Seglin:

I think you missed the boat on the issue of the car and the three sisters. [Orange County Register - Aug. 14) I'd guess that the price of the car reported to the DMV had more to do with avoiding taxes/fees than what the father intended to actually be the price of the car. Was the father's judgment impaired by the stroke? Why didn't he tell his other children about the transaction? For the daughter to use his car to take him to appointments, the car's title didn't need to be changed; they could merely have added her to the insurance as a driver.

The Probate Attorney isn't concerned with ethics, only with what the paperwork reflects. In this case, it looks like the daughter with the car is relying on the DMV paperwork to prove her point.

Pat Shuff
Fullerton, CA