MARCH 15, 2004 VOLUME 11, NUMBER 37
Louise Friar worried about what would happen to her modest estate if she ever needed to go into a nursing home. She owned her home, and she had two certificates of deposit that represented her life savings. Whether she got the idea from friends, professional advisors, her own analysis, or conversations with her two sons, she though she had come up with a surefire way to protect her assets from long-term care costs.
First Ms. Friar went to her bank, where she gave instructions that each of her two CDs was to be transferred into the name of one of her sons—but that the income payments should continue to be paid into her checking account. Then she visited her attorney and directed him to prepare a deed transferring the house to her sons, reserving a life estate.
By taking these two steps, Ms. Friar was assured that she would continue to have the use of her major assets for her life, but that her sons would automatically receive them on her death. After a while, however, she had second thoughts about the wisdom of her actions. She had, after all, given up control over all her assets. She had not just made them payable to her sons on her death, but had actually given them the CDs and an interest in her home.
Ms. Friar asked her sons to return her assets. After some discussion one son, Darrell, agreed and transferred property back to Ms. Friar. Her other son, J.D., refused to cooperate. So Ms. Friar sued J.D., alleging that he had coerced her into making the transfers, and that he had defrauded her.
A Georgia judge agreed with Ms. Friar and ordered J.D. to return her property even before a full hearing on her allegations. J.D. appealed, and the Georgia Court of Appeals reversed that order.
The appellate court did not decide that Ms. Friar could not get her property back, but it did decide that the issue was not as clear as the lower court had thought. The case was sent back to the trial court for a full hearing to determine whether J.D. Friar really had coerced or defrauded his mother. Friar v. Friar, Feb. 18, 2004.
Ms. Friar’s story is not unusual. Seniors frequently transfer assets to their children in order to “protect” them from nursing home costs. Sometimes those transfers actually result in protection, but sometimes they simply complicate the family situation. When transfers are made, whether they are well-advised or not, they are usually irrevocable. Ms. Friar will recover her assets only if she can show fraud or coercion by her son—and she will have paid significant legal expenses. Of course, she also will have had to sue her own son in order to undo the transfers.