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New Yorkers Planning to Make Gifts Towards the End of their Lives should Document them Thoroughly

{Read in 7 Minutes} As a Trusts and Estates attorney, I routinely represent Executors and Administrators of Estates. Once a Surrogate’s Court has issued Letters to the Estate’s fiduciary, one of the first jobs of the fiduciary is to investigate and figure out what assets the decedent held. Some of them are easy and obvious, like bank accounts, brokerage accounts, retirement accounts, life insurance policies, or tangible personal property in their home. However, sometimes a dispute comes up regarding a transfer that the deceased made shortly before death that the beneficiaries are now arguing about.

Here’s an example of how a scenario like this plays out: 

  • Mom has a valuable article of tangible personal property in her home. Perhaps it is a piece of artwork, or perhaps it is jewelry. Or perhaps it is the beloved family dog.
  • This item is no longer in Mom’s home when she dies.
  • One of Mom’s children comes forward and accuses their sibling of basically going into the apartment, either shortly before or after Mom died, and stealing the item(s), preventing it from being distributed in accordance with the terms of Mom’s Will
  • The other child, now in possession of the item(s), says that Mom gave the item to them in the weeks or months before Mom died, and tells the other siblings about the discussion they had with Mom about why Mom was making the gift(s). 
  • Guess what? Even if it’s true, the siblings don’t believe it, and Mom is no longer around to confirm what actually happened. Here comes the drama…

When one makes a gift of an item, there is often a dispute about whether it was a gift or a loan of the item. When the Surrogate’s Court makes a determination on this fact, they will look to see if the three elements of a gift are met. First, did the donor plan to make a gift? Second, did the donor deliver the item to the recipient? And third, did the recipient accept the gift? You may say, “Well, this shouldn’t be a problem because Mom’s adult child now in possession of the item can simply get on the witness stand and testify about their conversation with Mom.” Right?

WRONG. New York has a rule of evidence known as the “dead man’s statute.” CPLR 4519 No, this is not the newest sequel to the Pirates of the Caribbean film franchise. Rather, it is a rule of evidence that precludes people from testifying about self-interested transactions with a deceased person. This means that this child is unable to testify about the discussion with Mom and is probably going to lose the case unless there is some other extrinsic evidence of this transfer. 

So, if you are planning on making a gift of a valuable item, or if someone is making a gift of a valuable item to you, consider the following: 

  1. Some sort of writing is helpful. It doesn’t need to be a document that is signed and notarized with a wax seal. It can be as simple as an email, text message, or communication from the donor to the recipient confirming that they intend to part with ownership of this item and that they’ve given it to the recipient and that they want them to have it. This is incredibly persuasive in a Court proceeding. Paperwork is your friend.

Note — It doesn’t even have to be written. Consider this: Mom and adult child had a discussion about making the gift. Supposing one of them, with the consent of the other, took out their iPhone and turned on the video camera and recorded the conversation. That’s something that is admissible to Courts about what happened because it’s not simply one-sided testimony. The video speaks for itself and the jury will be able to draw their own conclusions.

  1. Witnesses — Here, I’m not talking about the witnesses that one would use when signing a Will, I’m just talking about literal eyewitnesses. Somebody who can observe the conversation and testify later about what happened. Just because Mom’s adult child can testify about it, doesn’t mean that somebody else can’t testify.

Who are some good candidates for this? People who have a real relationship with Mom, who can testify that Mom was in her right mind. She wasn’t under any sort of undue influence, and detail exactly what Mom said. This person might be another family member. It might be a co-worker or an employee, or it might even be Mom’s attorney. Any of these people are great. However, you might want to consider having more than one person, and ideally, one who is younger than the donor because if they die, they also cannot testify. (To my knowledge, the Surrogate’s Court has yet to hold a séance!)

  1. Tell the other potential beneficiaries. One of the best things that Mom can do to make sure that her other kids (and the Court) respect her wishes is telling her other adult children that she is making the gift. This means that the adult children can ask her about the gift directly and question her about it if she wants. This also means that after Mom dies, the other children likely will not bring a turnover proceeding in the Surrogate’s Court to try to recover the item. They are no longer suspicious because now they’ve heard it directly from Mom.

This is good advice whenever someone is making a gift, but also, if they are writing a Will disinheriting one or more close family members

So, much like a lot of things in the Trusts and Estates world, a little bit of careful planning goes a long way. After all, what good is having an estate plan if it doesn’t effectively achieve a person’s wishes?

For more information on this topic, please contact me.