Four years ago my father-in-law gifted money to my husband in the amount of $11,000 for three years in a row. Last year while filing for Medicare he found out he should not have done that. My sister-in-law gave the money to my father-in-law to bring his bank account back to the standing it needed to be at and now she says we owe her that money. Do we owe that money to her since it was a gift to us? Are we responsible for his money mismanagement?
3 Answers from Attorneys
If something was a gift, you don't have to give it back. Whether you are willing to help an elderly parent who may have made a mistake, because you are not legally responsible, is another question but you seemed to have answered that.
Medicare? Or do you mean Medicaid? Medicare is for elderly people and they do not request reimbursement. Medicaid has eligibility requirements - people have to spend down their assets and there is a 5-year look back period meaning that Medicaid looks back in time from the date of the application for the prior 5 years. Any gifts made during that period would render the person ineligible.
Obviously, your father in law did not bother to get proper consultation with an elder law attorney before he made these gifts and your sister-in-law compounded this problem.
I would suggest that there be a family discussion and that your father do what he should have done at the outset and seek the advice of competent estate planning counsel to how this can best be remedied at this juncture.
I do not see that your sister-in-law has the right to demand a repayment of funds which she voluntarily gave to your father-in-law. However, if she has a power of attorney over your father-in-law and if it can be shown that he was mentally incompetent when he made the gifts or if there was fraud or undue influence by your husband which caused your father-in-law to make these gifts which he may have been unable to afford, then there is a possibility that your sister-in-law could file suit to recover the funds. However, in such case, the money would be owed to your father-in-law, not the sister-in-law.
Unless it is shown that he was mentally incompetent to make a gift, no one can force you to give back a gift.
However as he found out, Medicaid (I suspect you meant that rather than Medicare) has lookback rules that cause him problems with gifts, and affect his eligibility. You have to decide if you want to help him out even if legally you do not have to.
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