Dear Senior Living Adviser,
I am retired and 75 years old. I would like to invest $50,000 to benefit my caregiver when I die. Please advise me. My savings account is the only thing that I have.
— John Juncture
I’m sure your caretaker will greatly appreciate this wonderful gift as a sincere expression of your gratitude for his or her service to you. That said, these types of gifts raise the concern that nonfamily caregivers have abused their position and exercised undue influence in the gifting decision.
Where you live can influence your ability to make this type of gift. For example, California has laws that, in general, prevent caretakers from receiving an inheritance when the gift is made by an individual deemed to be a “dependent adult” to an individual deemed to be a “care custodian.” Illinois passed a similar law in 2014.
There are exceptions to the general rule that will allow you to make the gift, but you should work with an attorney to accomplish this goal. Regardless of what state you live in, you should work with an attorney practicing in your state to ensure that you can accomplish this goal in your estate plan.
Is the goal to invest $50,000 now and have your caretaker inherit whatever the balance is when you pass, or is the goal to have your caretaker inherit $50,000? You didn’t mention your health, but $50,000 invested today could be worth $100,000 in about 12 years if it earns a 6 percent return.
There are also ways to do this outside of a will. For example, you could accomplish this goal with a payable on death, or POD, account where the caretaker is named as the account beneficiary.
POD accounts are common with checking, savings and brokerage accounts. U.S. savings bonds can also be payable on death to a beneficiary. Even with POD accounts, you should work with an attorney to make sure your intent of gifting the $50,000 to your caregiver can be accomplished in accordance with applicable laws concerning these gifts.
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