The case of Nice vs. U.S. is an excellent example to remind people why they need to consult with an elder law attorney and other professionals to assist with an elderly person’s finances. In the case of Nice vs. U.S, a trusted son left his mother’s estate with a $500,000 tax bill. In this blog, we explain what can go wrong when one person has the power to make transactions on behalf of an elder without supervision.
Mrs. Nice was married to her husband for more than 60 years. Prior to his death in 2002, Mr. Nice arranged to leave significant assets for his wife’s care. Their son, Chip, was named executor of Mr. Nice’s estate and moved in with his mother. Mrs. Nice was diagnosed with dementia in 2007. Chip allegedly began fraudulent activities once her condition started declining and gained access to her IRAs to use the funds for his own use.
Chip also filed federal income tax returns, which in turn caused Mrs. Nice to execute a fraudulent power of attorney. The federal tax returns treated the IRA distributions as taxable income to Mrs. Nice. As a result, Chip’s mother lost not only the money in her IRA but was also handed a hefty tax bill.
Mrs. Nice’s daughter, Julianne, had to obtain a temporary injunction against Chip to remove him from his mother’s home to regain control of her finances. Julianne filed amended tax returns on behalf of her mother in an attempt to claim refunds for 2006-07 and 2010-2013. The IRS accepted her claim for 2009 but denied the claims for 2006 and 2010-2013. While an appeal for 2009 was accepted, all others were denied.
Lessons Learned from Nice vs. U.S.
There are a number of lessons to take away from this family’s ordeal. But the most important lesson is that leaving a person in charge of an elder’s estate without the supervision of a trustee, estate planning attorney, or a financial planner is asking for trouble.