Are there tax/legal implications of buying a car for a family member from estate funds?

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jimcetera Asked May 2023

Are there tax/legal implications of buying a car for a family member from estate funds?

My widowed mother is 80 and lives at home. I have DPOA.

My sister drives 3 hours each way to provide care for her at least once a month (stays with mom for a weekend+ each time).

This is taking a toll on her vehicle (and sanity). Sanity aside, since my sister is doing this to take care of my mom, can I buy her a car for transportation out of the estate funds without running afoul with tax/legal issues?

The estate is well funded, so the cost of a car would not jeopardize my Mom's future needs.

Durable POA Elder Law Paying for Care Power of Attorney (POA)

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score 0 · Answer 1

Why don't you just have the sister submit expenses related to the travel (gas, mileage, wear and tear)? Much simpler than buying a car. Is there an option for her to fly there instead? Or rent a car? Otherwise, maybe buy a car with your Mom's name on the title and leave it to your sister in her Will? Otherwise talk to an elder law or estate planning attorney first.

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score 0 · Answer 2

I think this is something that a lawyer should be asked if Mom has a Dementia.

If Mom is competent to make decisions than she can buy sister a car if she will not need Medicaid within 5 yrs. Otherwise its a gift and will cause a Medicaid Penalty. Mom can always put the car in her name with Sister as the main driver. Thats how we have it with my daughter and she does not live with us.

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Are there tax/legal implications of buying a car for a family member from estate funds?

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