In the Estate of Emilia W. Olivo, TC Memo 2011-163, the tax court held that an estate could not deduct as a claim against the estate a large amount supposedly owed by the decedent to her son for caretaking services the son rendered to the decedent for many years. The claim was based on an alleged agreement that had not been reduced to writing. The only evidence was the son's testimony which the court found to be "improbable, self-serving, and uncorroborated."
The son, Mr. Olivo, cared for his parents from 1994 until his mother's death in 2003 (his father died in 1995). He was unable to continue his law practice because of the need to care for his mother. His siblings asked him to continue caring for their mother. When she died, Mr. Olivo claimed the estate owed him $1,240,000 for the care he provided. Mr. Olivo claimed that his mother agreed to pay him $200 per day for his caretaking and he suggested she defer payment until her death. But this agreement was never reduced to writing. The Tax Court denied the deduction.
This is a cautionary tale that acts as a reminder that agreements between family members should be reduced to writing if they are to be enforced.