We've been following an interesting thread on one of the Idaho State Bar's listservs about the legal ramifications of gifts received through crowdsourcing sites like GoFundMe. The original question was "I represent the estate of a man who died without a Will. He was married with several children. Prior to his death, a GoFundMe account was set up. The person who set up the account stated on the page, 'He and his family could use all the help they can get...At the moment, I'm working toward helping make sure the family's day-to-day expenses are met, but it's likely that he'll be engaged in rehab when he recovers more.' The man subsequently died. After his death, the person who set up the account wrote on the page, 'The funds we've raised and continue to raise will go to help his family get through this.'"
This scenario raises numerous legal issues. Are the funds raised in the GoFundMe account estate assets, or are they a gift to the surviving spouse and children? Do you differentiate between gifts made before the man died versus donations made after the date of death? Gifts are normally separate property, but is there a potential argument that these funds are income and therefore community property? And which state's laws apply? And when the site has vague language like "raising money for so-and-so's family," who is the recipient? The wife? The kids? Does it matter is the kids are minors or adults? Who decides how funds are divided among family members? And if the kids are minors, do guardianships or custodial accounts need to be set up?
And apparently, when funds are distributed, GoFundMe sends the recipient an IRS Form 1099 MISC and leaves it up to the recipient to argue with the IRS to prove it was a gift and not taxable income. (Not cool, GoFundMe, by the way.) Since the organizer of the GoFundMe page has the authority to withdraw funds on the beneficiary's behalf, is a resulting Trust created and what are the Trustee's duties to the beneficiary? Also, apparently, the GoFundMe "service agreement" is pretty murky when it comes to legal issues because, in the words of one of my colleagues, "Most likely, it is all confusing because internet startup companies don't care about these issues - they care about their fees and successful campaigns to generate more fees."