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Employ Your Kids To Take Care Of You?… Personal-Care Agreements

tim-williams1Issue 35.10

A growing number of families are setting up caregiver contracts, in which adult children are hired to take care of an elderly or disabled family member.  These arrangements, which are called personal-service or personal-care agreements, can help reduce the size of a parent’s estate and help improve their chances of becoming eligible for long-term-care coverage under Medicaid.  They can also minimize battles between siblings and other family members.  For many other families, the contracts simply help reward the significant amounts of time, effort and money that family members often spend watching over and taking care of an elderly relative.

For an aging parent who wants to age in place (stay in his/her own home while receiving care) the idea of being cared for by a trusted family member can be very appealing.  Usually the Caregiver Agreement compensates the caregiver at a lower rate than an in-home provider, meaning hiring a relative can also be a money-saving strategy. 

But, still, there’s a lot of stigma to overcome when recommending the idea to families.  The main reason: people are uncomfortable with the idea that you are paying your kids.   Families complain “it doesn’t feel right to put a dollar figure on service you are doing for your mom.” Nevertheless, there are sound financial reasons for do so, especially if a costly Nursing Home stay is in the future, and Medicaid eligibility is the goal.

Medicaid penalizes the elderly for making outright gifts to family members.  However, if set up properly, caregiver contracts, and payments made under them, shouldn’t be considered gifts to children because the elder is receiving a real service in return.   And better yet, if the elder doesn’t have the money to pay the family member at the time of service, if properly structured and documented, the costs can be accrued and paid in a lump sum at the time the Medicaid application is filed.  

Caregiver Agreements must be arms-length contracts, completed in advance, detailing the services provided and reasonable compensation for the service.  The contracts need to specify duties the caregiver will be expected to perform such as running errands, paying bills, cooking, serving meals, house cleaning, shopping, supervising medication use, etc.   You can’t back date a Caregiver Agreement for past services, so setting one up as early as possible, gives elders the greatest length of time to transfer some of their estate to their loved ones, rather than spending it down to qualify for Medicaid.

To find out if a Caregiver Agreement is right for you or a loved one, please call me to schedule a free consultation.

For more information Timothy Williams can be reached at 435-673-9180.

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