Caregiver agreements are formal contracts under which relatives are hired to care for elderly family members. Although these types of contracts are not new, families may be open to entering into a family care agreement given our current economic downturn. Because it can impact the size of an estate, the caregiver agreement has been used as an estate planning tool.
In today’s economy, a caregiver agreement can provide the opportunity to save resources and keep resources within a family. A written caregiver agreement is a good idea for family members wanting to preserve harmony among family members and at the same time stay informed about the care delivery and cost of care to an elder.
Here is a common family situation: Jenny and Ken are siblings who want to make sure that their mother is receiving appropriate care and attention at home. Ken lives close to his mother’s home and can budget time to provide regular care. Jenny lives in another state and is busy with a career that prevents her from visiting her mother regularly. A written caregiver agreement providing compensation to Ken for the hours he provides care will recognize the work that Ken is doing and prevent misunderstandings over the extent of Ken’s responsibilities.
For an aging parent who does not want to leave their home, the opportunity to be cared for by a trusted family member is an attractive solution. It can also be a money-saving strategy for an aging parent who is unable to sell property or other assets to fund entry into a continuing care retirement community. For an adult child who has the time and ability, caring for an aging parent may provide a modest income at a time when many families are struggling with finances. The caregiver agreement between the elder and the caregiver should cover the following:
- Caregiver’s tasks and duties including meal preparation, housekeeping, personal care needs, transportation, companionship.
- Times and days the caregiver performs the service.
- Caregiver’s responsibilities for the supervision of other caregivers.
- Reimbursement for expenses paid for by the caregiver.
- Elder’s role as an employer who pays wages.
- Wages paid to the caregiver, comparable to local home care
The caregiver agreement allows you to track and forecast a senior loved one’s finances. Without an agreement, the finances of the loved one and those of the caregiver can be comingled and it may become difficult to determine who paid for what. The agreement allows money matters to be transparent. When a caregiver agreement is properly established, transfers of money are not considered gifts, but rather are treated as compensation since they are payments made in return for a service. However, the caregiver is required to pay income taxes on the compensation received.
A caregiver agreement can help your family to:
- Recognize and reward time and effort of family members caring for an aging loved one or parent.
- Provide an organized and structured schedule of care.
- Prevent arguments or misunderstandings among family members.
MacElree Harvey’s Family Law practice can provide you with samples of caregiver agreements to meet the needs of your particular family situations. Our Family Law practice has lawyers located in all three of the MacElree Harvey offices.
The following article is informational only and not intended as legal advice. Speak with a licensed attorney about your own specific situation. © Copyright 2011 MacElree Harvey, Ltd. All rights reserved.
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