What National Relaxation Day Can Teach Us About Estate Planning
August 15, 2018

Elder LawToday is National Relaxation Day.  What a shame that we need to remind ourselves to relax!

Often when I meet with families about estate planning and elder law, one of the concerns I raise is how the kids and other caregivers are holding up.  Being a caregiver is a burden, one that we happily take on out of love and affection, but a burden nonetheless.

Caregivers expend time, energy and money in the process.  Use of a caregiver agreement can provide protection to the caregiver and the parent receiving the assistance.

Many times when we start to discuss the need for outside caregivers or skilled nursing, we need to spend down assets for the parent to qualify for Medicaid.  Children will say “just pay me $35 for each day for the 3 years I took care of Mom and that gets rid of her money.”  Unfortunately, retroactive payments are considered gifts and it does not help the parent to qualify for government benefits.

The better approach is to create a Personal Care Agreement at the start of the caregiving process.  The agreement serves three purposes.    First, it establishes what services will be provided.  Second, it establishes the rate of compensation.  Third, it limits everyone’s expectations in the process.

For example, the agreement might list what the caregiver is going to do such as no-medical care, bathing, meal preparation, light housekeeping, and assistance with activities of daily living.  It might also provide for transportation.  In many agreements, we set different rates for different services.  Perhaps for transportation, the hourly rate is lower but there is a mileage reimbursement rate or trip rate.  Transportation may be limited to local medical appointments, grocery shopping, and hair care.  It may also provide that the caregiver is to be reimbursed for any advances made such as for co-pays, prescriptions, grocery purchases and the like.

Having the agreement in place avoids the dispute when the parent needs or wants to go see another child, sibling or another family member who is 10 hours away.  There is no “assumption” that such travel is required to be provided.  The caregiver could choose to say no without being in violation of the agreement.

A chart of the fees with a comparison column to other local providers to establish the fairness of the rates being used must be included in the agreement.  The agreement must be signed and witnessed before a Notary Public.

Compensation as a caregiver would be considered as earned income and must be reported for income tax purposes.  The parent may also have tax reporting obligations.  We recommend that both parties consult with their tax expert before the agreement is finalized.

Consider using a caregiver agreement as it will help everyone in the process “relax”.

If you are interested in learning more, please contact Vicky Ann Trimmer, Esquire at Daley Zucker Meilton & Miner, LLC at (717) 724-9821.  


Contact Us