Caregiver Agreements can and do work
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I came across an article "Protecting Your Future: Caregiver agreement protects assets" that reminded me how a simple, but effective, caregiver agreement can compensate a child who is assisting a parent, and perhaps lead to future family harmony.
The article give a good overview of how a caregiver agreement can be effective:
An example: Mom depends on daughter Janice for her care. If Mom gifts $100,000 to Janice, then goes into a nursing home in the next five years and applies for Medicaid, the gift to Janice will result in about a nine-month penalty period. Janice will have to give the $100,000 back to Mom to pay nursing home costs during the penalty period, or Mom will have to use other resources to pay.
Instead, using a caregiver agreement, Mom pays Janice $2,500 per month for caregiving services. If Mom moves to the nursing home in the next five years, the payments to Janice are compensation, not gifts.
A couple of details. The agreement must be in writing and entered into before the compensated services are rendered (you can't say "Mom, give me $30,000 for care I gave you last year." Also, since the caregiver child is getting "paid" they must report the income for tax purposes. Also, the payment must be commercially reasonable to services a third party would provide - both in terms of hourly wage and fair room and board if the parent is living with you.
Since caregiver agreements transfer money over a period of time, they are better entered into sooner rather than later.
If the child feels "funny" about taking money to care for mom and dad, a couple of points to consider:
- If someone else were caring for them/giving room and board, that person would get paid
- The child can save the money they have been paid to provide additional resources to mom and dad, or divide among their siblings if that seems "fair" to the family
- If mom and dad need to apply for Medicaid, money that the child could have been paid for legitimately caring for their parents will instead be paid to the nursing home as part of a Medicaid spend down.
Clearly your parents can be dependent on you (an issue beyond the scope of any article) , but can you claim them as dependents and get a tax deduction?
The Wall Street Journal recently ran "
I already tweeted this great post from South Carolina Nursing Home Blog, but it has been sticking with me. All seniors have done is work hard their whole lives, age, and not have planned to need to spend $10,000 a month on the care they need to stay alive - and for that they get institutionalized in a nursing home. Criminals steal, maim and murder and they get 3 square and rights as inmates that are closely monitored and enforced. Nothing is so simple just to compare the two situations on their faces, but the question ".jpg)
Are reverse mortgages great for every senior? No. However, they can be a very useful tool to many seniors that is often overlooked as the senior and their family have read and heard stories about bad experiences with reverse mortgages. .jpg)
Over the weekend the Wall Street Journal ran 
The estate tax changes in 2010 are not only playing havoc with estate plans, but asset protection planning for those concerned with long term care costs as well. I came across this informative article "
US News and World Reports.jpg)
The caregiver cares for the ill and needy, but who cares for the caregiver? 
A basic question in determining Medicaid eligibility is "Did you make a gift in the past 5 years?" If the answer is "Yes" a penalty period will be assessed before a person qualified for Medicaid.
Over the weekend the Wall Street journal ran an article on elder law planning entitled "
The most important Elder Law decisions from around the country are summarized here. Each case is relevant to New Jersey as elder law often involves Medicaid, which is subject to "supposedly uniform" federal regulation as jointly funded and administered by the federal and state governments. As a result, treatment of a question about Medicaid in one state may eventually become the law of the land in all states. 
I often have spouses or children expressing concern about a loved one driving. This stems from a real fear that as a person gets older, suffers from dementia, or is being treated for a medical condition, their reflexes and judgment may slow. While these conditions are difficult on their own, they can lead to tragedy if the person suffering from reduced abilities is behind the wheel of a car. They could damage property, or more importantly, injure or kill themselves or others.
In a companion piece to "
Money is always a touchy subject - particularly when you are an adult child trying to see if your adult parents need help. I was featured in an article in Money Magazine this month about this very subject: "
In response to my post 
A new ruling out of New York raises questions about the efficacy of a Family Care Contract where a lump sum payment is made in return for promising a lifetime a care services. Medicaid may find the Care Contract to really be a disguised gift and apply a penalty period. 
