July 15, 2024


Law can do.

Caregiver Agreements – A Creative Solution to the Elder Care Dilemma

Caregiver Agreements – A Creative Solution to the Elder Care Dilemma

Your frail mother is still beloved but she’s 92 and requires home care. Caring for her is a labor of love, but difficult work; even when she smiles. Besides the tedious and unrelenting requirements involved, the “job” of caring for her can be a severe financial strain on the child. Studies have shown that a child serving in the capacity of primary caregiver can lose 75% of potential earnings during every year that the”job” of caring for their parent continues.

What if there existed a creative solution to your elder care dilemma? Caregiver agreements – formal contracts under which relatives are hired to care for elderly family members have been around for decades, but with the current economic downturn, an increasing number of families are choosing this option. This is good news, because caregiver agreements come with a number of benefits, not the least of which is that money given to a son or daughter under a caregiver agreement is not considered by the government to be “a gift” when an elderly person is attempting to qualify for Medi-Cal, Medicaid, or other public benefits. Another plus is psychological: to an aging parent, the idea of being cared for by a trusted family member may be especially meaningful. The contracted arrangements may also ease tensions and resentment among siblings, if for example, one child is rendering the lion’s share of the care.

The caregiver agreement must be in writing and it should be carefully crafted, preferably by an attorney specializing in Elder Law. There are also tax consequences. These agreements are legal contracts; should include details such as the cost of services with each service itemized; and the duties that the caregiver will be performing, spelled out in clear language. Authorizations for medical or financial decision-making should also be clearly described, especially if making medical and physical decisions will be part of the caregiving duties, those powers should be separately set forth in Durable Powers of Attorney for finances and Advance Health Care Directives for medical issues. Perhaps most crucially, the caregiver contract must be executed before the caregiver receives any compensation. If this final stipulation is ignored, a caregiver agreement could lead to a crisis instead of a solution.