CAREGIVER CONTRACTS: A GROWING PLANNING TREND FOR FAMILIES

Many people are willing to voluntarily care for a parent or a loved one without any promise of compensation. Even so, a growing number of people are entering into caregiver contracts (also called personal service or personal care agreements) with their family members. Having such a contract has many benefits. It rewards the family member doing the work. It can help alleviate tension between family members by making sure the work is fairly compensated. In addition, it can be a key part of Medicaid planning, helping to spend down savings so that the elder might more easily be able to qualify for Medicaid long-term care coverage, if necessary.
The following are some things to keep in mind when drafting a caregiver contract:
Meet with your attorney.

Caregiver’s duries.

Payment.

Taxes.

Other sources for payment. If the elder does not have enough money to pay his or her caregiver, there may be other sources of payment. A long-term care insurance policy may cover family caregivers, for example. Also, there may be state or federal government programs that compensate family caregivers. Check with your local Agency on Aging to get more information. Keep in mind that there are tax consequences.. The caregiver will have to pay taxes on the income he or she receives. Payment to the caregiver can either be made with a lump-sum payment or in weekly or monthly installments. For Medicaid purposes, it is very important that the pay not be excessive. Excessive pay could be viewed as a gift for Medicaid eligibility purposes. The pay should be similar to that other caregivers in the area are making, or less. To calculate a lump-sum payment, take the monthly rate and multiply it by the elder’s life expectancy. (Not that some states, Georgia for example, do not recognize the ability to create a lump sum contract based on life expectancy.) The contract should set out the cargiver’s duties, which can be anything from driving to the doctor’s appointment and attending doctor’s meetings to grocery shopping to help with paying bills. The length of the term of the contact is usually for the elder’s lifetime, so it is important to coverall possibilities, even if they are not currently needed. The contract can continue even if the elder enters a nursing home, with the caregiver acting as the elder’s advocate to ensure the best possible care. It is important to get your attorney’s help in drafting the contract, especially if qualifying for Medicaid is a goal.Author’s Note:
Elise Lampert is an Estate Planning Attorney in Sherman Oaks handing living trusts, special needs trusts, powers of attorney, conservatorships, probate, probate litigation, and elder abuse matters. You can learn more about her practice at
Elise Lampert is a proud member of the AARP Legal Service Network.


Author’s Note:
Elise Lampert is an Estate Planning Attorney in Sherman Oaks handing Living Trusts, Special Needs Trusts, Powers of Attorney, Conservatorships, Probate, Probate Litigation, and Elder Abuse matters. You can learn more about her practice at
Elise Lampert is a proud member of the AARP Legal Service Network.http://www.ca-estatelawyer.net or call for a free consultation at (818)905-0601 http://www.ca-estatelawyer.net or call for a free consultation at (818)905-0601