Most people are willing to care for a parent or loved one without any promise of compensation. Not that this unconditional love should go unrecognized, but what if the caregiver could be fairly compensated and the recipient of the care could be spending down his or her assets in a permissible way so that the elder may be able to qualify for Medicaid long-term care coverage in the future.
This growing trend in Medicaid planning acknowledges that a caregiver has most likely compromised his or her ability to make a living to provide care for his or her parent or loved one. Also, having the contract in place usually alleviates concerns amongst family members as the duties and responsibilities of the caregiver as listed in painstaking detail.
Before creating a caregiver contract, one should consider the following:
· Seeking the services of an experienced elder law attorney, especially if future qualification for Medicaid is the ultimate goal.
· What are the Caregiving Duties? The agreement should list with specificity any and all services to be provided either now or in the future (i.e., transportation to doctor’s appointments, cleaning services, laundry, etc.).
· How will I be paid? Make sure the compensation is reasonable and in accord with what professionals in the field are charging. For example, someone with a medical background who can provide medical care can probably charge more than someone without a medical background who is merely providing custodial care.
· What are the tax consequences? The caregiver must report payment under the agreement on his or her tax return.
As I always like to say, “Plan in Advance to give your loved ones a chance or procrastinate and leave it up to the state!”