My next door neighbor recently had his mother pass away.  His mother lived a long, happy life, and passed away at the age of 102!  102 years is a good, long life to me.  Apparently she was a woman of many talents, and long life appears to be one of those talents!  My neighbor tells me that she was a tough farm woman who was not going to give up on life easily, and she took care of the farm for most of her life.  I never met the woman, but I do enjoy my neighbor, so the main thing I know about this woman is that she raised a great son, and that is enough to make her an amazing person in my book.

My neighbor’s mother seemed to be able to take care of herself for most of her life, though my neighbor did go visit her many times over the past few years to check in with her and make sure she was OK.  For most of the clients I have who are approaching the age of 102, occasional visits are not enough.  As my clients age, they usually can become less able to do everything themselves.  As the client ages, they may become weaker, more frail, or lose their ability to make good decisions if they are affected by dementia, Alzheimer’s disease, or other mental ailments.  In this type of situation, my elderly clients are often in need of a caregiver to supplement their ability to take care of themselves.

 

Family Members Often Take Over Caregiving Duties

Often, I observe that a child or other family member steps into the role of being a caregiver.  Oftentimes a child who becomes a caregiver will quit a job, or stop doing other things in life to care for an aging parent.  Stepping up to take care of an aging parent is certainly a noble endeavor, but it can have negative financial consequences for the caregiver.  If the caregiver is not working, especially during high earning years, the caregiver may be sacrificing their own financial future to care for a parent.

Many of the aging clients I have are not so rich that they can just pay a child for taking care of them.  Instead, the child will give care out of the goodness of their heart, or out of familial fealty or support.  Although such altruistic motives are noble and great, many parents want to reward the child who gives care for doing so, and ask how that is possible if they have no assets available to pay the caregiver?

A lot of the time, an aging parent has an asset like a house, but doesn’t have many liquid or other disposable assets to use to pay a caregiver.  The elderly parent is usually living in the house, and cannot simply access the value of the house while alive.  In this type of case, the elderly parent can direct that a larger portion of ownership of the house could be sent to the caregiving child, or a larger portion of the proceeds from the sale of the house could be given to the children.  In that way, the parent can almost be paying deferred compensation to the caregiving child, and help offset the lost wages or earnings the child endured while giving care.

Such an arrangement could help the caregiving child be less behind from lost earnings.  A paid caregiver doesn’t necessarily need extra given to them, as the paid caregiver has been compensated, but a family caregiver can be compensated post death of the elderly parent if no assets existed to pay the family member or child while the aging parent was alive.

 

Family Members Can Be Paid

It is also possible to pay family members who are caring for an aging parent.  Some programs, like Medicaid, have their default assumption that family caregiving is out of familial duty and that any payments are gifts to the caregiving child or other family member.  Gifts can impact Medicaid eligibility, so if an aging parent may need to start having Medicaid pay for care and life, then the payments to a family member caregiver need to be properly set up and characterized as payments, not a gift.  Payments to family members should be set up under the Medicaid personal services contract / family caregiver agreement rules that characterize payments to a family member as income, not gifts, if someone is trying to spend down assets to qualify for Medicaid.  And, such caregiving contracts need to be set up in writing and in advance of payments to a caregiving child or other family member to be effective.  It is never fun to try and deal with Medicaid and try to characterize payments as income for services rendered after the payments are made, so planning ahead for Medicaid assistance is vital, if that is part of what may need to happen for an aging parent.  There are people and businesses who specialize in Medicaid type of planning, and if Medicaid is potentially part of the plan to pay for care, I do strongly recommend consulting with someone who does Medicaid planning.

 

Planning For Paying a Caregiver Should be Thought Out

If an aging parent doesn’t have a lot of assets to pay a family caregiver while the aging parent is alive, but wants to leave extra assets to a family caregiver in a will or trust, then a quick explanation of the extra payment can be put into the will or trust.  This can help avoid hurt feelings, disputes, and challenges to a will or trust.

Most children think they will, or at least should, be given an equal portion in a will or trust as all of their siblings.  When an uneven amount is given, the sibling getting less may feel slighted and likely think they deserve more, and the sibling getting less may be more inclined to challenge a will or trust in court to try and get more.  I counsel agent parents who want to give more to one child over another that they should probably explain the uneven distribution.  Including a sentence like, “Because my child has cared for me, and I was not able to pay them while I was alive, I am giving them extra to  compensate them for caregiving” could certainly help the child receiving less to understand the reasons and be less likely to sue or otherwise challenge a will or trust.  Certainly not all challenges or disputes can be avoided, but you can try to minimize the challenges by explaining why a bigger reward is being given to your caregiver.

 

Not All Caregiving Needs to Be Compensated

Of course, not all family caregivers need, or want to be compensated for their time and work.  Many of my clients want to care for their parents and don’t feel right taking compensation, as they give care out of love for their family.  I can certainly understand that position and admire it.  However, if a caregiver does need or want to be compensated, then the caregiver can be compensated, and the proper provisions included in a will or trust to allow for the proper compensation.  If you would like to discuss how to set up caregiver compensation in your own situation, please click the button below to talk to an attorney who can help.