Caregiver Agreement: The Reason
I’ve had many clients come to me who have been taking care of mom or dad, sometimes for years, and been paying themselves from mom or dad’s money. There’s nothing wrong with this, often mom or dad is the one who insisted on paying caregiver child. The problem comes if the parent’s needs increase and the child can’t do everything by themselves anymore.
Caregiver Agreement: Protection
If a parent ends up needing skilled nursing care and needs the government to pay for it, the government can ask for the most recent 5 years of bank statements. So they see these transfers going out every month to child and they think it’s a gift, but it wasn’t—it was payment for caregiving (which is legally allowed). But the government almost always insists they need something in writing that these payments were for services—not gifts. I have had more than 1 client face a penalty period (where the government won’t pay for long term care) because the child has no written proof that these payments were for caregiving services.
So, if you are providing care for a friend or family member, put something in writing that you are entitled to compensation. Even if you don’t take the compensation right now, it’s best to just put something in writing so it doesn’t come back to bite you down the road. If you have questions about this topic or any other topic, our free workshop How to Protect Your Stuff in Three Easy Steps is a great place to start. Contact our office to enroll in our next upcoming Workshop.