Should Relatives Be Paid To Look After Elderly Family Members?
Caring for a family member is a responsibility many people bear. It can also be a source of income.
So-called “caregiver agreements” — formal contracts under which relatives are hired to care for elderly family members — have been around for a while. But with the economic downturn, more families may be open to entering into such arrangements, some attorneys and caregiver advocates say.
Financial transfers made under a caregiver agreement generally aren’t considered gifts, an important consideration if an elderly person later hopes to qualify for Medicaid, the joint federal/state program that covers nursing-home care. The contracts can also provide assurances to other family members about the cost and quality of care being delivered and reward caregivers for the long hours they put in. The agreements need to be carefully crafted, and there are tax consequences.
To an aging parent, the idea of being cared for by a trusted family member may be appealing. And for those who want to stay in their own homes, or need to because they can’t sell their property to fund entry into a continuing-care retirement community, hiring a relative can be a money-saving strategy.
For adult children who have more time to devote to mom or dad, such arrangements can provide a modest source of income — or at least cover expenses they incur in providing care — at a time when many families are struggling.