Steps to a create a Family Caregiving Agreement

More than 65 million Americans provide more than $350 billion a year in uncompensated care to friends and family members. Now, with older populations growing rapidly, the need for caregiving is rising, just as a brutal economic downturn is making money increasingly tight. In response, some family caregivers are being paid for their work, usually by an aging parent. And while authoritative numbers aren't available, David Wingate, elder care attorney states” they're seeing more families creating caregiver agreements.”

However, he cautions that agreements need to be extensively documented and must stand up as arm's length contracts. Furthermore, family members involved in the process need to be sensitive to how the arrangement might affect relationships among family members. Here are five tips:

1. Define care needs. Do a realistic assessment of the older adult, you may ask a physician's opinion of whether their needs can realistically be met in a home-based setting. The family needs to lay out very clearly the duties and responsibilities the caregiver will be required to provide. Doing so solidifies the appropriateness of the agreement for tax and Medicaid-eligibility purposes, and it can also help families avoid communication problems later.

2. It's a job; treat it like one. The best way to do a caregiver agreement is to do a job description. The caregiver's ability, willingness, and time availability for those tasks must be assessed as well.

Caregiving can be physically and mentally draining, especially when the caregiver lives in the family member's home. But if you have a respite and time-out built into the agreement, you're less likely to reach a burn out point.

3. Make a financial plan. Many of these caregiving agreements are tied in to Medicaid planning. It could be a spend-down scenario, exhausting a person's assets until they qualify for Medicaid support, or could also be used for estate planning. Properly developed caregiving agreements enable compensation payments that do not adversely affect Medicaid eligibility. The payments can also reduce the assets subject to estate taxation of the person receiving care.

4. Put it in writing. The contract must be in writing.

5. Talk it over with family members. Paid family caregiving situations can create tension among other family members, including disagreements over how an ailing parent's assets are being used. This can lead to family friction among children about paying for fixing up the home, as well as fights about the parent's estate when they pass on. Avoiding family friction can be another reason to involve an elder care attorney who can act as an insulator for family emotions.

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