Senior Living: Can A Family Member Be Paid for Assuming Caregiving Responsibilities?

Most people are reluctant to discuss money when inviting a relative to move in with them, but it just makes good sense.  If a parent (or child for that matter) is young and healthy enough, it should be understood that they will make regular financial or service contributions to the household.

 

If, on the other hand, you are overseeing or doing hands-on care for an ailing parent, you should and could be compensated for the services/hardships that are bound to occur.  Caring for a family member is a responsibility that many people bear.  It can also be a source of income.  An article in the Jacksonville Free Press (June 11-17, 2009) outlines a few things to consider before entering into such an arrangement.

 

Caregiver agreements, where relatives are hired to care for elderly family members, have been around for awhile.   Financial transactions entered into are not considered gifts and need to be carefully crafted so that there are no misunderstandings. 

 

Many people will enter into this end-of-life type arrangement anyway, but it can become quite a financial burden. For the adult child who wants to provide this kind of support, a caregiver agreement can provide a modest source of income.

Older people like the idea of being taken care of by trusted family members.  Whether they move in with a family member or stay in their own homes under supervision, they are more comfortable with family than with using outside help.  If it is an either/or situation, hiring a relative can be a money saving strategy. 

 

Caregiver agreements, also known as personal care contracts, can reduce tension among family members and removes the mindset about contesting a will if an agreement can’t be reached.  If properly set up, money under a caregiver agreement is not considered a gift, but rather a compensation for services rendered.

 

Caregiver contracts must be written contracts that are completed in advance, and the compensation should be agreed upon.  You cannot submit a bill, after the fact, which says a certain amount of money is expected for services rendered.

 

Contracts should specify duties the caregiver will be perform (making sure medications are taken, preparing and serving meals, running errands, keeping the house tidy, paying bills, etc).  Compensation is based on the average hourly rate that a local agency would charge for a similar service.  Contracts also need to stipulate how the payments will be made.  It could be an upfront lump-sum or in made in regular installments.  Caregivers are required to pay income taxes on the compensation that they receive, social security and other taxes need to be withheld, so you will undoubtedly need to hire an accountant or use a payroll service.

 

If you are anticipating this type of care giving, this is a good way to be compensated for lost work and miscellaneous expenses.  It will make the experience more satisfying for everyone involved and hopefully this will keep the older family members from feeling that they are a burden.

Comments

[firstSTREET]

Paid family caregivers can bring up some challenging issues, but your suggestion about a caregiver contract is a very good preventative measure. This way, the caregiver is treated in terms of the law the same as a private caregiver, and still retains the ability to take care of their loved one. Thanks for the suggestions!