Family Care Agreements

I have been reading more about agreements made between family members for the care of their loved ones.

This “movement” is a natural progression of the aging of an entire generation of ‘baby boomers’ who a) want to stay in their homes b) rely on the services of a family member to help them c) recognize the significant role of a family member who becomes the primary caregiver for a parent/loved one.

The reality of a family care agreement may be more involved than it first appears and such agreements should be considered legal documents.

First, we can explore the TERMINOLOGY:

family care agreements can be known as

family care contracts

care contracts

caregiver agreements

family caregiver agreements

personal care agreements/contracts’

or a myriad of other titles.

For the purposes of this article I will use the title ‘family care agreements” (FCA).

An FCA in general is a written agreement between an ‘older adult(s)’ and a family member.

The agreement will outline the duties and responsibilities of the family member who provides assistance to their loved one(s) and the agreeement will give the specific terms of compensation to be made to the family member.

The adult child (or other family member) providing the care, we will call the ‘Caregiver’

The family member receiving the care, we will call the ‘Recipient’

Note: that is most cases there will be other family members involved in some decisions, e.g. other adult children who cannot or choose not to take on the role of ‘Caregiver’.

On the surface, FCA’s are quite straight-forward, but as with any agreement/contract; the devil is in the details.

It is a question of how to fairly compensate an adult child who has taken on the duties and becomes the Caregiver of an older adult family member (or in some cases a couple)

Consider that there are many variations of the caregiver role:

  1. a) the adult person who assumes the role of Caregiver may be married and their partner may be otherwise employed
  2. b) the Caregiver may live in their own home, but more than likely will move in with the older family member (Recipient)
  3. c) the Caregiver may have been fully employed elsewhere and given up their employment, or they may continue to be employed part-time or work from home
  4. d) there may be additional state supported in-home care available to supplement the role of the Caregiver
  5. e) the Caregiver may have older children still living with them

The variations/issues are as numerous as there are families who have an aging parent/loved one.

One common element is that in most cases the older adult (Recipient) will – over time – require more care rather than less care to remain in their own home.

Duties and Responsibilities:

These should be clearly stated/identified under the terms of the FCA.

Normal duties might include Nutrition; Housekeeping (or supervision of housekeeping); Personal care; Transportation; Maintenance of home e.g. gardening/supervision of landscapers/Repairs, etc.; Maintaining health records and Physician visits.

Will there be limitations/restrictions on the use of the home? E.g. can the Caregiver have Guests? Hold Parties? Start a home-based business? Write checks? Have unlimited use of credit cards?

Note: A good idea is for Caregiver to maintain a daily log/schedule of all activities and how their time has been spent.

Compensation of the Caregiver:

  1. a) Determine what is reasonable and customary in the area
  2. b) Does compensation include room and board- for how many people?
  3. c) Consider/Identify the number of hours to be worked, sick leave, vacation days, holidays
  4. d) What would constitute grounds for termination of the FCA? Of the Caregiver?
  5. e) Consider what modifications of the FCA might be required over time e.g. pay increases

Note: the Recipient in essence becomes the “employer” of their Caregiver.

Consider all issues of how Caregiver will be paid and their compensation package. For the Caregiver – Will there be health benefits; sick leave; overtime pay; medical insurance; liability insurance; tax withholding?  Pension?

Who will handle the finances, issues of social security and taxes, write paychecks?

Undue Influence:

What would constitute ‘undue influence’ e.g. the Recipient bequests large sums of money to the Caregiver? The Recipient gives away valuable items to the Caregiver? Gives loans to the Caregiver?  Places the house into the name of the Caregiver? Buys a life insurance policy with the Caregiver as Beneficiary?

Note: One idea might be to make a complete inventory with photographs of all items in the house, safe deposit, financial statements/documents, etc.  before the FCA becomes effective and update/review the listing annually.

Legal:

Consider the laws of your state as they apply to such contracts/agreements and the enforceability of such documents.

Coordination of the FCA with any existing Estate Planning documents

What impact could the FCA (and payments to Caregiver) have on any Medicaid planning?

Who will hold the power of attorney and make medical decisions?

What are the healthcare directives?

Who will handle annual tax filings for the older Recipient?

Who will handle bank account; check book; pension payments; credit cards, stock transactions, etc.; pay the mortgage? Pay the utilities?

Will the Caregiver be permitted to enter into contracts on behalf of the Recipient?

Consider the “WHAT IFS”:

If the Recipient moves into a health facility, will the Caregiver be permitted to stay in the residence? If so, for how long?

If the Recipient decides to marry?

The Caregiver marries/remarries?

The Caregiver resigns or has an accident in the home?

Family Meetings:

It may be advisable to have a family meeting to draft the terms of the FCA and coordinate with any estate planning that has taken place.

The presence of a knowledgeable, non-family member to ‘negotiate’ any issues between family members could be helpful.

Working to Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

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About Attorney Barbara Ann Dalvano

Attorney in Denver, Colorado with extensive practice experience in the areas of Estate Planning, Wills and Trusts, Business Succession Planning, Probate, Contract Law.

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