Family Caregiver Contracts? - Retirement Net by Diane Carbo

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Family Caregiver Contracts?

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Here are the top six reasons such contracts make sense.

In the past, when a family caregiver needed to provide increased amount of time and care, to keep the aging senior at home, it was expected that they would do so in spite of any financial or emotional sacrifice. Aging baby boomers are changing that expectation and many are doing it out of necessity.

A family caregiver contract is a legal contract in which a family member is paid to care for the aging senior member of the family. Once an unspeakable or even unthinkable topic, there is a growing interest in the family caregiver contract.

As the aging population is living longer, baby boomers are facing caring for aging parents. Many are providing this care as they plan for their own retirement. Elder law estate attorneys are reporting an increase in interest in a formalized family agreement.

With the recent economy and new regulations regarding the qualifications for Medicaid, families are exploring creative solutions to providing care for the aging senior in their life. Caring for an aging parent can involve time, emotional and financial sacrifices. Providing care can involve many years of commitment and dedication. Families are exploring options so that they can provide the quality care the aging senior deserves. Many do not want to suffer the financial consequences or losses of providing that care, even though there may be tax consequences to the income they receive.

The top 6 reasons a family caregiver contract makes sense when a caregiver is needed:

  • The first and foremost important aspect is that the aging senior will be provided care by a familiar person, not a stranger. Many aging seniors find comfort in having a trusted and caring family member provide support and care for them as they age.
  • With the Medicaid guidelines changing, and the “look back” period extended to 5 years (soon to be 7 years), families are trying to investigate ways to save what they perceive as their inheritance. Money paid by the aging senior to a son or daughter for services they provide is not perceived as a “gift” by the system when applying for Medicaid or other public services. It is important to note here that an agreement must be put into place before services are provided. You cannot go back and collect money for care provided after the fact. The system when considering assets for Medicaid will view that money given as a gift.
  • A formalized contract drawn up by an elder law attorney can help ease the tension and resentment that occurs between siblings and other extended family members. The attorney can act as a buffer between family members and make the tracking of the aging senior’s finances available to all involved. A contract clearly will determine who is getting paid, how much and for what services. An elder law attorney’s involvement can reduce the family arguments and tension between family members with clear cut rules and expectations they set forth in the agreement.
  • A fourth benefit of having a written agreement is the prevention of the caregiver and the aging seniors finances becoming entangled, which is so often the case with many family members that provide care. It becomes difficult to determine who paid for what. Over time, family caregivers become resentful and even angry at the financial loss. Having an agreement in place can prevent that from becoming a problem.
  • Many aging seniors are finding the present housing market downturn has affected their ability to sell their house, or for what it was worth. This has caused many aging seniors to rethink their options of moving into a retirement community. Utilizing a family caregiver agreement, they are paying their younger family members to provide care in their home. This can be considered a form of family long term care insurance. The family provides care, receives a modest reimbursement for their services and the aging seniors benefit from remaining in familiar surroundings and receiving quality care.
  • This is a win/win proposition for both parties. With a written agreement, the caregiver can identify what they can and cannot do. The aging senior can express what expectations they have about the care. It is all clearly stated and in writing so there are no surprises or unrealistic expectations.When a family caregiver needed a breather or break from their duties, without a formalized agreement, many had no back up plan. They felt too guilty or ashamed that they wanted, needed or even deserved a break.

A family caregiver contract should address those issues and be part of the agreement. A family caregiver agreement may not sound appealing but for some families is does make sense.

Diane Carbo, RN has over 35 years’ experience in a variety of nursing settings, including orthopedics/rehabilitation nursing, home care, discharge planning, case management, oncology, hospice, senior behavior health, assisted living, and long term care. Her passion is to help people plan for long-term care needs, and to that end started Her goal is to assist aging seniors and their families to develop plans that allow individuals to remain home, safely and comfortably, in the least restrictive environment, regardless of age, income or ability level.

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