Providing care for aging parents
By Gina M. Barry, Esq.
Partner, Bacon & Wilson. P. C.
Special to PRIME
When an aging parent needs assistance to live at home, many children opt to provide the care. In some cases the parent may not agree that they need outside help. In others, they may have privacy concerns. In either case, a caretaker child arrangement brings up several legal issues.
Establishing a value for care
A caretaker child arrangement exists when the parent lives with the child, and the child provides care similar to that of a facility.
Here, it is best to establish a care agreement. This is a contract in which the parent agrees to pay the child (in either a lump sum or on an ongoing basis) or to finance an improvement to the child's home, and the child agrees to care for the parent until either (1) the parent passes away or (2) is in need of nursing home level care.
When establishing a care agreement, you must value the services to be provided. You may value the services as a package as would a board and care facility when care is substantially the same as that in such a facility. In this situation, the average monthly cost of the facility may be used as the monthly cost of the care provided by the child.
An alternative involves valuing each service individually. This should be used when a child is performing only some caretaking activities, such as (but not limited to) grocery shopping, meal preparation, accounting services, driving to appointments, housecleaning and laundry services.
When using the individual pricing method, the child must keep a record of the services performed and receive payment based on the actual amount of service provided.
Spelling out the services
The agreement should indicate the exact services the child will provide and the location where the services will be provided.
The parent's "space," as well as any "common areas," should be detailed. The agreement should also establish whether parent or child is responsible for paying monthly utility charges and yearly expenses, such as property taxes and homeowner's insurance.
It is imperative that the parent and child decide under what circumstances the child is willing to care for the elder. The agreement should specifically state the terms upon which the agreement may be cancelled, such as if it becomes unsafe to continue to provide care in the home.
The services that the child will provide: housekeeping, laundry, meals, transportation, personal assistance, should also be as detailed as possible. For example, an agreement should establish parameters for transporting the parent to and from appointments.
The agreement should also address any property maintenance duties the child will perform, such as repair of the premises or its mechanical components, mowing the lawn, additional landscaping and snow removal.
Planning for cost increases
The plan should include a formula for calculating any cost increases. If the elder pays $50 per month to cover the cost of food, any increase should be tied to the annual consumer price index increase, or calculated in a manner that is precise. Without such a provision, disagreements may arise which could disrupt the ongoing performance of the agreement.
Caregiving, insurance and Medicaid
The impact of a care agreement on the parent's long-term care financing options is substantial. The most common financing options include buying long-term care insurance, privately paying for care or obtaining Medicaid benefits. When applying for Medicaid benefits, the Division of Medical Assistance will ask if the applicant has made any gifts during the applicable look back period. If gifts are uncovered, the Division of Medical Assistance will assess a penalty which will prevent the applicant from obtaining benefits for a period based on the amount of the gift. However, when assets are transferred to a child as payment for care provided, it may be possible to avoid this penalty.
Although there are many areas to address when establishing a care agreement, the benefits far outweighs the effort involved in establishing one. Outlining the responsibilities of each party will prevent most disagreements. Ultimately, working through the issues raised in a care agreement will lay the framework for a successful arrangement between the parent and the caretaker child.
Gina M. Barry is a Partner with the law firm of Bacon & Wilson, P.C., Attorneys at Law. She is an Adjunct Professor teaching Elder Law at Western New England College School of Law, as well as a member of the National Association of Elder Law Attorneys, the Estate Planning Council, and the Western Massachusetts Elder Care Professionals Association. She concentrates her practice in the areas of Estate and Asset Protection Planning, Probate, Guardianships, and Residential Real Estate. Gina may be reached at (413) 781-0560 or gbarry@bacon-wilson.com.