Formal contracts between adult children and their aging parents can be advantageous, legal experts say. Aurora Photos
Formal contracts between adult children and their aging parents can be advantageous, legal experts say.As the Brooke Astor trial unfolds in a Manhattan courtroom, friends, employees and relatives of the philanthropist have clashed over how much money her son, Anthony D. Marshall, 85, and her former estate attorney should reasonably have earned in exchange for attending to her affairs. New Old Age readers have wondered, too: What compensation, if any, is a family caregiver entitled to receive?
“We’ve all got the sense that this shouldn’t be reduced to a monetary equation — you should do it because you love your parents,” Mr. Reaves said. But caregiving can be grueling, and reducing or forgoing employment can undermine an adult child’s ability to save for her own retirement. “So I don’t see anything wrong with money going to the one who’s actually doing the work,” he said.
Elder lawyers have been discussing care contracts or caregiver agreements for years, but interest has picked up since 2006, when Medicaid eligibility requirements tightened. As parents “spend down” their assets to qualify for Medicaid, which pays for most nursing home care, they face stiff penalties if they simply give family members money.
With a formal caregiving contract, however, elders can show that they were paying for services rendered, said Richard Kaplan, a University of Illinois law professor who has studied care contracts: “Money can be transferred to younger relatives without triggering a penalty.” Assuming, of course, that those relatives legitimately take on the task.
A contract could also call for a caregiver to be compensated with a larger share of the eventual estate. But, Mr. Reaves said, “The risk to the worker is, there may not be much money left.”
Sometimes, a contract provides a means of clarifying informal understandings. When a parent appears to be treating children unequally, bitter family disputes sometimes result, said Thomas Hafemeister, a University of Virginia law professor and expert on financial exploitation of the elderly. “People pay attention to where money is going, and when some of it is siphoned off to one person, others start to question it or wonder if there’s undue influence,” he said,
With a caregiver contract, he added, “You try to be very specific, get everyone involved, have everyone agree that this is a fair solution.”
(Mr. Marshall, it’s worth noting, was never his mother’s direct caregiver; her own funds paid for a platoon of nurses and aides. He was paid for managing her finances, however, earning a $450,000 annual salary that he raised, retroactively, to $1.4 million, prosecutors in the case contend. He has denied wrongdoing.)
A simple idea, a care contract can become a complex document, covering not only the caregiver’s responsibilities and payments but issues common to any employer-employee relationship. Will the caregiver receive health insurance or workers’ compensation? Does she get an annual raise? A vacation? What happens if she’s no longer able to handle an ailing parent’s care on her own? Those contemplating contracts should also understand that the parent/employer must pay Social Security, Medicare and unemployment taxes; the caregiver pays her share of Social Security and Medicare, plus income taxes.
It’s still an uncommon arrangement, but one that could gain ground as parents live longer and families have to provide more care. “You may see it as a privilege or a calling, but it’s also a job and people need to treat it as a job,” Mr. Kaplan said.
He sees one additional benefit in a caregiver agreement: “It’s a way of making it clear that the person receiving this income is working for it. If other relatives have a problem with that, let them take Mom for a while.” [rc]
Paula Span is the author of “When the Time Comes: Families with Aging Parents Share Their Struggles and Solutions,” published this month by Grand Central Publishing.
Copyright 2009 The New York Times Company
June 25, 2009
USA: Family Caregiving on Contract
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NEW YORK, NY / The New York Times / June 25, 2009
Caring and Coping
By Paula Span
The elderly mother wanted to avoid a nursing home and remain in her house in Kansas City, but she needed hands-on help. The daughter, a nurse at a local hospital, was willing to shoulder responsibility for her mother’s care but couldn’t afford to lose income by substantially scaling back her work schedule.
So elder law attorney Craig Reaves drew up a care contract, specifying that the daughter would help her mother a certain number of hours each week and perform particular duties, for which her mother would pay the same hourly wage her daughter would have earned at the hospital. “The whole family agreed that this was fair,” said Mr. Reaves, immediate past president of the National Academy of Elder Law Attorneys.
Formal contracts between adult children and their aging parents can be advantageous, legal experts say. Aurora Photos
Formal contracts between adult children and their aging parents can be advantageous, legal experts say.As the Brooke Astor trial unfolds in a Manhattan courtroom, friends, employees and relatives of the philanthropist have clashed over how much money her son, Anthony D. Marshall, 85, and her former estate attorney should reasonably have earned in exchange for attending to her affairs. New Old Age readers have wondered, too: What compensation, if any, is a family caregiver entitled to receive?
“We’ve all got the sense that this shouldn’t be reduced to a monetary equation — you should do it because you love your parents,” Mr. Reaves said. But caregiving can be grueling, and reducing or forgoing employment can undermine an adult child’s ability to save for her own retirement. “So I don’t see anything wrong with money going to the one who’s actually doing the work,” he said.
Elder lawyers have been discussing care contracts or caregiver agreements for years, but interest has picked up since 2006, when Medicaid eligibility requirements tightened. As parents “spend down” their assets to qualify for Medicaid, which pays for most nursing home care, they face stiff penalties if they simply give family members money.
With a formal caregiving contract, however, elders can show that they were paying for services rendered, said Richard Kaplan, a University of Illinois law professor who has studied care contracts: “Money can be transferred to younger relatives without triggering a penalty.” Assuming, of course, that those relatives legitimately take on the task.
A contract could also call for a caregiver to be compensated with a larger share of the eventual estate. But, Mr. Reaves said, “The risk to the worker is, there may not be much money left.”
Sometimes, a contract provides a means of clarifying informal understandings. When a parent appears to be treating children unequally, bitter family disputes sometimes result, said Thomas Hafemeister, a University of Virginia law professor and expert on financial exploitation of the elderly. “People pay attention to where money is going, and when some of it is siphoned off to one person, others start to question it or wonder if there’s undue influence,” he said,
With a caregiver contract, he added, “You try to be very specific, get everyone involved, have everyone agree that this is a fair solution.”
(Mr. Marshall, it’s worth noting, was never his mother’s direct caregiver; her own funds paid for a platoon of nurses and aides. He was paid for managing her finances, however, earning a $450,000 annual salary that he raised, retroactively, to $1.4 million, prosecutors in the case contend. He has denied wrongdoing.)
A simple idea, a care contract can become a complex document, covering not only the caregiver’s responsibilities and payments but issues common to any employer-employee relationship. Will the caregiver receive health insurance or workers’ compensation? Does she get an annual raise? A vacation? What happens if she’s no longer able to handle an ailing parent’s care on her own? Those contemplating contracts should also understand that the parent/employer must pay Social Security, Medicare and unemployment taxes; the caregiver pays her share of Social Security and Medicare, plus income taxes.
It’s still an uncommon arrangement, but one that could gain ground as parents live longer and families have to provide more care. “You may see it as a privilege or a calling, but it’s also a job and people need to treat it as a job,” Mr. Kaplan said.
He sees one additional benefit in a caregiver agreement: “It’s a way of making it clear that the person receiving this income is working for it. If other relatives have a problem with that, let them take Mom for a while.” [rc]
Paula Span is the author of “When the Time Comes: Families with Aging Parents Share Their Struggles and Solutions,” published this month by Grand Central Publishing.
Copyright 2009 The New York Times Company
Formal contracts between adult children and their aging parents can be advantageous, legal experts say. Aurora Photos
Formal contracts between adult children and their aging parents can be advantageous, legal experts say.As the Brooke Astor trial unfolds in a Manhattan courtroom, friends, employees and relatives of the philanthropist have clashed over how much money her son, Anthony D. Marshall, 85, and her former estate attorney should reasonably have earned in exchange for attending to her affairs. New Old Age readers have wondered, too: What compensation, if any, is a family caregiver entitled to receive?
“We’ve all got the sense that this shouldn’t be reduced to a monetary equation — you should do it because you love your parents,” Mr. Reaves said. But caregiving can be grueling, and reducing or forgoing employment can undermine an adult child’s ability to save for her own retirement. “So I don’t see anything wrong with money going to the one who’s actually doing the work,” he said.
Elder lawyers have been discussing care contracts or caregiver agreements for years, but interest has picked up since 2006, when Medicaid eligibility requirements tightened. As parents “spend down” their assets to qualify for Medicaid, which pays for most nursing home care, they face stiff penalties if they simply give family members money.
With a formal caregiving contract, however, elders can show that they were paying for services rendered, said Richard Kaplan, a University of Illinois law professor who has studied care contracts: “Money can be transferred to younger relatives without triggering a penalty.” Assuming, of course, that those relatives legitimately take on the task.
A contract could also call for a caregiver to be compensated with a larger share of the eventual estate. But, Mr. Reaves said, “The risk to the worker is, there may not be much money left.”
Sometimes, a contract provides a means of clarifying informal understandings. When a parent appears to be treating children unequally, bitter family disputes sometimes result, said Thomas Hafemeister, a University of Virginia law professor and expert on financial exploitation of the elderly. “People pay attention to where money is going, and when some of it is siphoned off to one person, others start to question it or wonder if there’s undue influence,” he said,
With a caregiver contract, he added, “You try to be very specific, get everyone involved, have everyone agree that this is a fair solution.”
(Mr. Marshall, it’s worth noting, was never his mother’s direct caregiver; her own funds paid for a platoon of nurses and aides. He was paid for managing her finances, however, earning a $450,000 annual salary that he raised, retroactively, to $1.4 million, prosecutors in the case contend. He has denied wrongdoing.)
A simple idea, a care contract can become a complex document, covering not only the caregiver’s responsibilities and payments but issues common to any employer-employee relationship. Will the caregiver receive health insurance or workers’ compensation? Does she get an annual raise? A vacation? What happens if she’s no longer able to handle an ailing parent’s care on her own? Those contemplating contracts should also understand that the parent/employer must pay Social Security, Medicare and unemployment taxes; the caregiver pays her share of Social Security and Medicare, plus income taxes.
It’s still an uncommon arrangement, but one that could gain ground as parents live longer and families have to provide more care. “You may see it as a privilege or a calling, but it’s also a job and people need to treat it as a job,” Mr. Kaplan said.
He sees one additional benefit in a caregiver agreement: “It’s a way of making it clear that the person receiving this income is working for it. If other relatives have a problem with that, let them take Mom for a while.” [rc]
Paula Span is the author of “When the Time Comes: Families with Aging Parents Share Their Struggles and Solutions,” published this month by Grand Central Publishing.
Copyright 2009 The New York Times Company
