Care Agreements: Could one benefit your family?
Americans are living longer and will require increasing amounts of assistance as we age into our 70’s, 80’s, and beyond. Hiring someone to provide that assistance can be very expensive. Frequently, family members, often adult children, step up and help the older generation. Many family caregivers are unpaid and many would not want to be paid. However, compensating them via a well-crafted Care Agreement will have several benefits.
First, handled appropriately, a Care Agreement can help avoid problems within the family. Generally, caregiving responsibilities will fall more heavily on one child. Caregiving can be difficult, time consuming, and frustrating. Recognizing that, a parent or other care recipient may decide to leave a larger inheritance to the caregiving child. The children who did not provide care and receive a smaller inheritance generally have no idea how difficult, time consuming, and frustrating caregiving is and, even if they say nothing, are hurt and perhaps resent that their sibling was “favored.” However, if the entire family is involved in creating a Care Agreement, everyone is more aware of the care that is necessary and are more likely to value the caregiver’s efforts and sacrifices. Family members who are not involved in the day-to-day care may even step up to offer respite care while the primary caregiver takes a vacation or has a weekend off.
Second, a Care Agreement will avoid another negative consequence that could result from planning to compensate the caregiver with a larger inheritance. At death, the parent could have little to no assets to leave, especially if they eventually transferred to a long term care facility. In that situation, it could be the caregiver who resents their siblings.
Third, a well-crafted Care Agreement is an appropriate way to “spend down” countable assets prior to applying for government benefits to help pay for expensive care in a facility or at home. The rules pertaining to government benefits for long term care are exceedingly complex and far beyond the scope of this article. In general though, giving any caregiver cash or assets without an appropriate Care Agreement within a five-year period prior to applying for benefits is risky. It will almost certainly result in a penalty period during which the government will not pay for care even though the parent otherwise qualifies for benefits. This is true even if the purpose of the “gifts” was to compensate the caregiver for their care or reimburse them for items they purchased on behalf of the parent. Caveat: A Care Agreement must meet several legal requirements in order to be of benefit in that situation. It is best to hire an attorney who knows those requirements.
Finally, a Care Agreement can help avoid something most seniors are concerned about – running out of money. If a family caregiver does not want to be paid for their caregiving, they can set aside some or all of the net compensation they receive under the Care Agreement and use it later for the parent’s “extra,” supplemental needs they will have even if they qualify for government benefits to pay a portion of their long term care.
At Rhodes Law Firm we have helped many individuals and families create Care Agreements that promote family harmony and save money, often as part of a broader estate plan or asset protection plan. If you live in North Carolina and would like to learn more about how care agreements could help you and your family, talk with Attorney Annette Rhodes. Send us an email through our website or call us at 919-435-3646 to get started with thoughtful planning designed to bring you peace of mind.
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