From Kiplinger · · 1m 30s
How to Fairly Compensate Child Caregivers
Parents can create contracts or larger inheritances to fairly compensate children who care for aging parents.
In brief
Parents can create contracts or larger inheritances to fairly compensate children who care for aging parents. Parents can use caregiver contracts or larger inheritances to compensate children who provide care without penalizing their financial well-being. Originally reported by Kiplinger.
Caregiving financial toll
Caregiving takes a financial toll on families with multiple children, as one sibling often bears the burden of caring for an aging or ill parent.
Caregiver penalty
Caregivers have fewer financial assets and more debt than non-caregivers, according to Employee Benefit Research Institute research.
Typical estate plans worsen issue
Parents often split assets equally among children, penalizing the caregiver even if unintentionally.
Caregiver contract option
Parents can create a caregiver contract outlining duties, compensation, and mileage for driving parents.
Contract must be legally sound
The contract should be in place before services start, with a log of hours worked to avoid Medicaid complications.
Medicaid rules require caution
Medicaid uses a five-year look-back period, so asset transfers may affect eligibility for benefits.
Larger inheritance alternative
Parents can give a larger share of inheritance or a home to the caregiver to avoid Medicaid bills.
Caregiver child exemption
The caregiver child exemption allows the child to use the home if they lived with the parent for two years before nursing home entry.
Family meetings essential
Families should hold meetings to discuss arrangements and sign written acknowledgments to prevent conflicts.
Here's the gist
Parents can use caregiver contracts or larger inheritances to compensate children who provide care without penalizing their financial well-being.
