# How to Fairly Compensate Child Caregivers

> Parents can create contracts or larger inheritances to fairly compensate children who care for aging parents.
- Title: How to Fairly Compensate Child Caregivers · Kiplinger
- Summary: Parents can create contracts or larger inheritances to fairly compensate children who care for aging parents. Parents can use caregiver contracts or larger…
- Keywords: caregiver contract, inheritance, child care, parent, family, estate planning, medicaid, caregiver child exemption, Fairly, Compensate, Child, Caregivers
- Source: Kiplinger — https://kiplinger.com/retirement/inheritance/how-to-fairly-compensate-the-child-who-steps-up-to-care-for-you
- Published: 2026-09-30T10:00:00+00:00
- Read time: 1 min
- Topics: caregiver contract, inheritance, child care, parent, family, estate planning, medicaid, caregiver child exemption
## 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.
## Key takeaway

Parents can use caregiver contracts or larger inheritances to compensate children who provide care without penalizing their financial well-being.