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Many of our clients are part of what is often referred to as the "Sandwich Generation". Those clients are often caring for or supporting minor or adult children and come to us seeking estate planning advice regarding such children. Those clients, however, may also be caring for elderly parents in the parents' home or in their own home.  Often the care of a parent is done without prior planning as a result of a crisis illness or unexpected medical diagnosis. In addition, most care is provided without a written agreement between the child caregiver and the parent and without any expectation on the part of the caregiver to be compensated.


Having a written care agreement in place is important for three reasons. First, payment for care provided to a parent, if paid pursuant to a written care agreement, is a legitimate spend down method of a person’s resources in terms of Medicaid qualification. Second, Medicaid law, pursuant to OAR 461-140-0242(2)(c),allows a person to transfer his or her home without penalty to a child caregiver if the child has been living in the parent's home for at least two years prior to applying for Medicaid and has been providing care to such person forestalling placement in a care facility. Medicaid caseworkers, however, require such care be proven and documented at the time of application for Medicaid.  Third, if the child caregiver is compensated for such services by an adjustment in the parent's estate plan, the care provided will be documented through the care agreement. Such evidence may prevent a will contest by other non-caregiver children who may receive less of the estate. 


In addition to memorializing the care services to be provided in a written agreement, the child caregiver should keep track of hours spent providing or coordinating care and out of pocket expenses incurred in relation to such care. With regard to written care agreements, the agreement should be executed by the caregiver child as well as the parent.  An assessment of the parent's competency may be warranted.  The parent should also be represented by his or her own counsel.  The terms of the care agreement should include the following components: Services to be Performed by the Caregiver; Meals; Lodging; Obligations of the Parent; and Compensation. 


Under the section titled “Services to be Performed by the Caregiver”, the agreement should specifically describe the duties the child caregiver will undertake and where such duties will be performed: at the child’s home; the parent’s home; or a care facility. Caregiver duties can include night-time supervision, preparation of meals, housekeeping, monitoring of medications, and arrangement of medical care and transportation to appointments, shopping, laundry services, and personal assistance with bathing, dressing and grooming. These services may be performed daily or on a weekly basis depending on the parent’s need.


With regard to lodging, the agreement should set forth whether the parent will remain in his or her home or will reside with the child caregiver. If the parent is to reside with the child caregiver, a description of the parent’s accommodations is warranted as well as whether the parent will be provided with furnishings or will bring his or her own furnishings. If the parent is to reside with the child caregiver, the compensation section of the agreement should specify the cost for such room and board and state whether such payment covers the parent’s utility costs, cable TV and telephone service.


The parent’s obligations will depend on the nature and location of the care being provided. This section should at a minimum describe payment obligations of the parent and what items are covered by such payment and what items are the responsibility of the parent. If the parent is being cared for in the child caregiver’s home, the agreement should contain a provision mandating continued payment if the parent is absent from the home for reasons other than receiving medical treatment.


Compensation should be set in an amount that is consistent for similar services in the child caregiver’s community. To establish such amount, call in-home care providers and adult foster homes in the area to establish an acceptable rate in the community. This way, the child caregiver will be able to justify the payment amount if called on to do so by a Medicaid caseworker, court or non-caregiver sibling.


Many clients may have been providing care to a parent for months prior to seeking advice on the subject. It is possible to draft the care agreement to retroactively cover the time period actual care is provided. Such care, however, should be documented by the child caregiver. The child caregiver may have to look at calendars,

appointment schedules and receipts to recreate an invoice for the services provided. The child caregiver should also be mindful that receipt of payment for care services is taxable income and must be reported on his or her income tax return. The child caregiver should seek the advice of his or her CPA regarding income and pay roll tax issues.

While most clients enter into an arrangement to care for an elderly parent with no expectation of compensation, having a written care agreement in place with services and compensation specifically addressed may be beneficial to all parties.

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