The Devil is in the Details

When I read this blog post about an American case where a tax-planning lawyer acted as full-time care-giver for his aging parents, all I could think was "ouch..." The post from lawyer Kyle Krull will demonstrate loudly and clearly why you have to formalize caregiving arrangements between family members. Click here to read the story.

Compensating family caregivers

Even though there are tens of thousands of Canadians looking after their aging parents, there is a persisting viewpoint that this care should be given for free. Unfortunately, providing it for free means that the caregiver probably also has to continue working at a paying job at the same time, causing that person enormous pressure. Providing care for aging parents for a wage is just starting to gain acceptance, as I blogged about once before here (family care contracts).

In a recent article, Kyle Krull, an American lawyer, gives two very good reasons for entering into a formal agreement for a wage. I agree with both of his reasons. If you're providing care to a parent and are realizing that "something's got to give", this might help. Click here to read the article.

Relatives can be paid to provide care for elderly family member

There is an article talking about relatives being paid to look after aging parents or other family members here. Although it is American and focuses a bit on Medicaid, which doesn't apply to us here in Canada, the ideas in the article are still quite good and worth reading. People in general are becoming more accepting of the idea that family membes who devote their time to looking after an elderly relative should be compensated for their efforts, particularly when giving that care prevents them from working elsewhere.

I posted an entry about this topic on this blog not long ago, called "What is a Family Care Contract?". Read that blog post by clicking here. I also talk about it in a bit more detail in my "Estate Planning Through Family Meetings" book.

What's a Family Care Contract?

A family care contract, also known as a personal-care agreement or home-care agreement, is a formal, written agreement between a senior who needs care, and his or her family member who is prepared to provide care. It sets out the terms of the care that will be provided and how much the family member will be paid to provide that care.

Are you horrified and insulted at the very thought of being paid to look after your own parent? Some people are, though I think that's not a very practical reaction for most people. Many people now struggling to work fulltime, look after an aging parent, and possibly look after their own families as well, might benefit from this kind of contract. Not everyone can afford to pay someone else to give their parent the care they'd like the parent to have. The money isn't free for the caregiver; the caregiving becomes that person's job and they declare the wage as income on their tax returns.

If the caregiving services were provided by a non-family individual, you would have to pay for those services. Is your care of your parent less valuable than the care provided by a stranger? Likely the opposite is true and your care of your parent is of a very high quality. The fulltime care of an aging parent is important enough to become your job, or the job of a sibling.

If both parent and caregiver are interested in setting up a care arrangement, the contract allows both sides to be clear on what is going to happen, when it's going to happen, who is going to do what, and when the arrangement will end. There is no doubt that it will reduce disappointments and disputes.

It also benefits the family as a whole. When one person is looking after the care of a parent, siblings and other family members often speculate about just how much that caregiver is getting from the parent. Having an agreement that everyone can look at will help them understand the arrangement.

If your parent has a modest estate, it's possible that the cost of caregiving will deplete the estate. This might upset your siblings if they expect to inherit something one day. However, as mentioned already, the money could be used to pay a stranger to provide the care. One way or another, the money would not still be there when the parent passed away.

Those of you who read my blog frequently know that I'm a fan of pretty much all arrangements that allow the parties to understand what the other person expects before committing to something, and to express their own expectations. I'm definitely in favour of this arrangement for certain families. This is not to say that the arrangement couldn't be abused by someone. Almost anything is vulnerable to someone who really, really wants to cheat.

This kind of contract is gaining in popularity in the USA and Canada and we will see more of them in the future. I talk about them in much more detail in chapter 13 of my new book, "Estate Planning Through Family Meetings".

I'd love to hear from people who are currently not being paid for the care they provide to their parents, with your thoughts on these contracts.