Elderly individuals often prefer receiving care in their own home from a younger family member rather than receiving care from a third-party aide or in an assisted living facility.
They may feel uncomfortable with unfamiliar faces or in new surroundings, or they fear losing control over their lives. Other times, the decision for a relative to act as a caregiver is a financial decision based on the increasing costs of hiring outside assistance. Whatever the reason, a family caregiver alleviates a number of stresses on an elderly family member and provides invaluable services that are often times unrecognized and uncompensated.
Providing long-term care for an elderly relative can be a demanding and challenging task, both emotionally and financially. The caregiver may be forced to put his or her career and family life on hold to provide the necessary care. Oftentimes a younger family member will voluntarily take on this responsibility out of love and affection, without the expectation of compensation. Informal arrangements for some type of compensation may be the best option for some families; however, informal agreements are insufficient for Medicaid planning purposes and may ultimately result in internal family conflict or litigation.
Under Connecticut law, services rendered for a family member are presumed to be gratuitous. Cotter v. Cotter, 82 Conn 331, 331 (Conn. 1909). The Cotter court ruled that this presumption may be rebutted by evidence of a mutual agreement between the caregiver and the individual receiving care. The caregiver’s mere hope or expectation that he or she will be taken care of upon the death of their elderly relative is insufficient, the court stated. A caregiver contract is evidence of such an agreement and the right to payment.
A caregiver contract provides two benefits: (1) the contract will enable an elderly family member to “spend down” assets in a manner that will allow him or her to qualify for Medicaid, and (2) will help minimize internal family conflicts. A caregiver contract should set forth the services to be provided and the compensation arrangement that is mutually agreed upon making matters clear to the caregiver, the elderly family member, as well as other relatives.
As Connecticut’s Medicaid eligibility requirements are tightened for an elderly individual to “spend down” his or her assets in order to qualify for Medicaid, caregiver contracts are becoming a more popular planning tool. If drafted properly, a formal caregiver contract allows an elderly individual to transfer assets to relatives who are caring for them as payment for services rendered without triggering a penalty period under the Medicaid rules.
Not only does the agreement provide an avenue to spend down assets for Medicaid qualification purposes, such agreements are also a way to minimize interfamily conflict. Despite the benefits an elderly individual receives from having a family caregiver, oftentimes caregivers express frustration and anger that is caused by a lack of family support and appreciation for their services.
If at the time the agreement is entered into, the family understands the work being done by the designated caregiver and the compensation arrangement, the chances of conflict may be reduced. The value of the caregiver’s services will be recognized by the elderly family member and the non-caregiving relatives alike.
Although family members may feel uncomfortable accepting payment for providing care for a relative or entering into a formal contract promising to provide care for a loved one, having a caregiver contract in place is an important estate planning tool that will ultimately be in the best interests of both the individual receiving care and his or her family. •