Elder law attorneys advising clients with “crisis planning,” where a family member is currently in a nursing home, often have to choose between the use of a personal service contract or a gift and promissory note. Each of these post-Deficit Reduction Act (DRA) techniques has been the subject of a recent judicial opinion. The use of personal service contracts was addressed in Barbato v. New York State, 884 N.Y.S.2d 525 (App. Div. 4th Dept., 2009). The use of the gift and promissory note was addressed in Matter of M.L., 2009 N.Y. Misc. Lexis 2917 (Supreme Court, Bronx Cty). The equities now strongly favor the use of the gift and promissory note.
Personal Service Agreements
The personal service agreement is a contract between a person in a nursing home and a caregiver who agrees to provide care throughout that person’s lifetime, for a current, lump sum payment.
