If you're part of the "sandwich generation" -- the generation who find themselves still responsible for minor or college-aged children while also caring for an elderly parent -- you may be looking for ways to defray the costs of this dual caregiving. Fortunately, there are ways to receive compensation for parental care while still helping your parent maintain eligibility for Medicaid skilled nursing care in the future. Read on to learn the steps you should take to secure compensation for your services.
Creating a care agreement
To be paid for caring for a parent, both you and your parent must treat this like any other job and sign a caregiver agreement before any payments are made. This contract will clearly set out the rights and responsibilities of both parties (for example, allowing you to be reimbursed for mileage used to drive your parent to appointments, or providing at least 24 hours of notice if you need to reschedule the next day's care). This contract should also contain a payment schedule and specify that you are being paid for providing services, not receiving a gift.
Why is it important to document your payments for this care?
There are several factors that make an executed caregiver agreement very important.
First, if your parent wishes to qualify for Medicaid in the future in order to seek skilled nursing care or inpatient treatment, any transfers to family members that are deemed "gifts" could disqualify your parent from coverage for a period of time. However, payments for services are not considered when evaluating Medicaid eligibility.
Another downside of having any payments considered gifts is the imposition of the gift tax. In 2015, parents can give up to $14,000 per year tax-free to each adult child, but payments made over this amount may be subject to tax at your highest rate.
What else should you consider?
Before determining what your pay rate should be, check the rates for other caregivers in your area. Your fee should be in line with this rate -- an hourly rate of payment that is much higher than the average can trigger an IRS audit, particularly if it is seen as an attempt by your parent to avoid estate or gift taxes.
You may also want to check with other siblings to see if they are also interested in providing care for an hourly rate. If one sibling is being paid for services other siblings might like to perform, this can cause family strife. If you have questions about compensations, contact a lawyer like Cormac McEnery, who specializes in family matters.
Share14 January 2015
People with an eye for property can make a great deal of money buying a house, fixing it up and then selling it for a profit. However, there are many legal issues involved in this kind of pursuit. I am an attorney with experience in real estate, and I have helped many clients learn the legal details involved in flipping property. This blog will help you understand what you need to know when you are buying and selling a home as well as information about paying taxes on money made and property owned. Flipping houses can be a very profitable activity as long as you know how to do it legally.
