Family Caregiver Agreements: When a Family Member is Paid

By Linda Fodrini-Johnson, MA, MFT, CMC
Certified Geriatric Care Manager
Walnut Creek, CA

Linda Fodrini-JohnsonMost family members are pulled towards caregiving out of love.  Sometimes it is the increasing needs of an aging parent that transforms daughter/son into this role “caregiver.” At times a family member becomes the primary caregiver by default, through a lack of knowledge of benefits or resources.  On occasion, either the parent says they want to pay them for their care, or the adult child is losing earned income and the issue of pay for family care arises.

In order for an adult child or other relative to be paid from an aging parent’s assets, it is best that all the elements of the agreement be discussed. It is critical that it be legal, and — most of all — transparent to other family members. (Video Inset: NAPGCM President Elect Linda Fodrini-Johnson comments on caregiver agreements.)

Professional Geriatric Care Managers help families look at all the options prior to a family member taking over as a paid caregiver.  PGCM’s also help families write out clear care plans.  This care plan incorporates community support systems to give family some time off and increases quality of life for the elder.

Here are some items to consider with caregiver agreements:

  1. What does the parent need?
  2. What are the caregiver  tasks the family member would be doing?  Note that what is needed when they start might change drastically in six months or a year.  Have some built in re-evaluations written in.
  3. What is the time needed to accomplish these care  tasks?
  4. Does the family member have the skills to be doing the caregiver tasks required?
  5. Does the family member have the level of health him or herself to do these caregiver tasks?
  6. Once the caregiver tasks are listed (be specific) and time needed (be somewhat flexible), be sure it’s written out and agreed upon by all the siblings.
  7. Be sure to write in respite or time off for the family caregiver and include an “escape” clause. The escape clause allows the family caregiver to gracefully bow out of the tasks as they become more challenging or beyond their skills.
  8. What do you do when the family caregiver gets sick – what is Plan B?
  9. Do you have a professional to check on the plan of care  before to ensure quality of life for the elder and reduce stress for the caregiver?
  10. Set a salary for the family caregiver (you can base this on calling some of the local agencies and determine your pay on the average of 3 agencies) and a schedule for payments.  Put this information in your agreement. (What is the family member declines salary?)
  11. Consult with an attorney (Elder Law or Special Needs Attorney).
  12. Family caregivers need to be aware of tax implications.  They will need to pay taxes.  The best way would be to consult a bookkeeper to calculate the taxes, assist with the withholding and quarterly tax reporting.  This also should be spelled out in the agreement.
  13. Most families will need to pay the social security for the family member doing the work.  They might also agree to pay or not pay for vacation time, and health insurance, Be clear, especially if someone is giving up a job to care for the parent.
  14. In the best-case scenario, another sibling or professional fiduciary would generate the checks.  If the family member doing the care writes the checks they should be accountable to another – this could be a trustee, an attorney or the entire family on a monthly basis.
  15. If room and board is being given, plus pay; consult someone in your state to see if there are implications that would affect tax bases.
  16. Be sure to have homeowners insurance to cover the family caregiver’s time in employment – in case there is a work related injury.  You might also check to see that you have the maximum liability under this policy for unforeseen issues.