Safely Transferring A Parent's Home To A Child Using the Caregiver Exception
October 15, 2013
Every day, millions of adult children finish the work day and go to their second job, taking care of a parent at home. These children ensure their parent has a good meal, is comfortable, and is safe. The vast majority of these child caregivers are not paid, and they do not expect to be. However, there is a valuable opportunity to shift family assets to the next generation as payment for services already being rendered for free.
For parents who may someday require skilled nursing home care, paying a child for caregiver services can be an effective way of transferring inheritance to that child during life. Later, it will be too late. These arrangements require a reasonable written agreement—a caregiver contract—to ensure that those funds are not treated as a gift later, if the the parent is applying for Medicaid. Too many parents make transfers to children, intending those amounts as compensation: unless a written agreement is in place, those payments will be deemed as penalized gifts if the parent applies for Medicaid later. If you are caring for a parent, or receiving care from a child, it may be prudent to contact an elder law attorney to prepare a contract providing for payment for services currently being rendered for free. Due to restrictions on transfers from parents, this is often the best way to ensure a child receives some inheritance from a parent.