Purposes of Family Care Agreements

There are many good reasons for families to enter into care agreements, particularly agreements in which a family member is paid for services rendered. 
First, a care agreement spells out for the parent, family, and third parties the details of care a family member will provide to an ailing parent. Caring for a parent even occasionally can be a physical, time-consuming, emotional, and financial burden for a family member. Acting as a parent’s full-time, primary caregiver can be deeply burdensome. A care agreement spells out details of care in a way that is illuminating and helpful for everyone involved.

Second, when a parent needs help, family members often rally around and provide service for their parents free of charge. But caring for a parent can be a significant financial burden, not to speak of the physical and emotional burdens (in taking time off work or in taking time away from their own family duties, for example). A wise parent will set forth in a care agreement details regarding compensation of family members for care services the family performs on the parent’s behalf.

Third, a memorialized care agreement prevents family resentments and disagreements regarding said payments. Misunderstandings and hurt feelings often occur in families during the time an aging parent is being cared for by family members. A carefully drafted care agreement protects in numerous ways a family member serving an aging parent.

Fourth, a care agreement has Medicaid advantages. Without a formal care agreement, the funds used to pay family members are treated as part of the ailing parent’s assets or income for Medicaid eligibility purposes. On the other hand, if an ailing parent is paying a family member (or anticipates paying a family member in the future) for services, a formal care agreement ensures that funds used to pay family members are not treated as the ailing parent’s assets or income for Medicaid eligibility requirements.