A confluence of factors are presenting many people with some interesting and complex problems related to Medicaid planning and estate planning. An aging population, high unemployment, and the rising cost of long-term care have combined to present many with the question of whether it is wise to pay relatives to provide caregiving services to family members.
What seems to make a lot of sense at first blush, is actually quite a complex question. There are potential tax implications based on the many ways in which someone could be paid for their services. There are also Medicaid issues to think about since you do not want it to appear that you are attempting to hide assets. Family relations may also be an issue in that not every family member may approve of the arrangement being set up. All of these various questions deserve a little consideration before moving forward.
First, let us consider getting the approval of family members. Unfortunately, disputes arise between siblings and family members all too often when it comes to inheritances and the assets of wealthy or elderly relatives. If a situation presents itself in which you may be paid to provide nursing care or otherwise caring for one of your relatives, it may be a good idea to let any other interested parties now.
By letting your family members know up front, it may be harder for someone to argue later on that some underhanded deal with struck, or that you someone depleted assets through some sort of undue influence over the family member. In the end, anything you can do to avoid the pain and expense of estate litigation might be worth your time.
In the next post, we will discuss some of the other aspects of this caregiving scenario and how they might relate to tax and Medicaid planning.
Source: The Wall Street Journal, Should You Pay a Relative to Take Care of Mom?, Anne Tergesen, 12/11/10