Elder Planning – Personal Services Contracts

Morningstar recently published their 75 Must-Know Statistics About Long-Term Care. One statistic that stood out was how much uncompensated caregiving there is. In 2013, the estimated dollar value of long-term care provided by unpaid caregivers was $470 billion. In 2018, that number has most definitely increased.


This statistic tells me two things. First, many families are trying to care for loved ones at home. The sandwich generation—those caring for children and their parents—continues to be squeezed with no break in sight.


Second, it’s likely that most of these families that are doing elder care at home for a loved one do not consider the use of personal services agreements, or caregivers agreements. These are contracts between the parent and adult child where the parent can legally pay the adult child for the caregiving services that otherwise keep the parent out of a nursing home. 


In Pennsylvania, a caregivers agreement is one way to legally spend-down your estate for Medicaid qualification. After all, you are compensating the adult child for their services at fair market value. For instance, if a child is caring for their parent 30 hours per week, at a rate of $20 per hour, approximately $30,000 will be legally transferred each year from parent to child. If a nursing home were needed in the future, you would be closer to Medicaid qualification, all the while having transferred part of your wealth to the next generation.


This is one of several elder law and elder planning strategies that may be used. Of course, planning is very fact specific, and you should see an elder law attorney before taking any action. For a complimentary consultation with Jeremy A. Wechsler, Elder Law Attorney, call (215) 706-0200.


#ElderLaw #ElderPlanning #LongTermCare #EstatePlanning #Medicaid


Statistics Available At: https://www.morningstar.com/articles/879494/75-mustknow-statistics-about-longterm-care-2018-ed.html