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Should You Get Personal Care Agreement to Care for Mom?
Personal Care Agreement for Mom

Should You Get Personal Care Agreement to Care for Mom?

Using a personal care agreement to care for a loved one is a great way to get compensated for the effort while at the same time preserving the loved one’s assets. Families often expect to care for relatives, thinking that it is part of their duty as a daughter or son, niece or nephew. Using a personal care agreement often makes sense, says AARP Bulletin’s article “Creating a Personal Care Agreement as a Family Caregiver,” if the amount of care is a few hours here and there, or paying a bill or running an errand or two.

However, what happens when a parent needs far more intensive care, like having their meals prepared, monitoring medications and help with daily activities of life like bathing, getting dressed and walking within the home?

It costs about $170 per shift for home maker or health aid services. Few of us are able to write that check.

Some children move in with their parents in an effort to make caring for them easier. That’s when the pay issue often arises. The caregiver may have to give up opportunities for their career, Social Security earnings and the chance to add to their own retirement savings. When the parent dies, the caregiver may find themselves without a home or a job. In this case, payment of some kind seems fair. That may also be true for adult children who take an ailing parent into their home.

The problem is, older people with limited income may not have the ability to pay for home care. There are public programs to pay for caregivers, including a family member, although not a spouse. Every state has different programs. Some long-term care insurance policies may cover a portion of home care costs. If these options are not available, then the family may have to decide whether to pay.

Here is one scenario where things go wrong fast: a daughter moves into her mother’s house, who pays her without discussing it with any other members of the family. When siblings find out, there’s a big family fight. If there is no written agreement, the payments may be considered gifts from Medicaid’s perspective, and could delay a parent’s eligibility for nursing home coverage.

The best option is to have a financial agreement in place. The questions to consider include:

  • Should the room and board be included as part of compensation, if the person is living with the aging parent?
  • Will the family pay for the caregiver’s health insurance?
  • Should there be time off for the sibling who takes the parent into their home?
  • What can the other siblings do to help?

The paid caregiver family member is an employee of the parent, and their income needs to be reported as taxable. The parent may need to file paperwork and pay employer taxes or hire a company that can manage the bookkeeping. The use of a contract and forms may feel overwhelming at first, but there will be many difficulties in the future avoided by doing this right the first time.

Learn more about the benefits of a personal care agreement.

Reference: AARP Bulletin (March 5, 2019) “Creating a Personal Care Agreement as a Family Caregiver”

Why is Angelina Jolie Leaving Her Total Estate to Just One of Her Kids?
Angelina Jolie leaves her estate to just one child

Why is Angelina Jolie Leaving Her Total Estate to Just One of Her Kids?

Angelina Jolie has made the decision to reward her son Maddox for supporting her during her divorce from Brad Pitt by leaving her entire estate to him. Jolie wasn’t happy that only one out of her six children totally sided with her in the couple’s divorce. Others close to the Jolie/Pitt family say that Brad is upset with Jolie for leaving the other children out of her estate and treating Maddox as her “Golden Child.”

Hollywood News Daily reports in its article, “Angelina Jolie Plans To Leave Son Maddox Millions Ignoring Other 5 Children Per ‘Radar’” explains that the final estate planning decision to will Maddox her empire was made by Jolie because of his loyalty.

“Brad is in an absolute fury and fit to be tied over Angie’s moves!” revealed the insider. “It finally seemed like they were reaching some kind of compromise with the divorce. But he’s been blindsided by this mess over Maddox.”

In September of 2016, the story surfaced that Jolie decided to file for divorce from Pitt, after becoming increasingly worried about his parenting methods. The news reportedly followed a nasty encounter between Brad, Angie and Maddox that put the family through one of the nastiest celebrity divorce and custody battles in recent memory.

Jolie claimed that Pitt allegedly attacked Maddox during the fight. An investigation was made by the Los Angeles County Department of Children and Family Services, but no charges were filed. However, according to a family friend Brad remains very upset by the entire situation and especially angry with Angelina for not setting the record straight.

Brad feels that his other children are getting short-changed, and he won’t permit it, the friend says.

Brad Pitt is angry that Jolie would treat their children so differently, cutting out Pax, Zahara, Shiloh, and 10-year-old twins Knox and Vivienne. Leaving it all to Maddox, is just wrong in Brad’s view.

“Maddox took his mother’s side in the divorce, and now she’s made him the head of her movie empire,” said the insider.

“He’s her golden boy, but Brad feels someone needs to remind her that she has five other children!”

If this rumor winds up being true, then most likely Pitt and Jolie will continue to wage brutal battles regarding the welfare of their children for years to come.

Read here about estate planning for parents with young children.

Reference: Hollywood News Daily (April 24, 2019) “Angelina Jolie Plans To Leave Son Maddox Millions Ignoring Other 5 Children Per ‘Radar’”

Gifts During Lifetime Has Advantages
Making Gifts During Your Lifetime Has Estate Planning Advantages

Gifts During Lifetime Has Advantages

There are several non-tax advantages of making lifetime gifts. One is that you’re able to see the recipient or “donee” enjoy your gift. It might give you satisfaction to help your children achieve financial independence or have fewer financial concerns.

WMUR’s recent article, Money Matters: Lifetime non-charitable giving,” explains that lifetime giving means you dictate who gets your property. Remember, if you die without a will, the intestacy laws of the state will dictate who gets what. With a will, you can decide how you want your property distributed after your death. However, it’s true that even with a will, you won’t really know how the property is distributed, because a beneficiary could disclaim an inheritance. With lifetime giving, you have more control over how your assets are distributed.

At your death, your property may go through probate. Lifetime giving will help reduce probate and administration costs, since lifetime gifts are typically not included in your probate estate at death.  Unlike probate, lifetime gifts are private.

Let’s discuss some of the tax advantages. First, a properly structured gifting program can save income and estate taxes. A gift isn’t taxable income to the donee, but any income earned by the gift property or capital gain subsequent to the gift usually is taxable. The donor must pay state and/or federal transfer taxes on the gift. There may be state gift tax, state generation-skipping transfer tax, federal gift and estate taxes, as well as federal generation-skipping transfer (GST) tax.

A big reason for lifetime giving is to remove appreciating assets from your estate (i.e., one that’s expected to increase in value over time). If you give the asset away, any future appreciation in value is removed from your estate. The taxes today may be significantly less than what they would be in the future, after the asset’s value has increased. Note that lifetime giving results in the carryover of your basis in the property to the donee. If the asset is left to the donee at your death, it will usually receive a step-up in value to a new basis (usually the fair market value at the date of your death). Therefore, if the donee plans to sell the asset, she may have a smaller gain by inheriting it at your death, rather than as a gift during your life.

You can also give by paying tuition to an education institution or medical expenses to a medical care provider directly on behalf of the donee. These transfers are exempt from any federal gift and estate tax.

Remember that the federal annual gift tax exclusion lets you to give $15,000 (for the 2019 year) per donee to an unlimited number of donees, without any federal gift and estate tax or federal GST tax (it applies only to gifts of present interest).

Prior to making a gift, discuss your strategy with an estate planning attorney to be sure that it matches your estate plan goals.

Learn how to make a gift of the family vacation home.

Reference: WMUR (April 18, 2019) “Money Matters: Lifetime non-charitable giving”