The New Normal is adult children who take care of parents—and parents who take care of adult children
Many of us travel when we can to visit family we have not seen in a while. This family may be aging parents, or grown children who have started families of their own. Some of us, however, see this family everyday—because they live with us. More and more often, families find themselves in this latter category—living with extended family, and caring for them.
A recent Wall Street Journal article titled “‘I Was Hoping to Be Retired’: The Cost of Supporting Parents and Adult Children” highlights some of the challenges these individuals face. This group is part of what is now called a “modern family.”
Modern families have specific sets of legal needs. This article discusses the documents and forms that modern families should create so as to plan for the future, avoid disputes, and keep things running as smoothly as possible.
What is a modern family?
A “modern family” refers to any family structure that falls outside of the traditional nuclear family structure. Few families continue to be made up of just mom, dad and 2.5 children. Instead, more than half of American families are blended, with step-siblings, aunts and uncles, older relatives, and/or adult children living in one household. A subset of these families are arranged this way to facilitate caregiving duties.
Estate planning for caregivers in the modern (or blended) family
Often, we create these kinds of modern families when we start caregiving for aging parents, for adult children with special needs, or for other family members who need help. If you are part of a combined or blended modern family living under one roof, consider some of the following documents. They will ensure that you are able to manage more for additional family residents than just the grocery list or laundry duty.
Essential Estate Planning Documents for Blended Families: Power of Attorney, Caregiver Agreements, Wills, and Trusts
All about Power of Attorney (POA)
POA when caring for older parents or relatives
When caretaking for elderly adults, making sure that they have both a financial and a medical power of attorney is essential. Even if they still have the capacity for medical decision-making, they may not want to deal with making financial decisions. And they are more likely to experience medical complications that leave them incapacitated and legally unable to make decisions.
POA when caring for adult children living at home
Every adult in your household should have both financial and medical powers of attorney in place. This may sound surprising for those parents with a 20-something child still living at home. However, these 20-somethings are adults in the eyes of the law, and a power of attorney will simplify fiscal or medical access for their parent-agents, should the need arise. With these documents completed, parents will be able to access bank accounts and have a say in how medical decisions are made if their child becomes incapacitated.
Power of Attorney documents: Two types
There are two very different types of power of attorney. Each serves an important role to family caregivers:
Financial (Durable) Power of Attorney. If you are the caregiver in your family, you are likely the de facto manager of your parents’ or adult child’s finances. A financial power of attorney document, however, can ensure that you are able to handle any and all of their real estate, bank account, stock fund, or other estate matters. Without one, you could find yourself powerless if something of a financial nature needs urgent attention. A financial power of attorney is essential to any modern family estate plan.
Medical Power of Attorney. As a caregiver, you likely already make some health decisions on behalf of your family member. This individual might even be more vulnerable to sudden changes in physical or mental health status. A medical power of attorney is an essential health care directive ensuring there will be no question about who is empowered to make medical decisions if an emergency arises for your loved one. (Be sure to look for other healthcare directives as well.)
All about Caregiver Agreements
A caregiver agreement becomes relevant when an individual wishes to remain at home rather than go to an assisted living community. This can be a contract between a patient and a professional caregiver. But it can also be a contract between a patient and a family member, like an adult child—which keeps assets within the family.
Family caregiver legal documents can provide a number of benefits to a caregiving child and care-recipient parent (or vice-versa). These agreements can help ensure that caregivers get paid. They can help prevent sibling inheritance disputes further down the road. And they can help ensure Medicaid or VA benefit qualification.
1. Get paid as caregiver for aging parents
One, a caregiver agreement can be used to fairly compensate a child for the time and energy they used to care for their parent. It does so by creating a formal caregiver–patient relationship. A caregiver agreement can ensure that both parties are on the same page regarding what kinds of caregiving services are desired, as well as any compensation expected. And it can spell out the terms by which payment will be rendered.
2. Avoid family inheritance disputes between siblings
Two, a caregiver agreement can prevent inheritance disagreements between siblings who feel entitled to assets because of their efforts caring for mom or dad. Figuring out how much is owed to a primary caregiver sibling ahead of time can help to prevent future disputes based on who helped out more. No one wants to deal with a sibling conflict during the already stressful time of a parent’s passing.
3. Use the caregiver agreement as documentation for Medicaid or VA benefits
Three, a caregiver agreement, if properly drafted, can allow family members to seek reimbursement for caregiving under certain Medicaid programs or through Veterans Affairs (VA) benefits for at-home elder care. Some kinds of benefits available to compensate caregivers require detailed documentation to maximize reimbursements. This documentation begins with a well-written and legally sound caregiver agreement.
All about Wills and Trusts
These estate planning documents allow families to plan for future events. Often, the focus of this planning is to prevent burdens placed on our family.
The difference between wills and trusts:
These are very different documents, both used in estate planning.
Wills. Wills help to clarify an individual’s intentions. They can make legal estate proceedings much easier in the event of that individual’s passing. Every adult should have a will.
Trusts. Trusts place a third party in control of defined assets in an individual’s estate. They can remove any management burden both from that individual and from beneficiaries.
Wills and trusts can alleviate the stress of modern family estate planning
Sidestep some of the stress on modern caregiving families by having the proper documents in place.
Avoid financial elder abuse scams with a trust
For aging parents who live with their children, a trust can allow a trusted family member to manage these elders’ day-to-day expenses while at the same time protecting them from elder abuse scams.
Create a special needs trust
A certain type of trust can ensure that a child with special needs, will continue to be eligible to receive any government benefits or public assistance for which they qualify. Gifts or payments not arranged following special needs trust rules could cut into the recipient’s eligibility for benefits.
Know the value of a will
Even a simple will provides significant value. For example, it can allow a parent to distribute assets in a manner that recognizes the services performed by the caregiver child. Every adult in a blended household should have a will in place so that asset distribution decision making does not fall to the rules under Texas law.
Holman Law can provide individualized estate planning documents designed for your family.
Holman Law understands that modern, blended families in Texas might need personalized forms and documents for family estate planning. We can talk through your options and draw up the documents your family needs.
FAQs About Caregiving in the Modern Family
1. How do I get paid to be a caregiver for parents?
We recommend that individuals who wish to get paid for caregiving come to us to discuss options. We can help you:
- First, set up a caregiver agreement
- Second, learn what state and federal programs might be able to help pay for caregiving
- Third, ensure that a proper plan to document caregiving expenses is in place to limit questions over inheritance down the road
2. Can a caregiver make financial decisions for elderly parents?
A caregiver can only make financial decisions on someone else’s behalf if named as joint owner on their accounts or property—or if granted financial power of attorney. A financial power of attorney is a form one can use to empower another person, including a caregiver, to make decisions on one’s behalf.
Have additional questions about caregiving in the modern family?
Holman Law can help. From setting you up with a caregiver agreement to talking through the finer points of estate planning, we can help you save money and avoid trouble down the road. Contact us today for more information.
Steven C. Holman
Estate Planning and Elder Law Attorney
I love to spend time with my wife and three children and serving the Dallas Fort Worth community. I provide clients with a wealth of knowledge and experience navigating each individual’s Estate Planning needs including Trusts, Probate, Elder Care Law, and Long Term Care Planning. My law firm specializes in assisting clients with complicated legal forms and qualifying for the maximum Medicaid and Veteran (VA) benefits in Texas.