Providing care for a loved one is one of life’s most generous acts—but it can also be physically, emotionally, and financially draining. Many family members spend years caring for aging parents, spouses, or relatives without pay, assuming they’ll be compensated later. But after a loved one passes away, caregiver compensation from the estate isn’t always automatic.
If you’ve provided unpaid care, it’s crucial to understand your rights and how to claim payment from your loved one’s estate.
Many families find themselves needing to provide care for an elderly relative, raising the important question: What is fair compensation for the family member who takes on the role of caregiver?
When faced with this situation, families typically consider one of three paths:
- Do nothing
- Amend the elderly relative’s estate plan to benefit the caregiver
- Create a personal care agreement to ensure fair compensation for services provided
To illustrate how these options might play out, consider the following family members:
- Mary, an elderly woman
- Christine, Mary’s daughter and primary caregiver
- Jill, Mary’s other daughter, who manages Mary’s finances and will serve as personal representative of Mary’s estate upon her death
Let’s explore how Mary and her daughters might address Christine’s caregiving services under each of these options.
Family Caregiver Compensation After Death:
The emotional impact of losing a loved one is profound. However, a second inquiry frequently arises for family caregivers: Is it possible for them to receive compensation after the individual they cared for has passed away?
It is essential to comprehend your rights regarding compensation for family caregivers after death, regardless of whether you have been providing care for years or stepped in during your loved one’s final months. We should deconstruct it.
Caregiver Compensation After Death:
As significant portions of the American populace age, they will become more dependent on care and support in their daily lives. These individuals and their families are required to make critical decisions regarding the type of care required and the provider of that care.
Perhaps the most critical factor in this process is the cost of care. When specialized care is necessary in intensive settings like hospitals or nursing homes, expenses can rapidly accumulate for many older individuals who will require some degree of assistance for the duration of their lives.
Many families experience a strong filial obligation to care for their elderly relatives themselves as a result of the exorbitant costs associated with professional care. Nevertheless, the personal cost of family-provided care is often significant: individuals may be compelled to sacrifice their careers, give up full-time employment, and sacrifice consistent incomes, as many older adults require near-constant assistance with mobility, personal hygiene, and medical requirements. Despite the substantial personal sacrifices they make, family caregivers are frequently not compensated for their time and effort.
Option 1: Do Nothing
Doing nothing is a common choice, especially when family members are on good terms. However, from a legal perspective, it can produce significant problems.
Under Arizona law, personal care provided by a family member is generally presumed to be offered out of “love and affection.”
Consider this scenario: Christine initially begins “helping out” her mother, as any devoted daughter might. Over time, Mary’s needs grow, and Christine reduces her full-time employment to part-time to accommodate her mother’s care.
Even if Christine were to move from another state and stop working entirely to provide exceptional levels of care, neither Mary (during her lifetime) nor Jill (after Mary’s death, on behalf of her estate) is legally obligated to compensate Christine. If Christine were to seek payment for her services, she would face the uncomfortable task of justifying the value of her contributions to her mother or sister.
Although maintaining meticulous records of her time and effort might support Christine’s case, any payment she ultimately receives is likely to fall far below the fair market value of her services. Moreover, choosing this route substantially increases the risk of an estate dispute, potentially creating a costly legal conflict between the sisters.
Check Also: Caregiver Compensation After Death – Complete Guide
Option 2: Change the Estate Plan
The second option is to update Mary’s estate plan to provide for Christine’s compensation. This approach is better than doing nothing because it creates a legally enforceable mechanism for payment. However, it has limitations:
- If Christine’s compensation is addressed solely through Mary’s will, Christine may receive payment only after Mary’s death.
- It is difficult to predict in advance how much care Mary will ultimately require or for how long. As a result, there could be a significant gap between the fair market value of Christine’s services and the compensation she ultimately receives.
- If the cost of Mary’s care depletes her estate, there may be no funds remaining for Christine—or for Jill—at the time of Mary’s death. Advances in medical technology and increasing longevity make this a very real possibility. Should Mary’s care needs exceed what Christine can provide, Mary’s assets could be quickly consumed to pay for professional care or to qualify her for publicly funded long-term care assistance.
Option 3: Create a Personal Care Agreement
The third—and often best—option is to establish a personal care agreement between Mary and Christine, clearly outlining the terms of services and payment. This approach avoids the pitfalls of the previous two options and offers several advantages.
A personal care agreement allows Christine to receive compensation as services are rendered, through a legally enforceable contract. The compensation can—and should—be tailored to reflect the fair market value of the services provided.
Moreover, when adequately documented, payments under a personal care agreement are not considered gifts from Mary to Christine. Instead, they are legitimate expenses that reduce the value of Mary’s estate for Medicaid eligibility purposes, without triggering penalties for improper asset transfers.
To avoid having Christine’s compensation treated as a gift, the personal care agreement should:
- Be in writing and executed before services begin
- Provide a detailed description of the services Christine will provide (and, ideally, examples of services she will not provide), including the schedule or frequency of care
- Compensate Christine at a rate comparable to local third-party providers
- Include provisions allowing either Mary or Christine to terminate the agreement
- Be properly notarized when signed by both Mary and Christine
Once a personal care agreement is in place, it remains crucial for Christine to keep detailed records of the services she provides and the payments she receives. With this documentation, all parties can be confident that Christine will receive fair compensation, protected by a legally sound agreement that helps avoid family disputes. Additionally, it allows Mary to begin “spending down” her estate, which may be important if she later needs to qualify for long-term care benefits.
How Much Should a Family Caregiver Be Paid?
The question naturally arises: “How much should a family caregiver be paid?”
To set a fair compensation rate, the parties should research several reputable home care agencies in their local area to determine the current market rate for similar services, charged either hourly or daily. Using this information as a guide, they can agree on a rate that is sufficient to fairly compensate the caregiver but not so high that it could appear to be a disguised transfer of wealth rather than legitimate payment for services rendered.
Conclusion:
In summary, while family caregiving often arises out of love and a sense of duty, it is important to address the caregiver’s right to fair compensation. A thoughtfully crafted personal care agreement provides the best solution to ensure that caregiving services are fairly valued, legally protected, and less likely to spark future family conflict.
Frequently Asked Questions:
Is there a deadline for submitting a claim against an estate?
Yes. Each jurisdiction has time limits for filing claims against an estate, often ranging from a few months to a year after death. It’s important for caregivers to act quickly and seek legal advice if needed.
How does a caregiver claim money from the estate?
The caregiver should submit a written claim to the executor or personal representative of the estate, detailing the amount owed, the basis for the claim, and any supporting documents (e.g. timesheets, employment contract).
Can a caregiver be paid from the deceased person’s estate?
Yes. If wages or expenses are owed to a caregiver at the time of the person’s death, those payments become debts of the estate and should be settled before assets are distributed to heirs.
