As we age, we tend to need more care. Frequently, the provision of that care falls on our younger, healthier family members.

I recently had the son of a client come to see me. His parents are in their mid-90’s, and he is coordinating and tending to their care needs, which are substantial. He was telling me about a speech President Obama recently gave where the President had a 104 year old World War II veteran behind him; the President was praising the 104 year old veteran for his service and for achieving his advanced age. The son jokingly said to me, “What no one mentioned is that the 104 year’s son–who is 80 years old– is the one caring for his aged father.” The truly funny thing is, there’s probably a great deal of truth to that joke.

The adult children of elderly parents often spend a great deal of their time and effort caring for their parents. More than that, the children often spend their own money to provide for the needs of their parents. The children do these things out of love, and without question, their dedication is admirable.

In some cases, the care the parent needs simply gets to be too much for any person to handle in a home environment and the parent needs to begin residing in a nursing facility. Once in the nursing home, the parent will pay $9,000 to $12,000 a month until his funds are depleted, at which point in time he will likely qualify for Medicaid benefits.

All of the parent’s money will have gone to the nursing home, and his family will not receive any of his estate. This is not what the parent would have wanted. People want to leave something to their children. While they don’t want to “live off the government,” they also don’t want to leave this world with nothing to pass on to their family. Aside from the obvious financial benefits to the family, there are psychological benefits to a person when they feel that they are contributing to future generations of their family.

A recent New Jersey appellate case highlights the potential pitfalls with one Medicaid planning technique that some attorneys employ in order to enable an elderly client to preserve a portion of his estate for the benefit of his family. The technique is called a caregiver agreement.

Instead of having a child gratuitously provide care to an elderly parent, a caregiver agreement permits a parent to compensate a caregiver child for the care the child is providing to the parent. In the recent case, the court found that the caregiver agreement was invalid.

I always advise clients that if they are going to use a caregiver agreement, the agreement and the provision of the care must be arranged in a very coordinated and careful manner. I would only advise using this technique if you retain the services of a Certified Elder Law Attorney. There are so many things that a person could do wrong with these agreements, that I could not discuss the potential pitfalls in an article of this size.

But here’s an example. In this recent New Jersey appellate case, the care that was being provided to the elderly parent was, in part, being provided by a 12 year old grandchild. Now, having a 12 year old grandchild as a paid caregiver is so silly that I don’t think I even need to mention the problems with that situation.

A caregiver agreement may work to preserve assts for the family of an elderly, needy individual, but care must be employed in drafting the agreement and in documenting the care that is being provided.

Caregiver agreements can provide structure, clarity, and financial protection for families navigating long-term care decisions. When properly drafted, these agreements help avoid misunderstandings while supporting Medicaid planning goals and preserving family assets for the future.