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Preventing family feuds: when families choose to care for aging relatives at home, these arrangements can strain even the strongest bonds. A formal contract will protect all parties and help keep family squabbles at bay.

Article Excerpt
The number of Americans age 65 and older continues to grow at a rapid pace. According to the U.S. Census Bureau, this age group made up 12 percent of the total population in mid-2006. By 2050, the bureau estimates, it will increase to 21 percent. In sheer numbers, these percentages translate to 37.3 million seniors in 2006 and 86.7 million in 2050--and that's just here in the United States. (1)

Many factors have contributed to this growth, but technological and medical advances have perhaps made the biggest difference. Life expectancy at birth has increased for the average American from 68.2 years in 1950 to 77.8 years in 2005. Likewise, life expectancy at age 65 rose from 13.9 years in 1950 to 18.7 years in 2005. (2)

Unfortunately, living longer does not necessarily mean living better. Seniors often face major health concerns just when their income stream is static and their living expenses are rising. Tough economic times are forcing many older people to rethink their living arrangements, with many choosing to share housing with their adult children. These accommodations can include varying levels of financial and personal dependence, with some seniors needing only a place to live and others needing full-time care from their children. (3)

This arrangement may seem to be an ideal solution, but it can be fraught with potential problems for parent as well as child. These problems include tax issues and future eligibility for Medicaid benefits should the need for long-term nursing home placement become necessary for Mom or Dad.

A contract for care

Elder law attorneys often have to deal with the question of how best to help clients give a formal structure to living and financial arrangements with their adult children. One important concept is reciprocity, where adult children voluntarily assume the role of caretaker for their elderly parents as a form of repayment for the care and upbringing provided during their childhoods. (4)

Reciprocity is rooted in moral obligation and does not envision the child being paid for this care. About 60 percent of states have filial responsibility laws. (5) These laws, both civil and criminal, embrace the concept of reciprocity by imposing a legal duty on capable adult children to support their needy parents.

While these laws are on the books, most states do not actively enforce them. This might be because the statutes are vague about who has standing to assert them, or it could be that the advent of Medicaid legislation largely did away with the need for statutes rooted in the "poor laws" of colonial times. (6)

Eligibility for Medicaid benefits is a major reason that older clients meet with elder law attorneys. These clients want to move in with their children, or have their children move in with them, so they can stay in their own communities as long as possible.

In return, these parents want to compensate their adult children without jeopardizing their own ability to qualify for Medicaid benefits if they need nursing home placement down the road. As Medicaid laws have become more stringent, elder law attorneys have developed alternatives to meet the often-competing goals of compensating children and maintaining future eligibility for Medicaid benefits.

A useful tool in these circumstances is the personal service contract, sometimes known as...

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