Mother (93) in SNF two weeks wanting to "go home". Frail but pretty sharp- some confusion especially with pill management. Severe neck pain forced a move to SNF but she wants out (don't blame her). The caregiver she really likes wants to move into the home (with young daughter) and provide 24/7 care for room and board? Could likely get government care payments of $1600/month. Other than scary "crossing the line" as an employee are there legal issues of minimum pay, etc?
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Let's say your mother falls & the child is hurt too. Who is the caregiver going to attend to first? Your mother is 93 with severe pain issues. Her mental capacity is effected by her age, regardless. Don't fool yourself saying she is still pretty sharp but also has some confusion. One can't be sharp & then get confused. Remember, your mother is 93. She brought you into this world & raised you. Now she needs your help. You need to act in what is the best interest for your mother & that may not be what she wants.
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Will she quit her job at the nursing home? WHO will care for the child if she's caring for your mother in law full time? WHO will pick that child up from school, activities, wherever, if she's caring for your mother in law full time?
My answer is no.
I do, however, know someone that took care of an elderly woman that lived in her home with her pre-teen and then teenage daughter, and it worked out wonderfully. The elderly woman liked the teenage daughter more than the caregiver!! She eventually passed away, but that arrangement lasted for many years. So, it can be done & not everybody has bad intentions.
Come to your senses quickly. Yikes!!!
Wanting to home should not always be taken literally. Sometimes it is a desire to return to the past and the way things were years ago when life was good. I would give this time. The elderly require a lot more time to adjust to transitions and changes. When I say give it time, I mean weeks and months.
Seriously, talk to a lawyer. I personally would not ever enter into this kind of arrangement. Who is to provide care when the live-in caregiver is "off duty"? Nobody can work 24/7/365. I'd rather have my mom somewhere there is always staff on duty, regardless. Who provides care if the live-in is sick or injured or something unplanned happens to the child? Too many variables for me to have a willingness to even explore it. What if the caregiver gets hurt in the home - there could be an insurance mess.
That's just my opinion though. I wouldn't do it without an iron-clad contract in place that defines the boundaries, limits, and terms of this arrangement.