My sister wants $10,000 a year to care for my mother in her home?
This is a good deal because she is a nurse and feels at home there. My mother has the money to do this (I am the POA) but will there be a problem down the road with the other siblings after my mother passes (she is 97). I am also the executor.
If your sister will take care of your mom for $10k per year I would jump on that deal. The going rate for skilled nursing where my mom is runs about $10k per MONTH, so your sister is offering her help and nursing services at a very low rate. Gifting her the money will avoid payroll taxes, but may interfere with your mom's eligibility when it comes to medicaid. There could be a penalty of delay in benefits if your mom tries to qualify less than 5 years after her last monetary "gift" to you or your sister. There is no way to foresee if she will be needing to tap in to medicaid - if she has to be put in alzheimers care or other very expensive levels of care it may be a concern. You won't know that until the time comes. I think your sister is very generous in offering this deal and she deserves some compensation, as you do too. But make sure as Rainmom said, to check out the POA document to stay within the boundaries of your authority. I think if it were me and the POA allowed compensation, I would treat it as wages and deduct the small amount of Federal Income Tax and FICA/Medicare from it. Or treat it as contract labor and your sister can pay her own taxes on it in estimated tax payments to the IRS. That way your mom won't be left in a lurch if need for government assistance arises. In other words, don't make the mistake of jeapardizing your mom's qualification for potentially thousands of dollars in assistance by saving a much lesser amount on avoiding payroll taxes.
Whether or not Mom may ever need to apply for Medicaid, consult an Elder Law attorney about the best way to set this up. As room and board payments? In a care agreement?
Gifting would definitely cause problems for Medicaid, and perhaps with with your siblings. If there is no chance of Mom needing Medicaid, and if your siblings can accept this gift as payment for services, then treating it as a gift may be OK.
BTW, I think you are being very wise in compensating the caregiver while the services are being performed and not deferring it to trying to get it out of the estate after mom passes. Take the next smart step and have an Elder Law attorney have you set this up.
p.p.s. - regarding you taking any compensation - check the terms of the POA agreement. It needs to state in this document that you are allowed to be paid for your service if it's to be done legally. My moms DPOA allows me to pay myself. It also allows me to pay my brother for taking care of moms cat! Neither of us take any compensation basically because we don't really need it at this time. If our circumstances were to change, we also might change our minds - since we can do so legally. But at this point we both would rather see moms money being used only for her own needs and wants.
P. S. The amount your sister is asking for is very reasonable. Whether you do this as an annual gift - which does not need to be reported to the IRS by either party, or set up a caregivers contract is your decision. Yes, it could foul up Medicaid but you can access if mom has enough money for her care without Medicaid. Keep in mind mom may not always be able to stay with your sister. As far as your other siblings go - I'd be up-front and honest with them. Just present it as its your decision to make as POA. If they start to fuss, give them some quotes of nursing home costs explaining that's where mom will be if sister isn't compensated. It can be a bluff - I doubt they'll call you on it once they compare nh cost vs sisters compensation. Also - if they object you can ask them which two months they'll be taking care of mom since it isn't reasonable to expect your sister to do it full time without any compensation. Again, perhaps a bluff but I'm pretty sure you won't get called on this one. BTW - I applaude you as POA for seeing the reason in needing to accommodate your sisters needs - so many don't and are more concerned with hanging onto every last cent of their own perceived inheritance.
Just a quick note on inheritance tax. Inheritance tax is paid by the estate not by the person recieving the inheritance. Also - last time I checked the amount was over one million dollars. Meaning an estate only has to pay inheritance tax on any amount of money over one million.
Snow, the other poster mentioned disqualification for Medicaid, not medicare. Medicaid is for those with no income/savings and it doesn't sound like this is your Mom;s situation.
Ohio doesn't have either inheritance or estate taxes, so that is not a concern.. $10,000 a year is a good deal for your Mom to get care, assuming yur sister is willing to do it. But, it should be with an agreement and done properly. Do you aniticipate objections from your sibs? Skip taking anything yourself. There would be no justification for that.
snowquail, I would contact an Elder Law attorney as I see too many red flags that might cause problems later down the road.
You mentioned your sister is nurse, is she retired? I was wondering why she is on Medicaid. The $10k could cause issues with her Medicaid qualification.
Now for your Mom, if the time comes where she needs a higher level of care [3 full-shifts per day], thus needs to be placed in a nursing home, could Mom afford that or would she need to apply for Medicaid? Medicaid might disqualify her because of the $10k given to your sister and to you.
Speak to an attorney about this - really. I agree that sister should be compensated financially for 24/7 care for mama, but "gifting" you too might cause a family fight. If you do things for your mom - get reimbursed for actual costs - not payment for your time. Did your Mom get paid for "doing" for you as a child?
I'm no attorney, but I don't see a problem with gifting her (and even you) $10k per year if you're the ones doing the work for mom's care. That's well under the annual gifting allowance from the IRS. The only issue would be if your mom needed Medicaid before she passes away. At 97, the chances of that are diminishing rapidly if she has a fair amount of funds remaining.
As for the siblings, make them the same offer if they take her 24/7. If none of them step up, so be it. They've been offered. Gift away in my opinion.
My sister wants it as a "gift". If we made a contract for "services" then she would have to pay tax on it. yes? How does it interfere with medicare? My sister is already on medicare 4 years now. She wants me to take $10,000 too because "nobody else is doing anything but us". I probably won't take it, but we are thinking ahead about inheritance tax. My mother is 97. Thanks for responding. I am all alone here.
Read my own post and it didn't make sense. My mother is already living in my sister's house (sister's husband not happy about it). But my mother feels at home there and it is the only place now (her house has been sold) that she feels at home. I don't want to alienate my sister as the only one that would take on this 24 hour job. My husband says he will visit me in jail.
That is very generous of her. I'd say her rate is quite low.
The best way to handle this is to make sure your sister and mom (or your sister and you as POA) set up a care contract (like an employment contract) so that the money she is paid is seen as payment for services...not as a gift. If this is done correctly (an elder lawyer may be of great service to make sure this is set up correctly) then there should be no issue.
Without a proper care contract, the money your sister receives could be viewed as a gift and either a) disqualify her from medicaid if the need ever arises, and b) cause issues with the other siblings when they seek their inheritance.
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Gifting would definitely cause problems for Medicaid, and perhaps with with your siblings. If there is no chance of Mom needing Medicaid, and if your siblings can accept this gift as payment for services, then treating it as a gift may be OK.
BTW, I think you are being very wise in compensating the caregiver while the services are being performed and not deferring it to trying to get it out of the estate after mom passes. Take the next smart step and have an Elder Law attorney have you set this up.
Ohio doesn't have either inheritance or estate taxes, so that is not a concern.. $10,000 a year is a good deal for your Mom to get care, assuming yur sister is willing to do it. But, it should be with an agreement and done properly. Do you aniticipate objections from your sibs? Skip taking anything yourself. There would be no justification for that.
You mentioned your sister is nurse, is she retired? I was wondering why she is on Medicaid. The $10k could cause issues with her Medicaid qualification.
Now for your Mom, if the time comes where she needs a higher level of care [3 full-shifts per day], thus needs to be placed in a nursing home, could Mom afford that or would she need to apply for Medicaid? Medicaid might disqualify her because of the $10k given to your sister and to you.
As for the siblings, make them the same offer if they take her 24/7. If none of them step up, so be it. They've been offered. Gift away in my opinion.
The best way to handle this is to make sure your sister and mom (or your sister and you as POA) set up a care contract (like an employment contract) so that the money she is paid is seen as payment for services...not as a gift. If this is done correctly (an elder lawyer may be of great service to make sure this is set up correctly) then there should be no issue.
Without a proper care contract, the money your sister receives could be viewed as a gift and either a) disqualify her from medicaid if the need ever arises, and b) cause issues with the other siblings when they seek their inheritance.
Angel