As a caregiver, you have great power—and great responsibility. Understanding family caregiver legal rights and is an important step toward maintaining balance and preventing ongoing care from becoming a burden.
Sigrid Haines, Esq., a partner at Whiteford, Taylor & Preston, LLP, explained it simply: “We all like to assume we’re in charge of our own lives and can manage our own affairs. But then people start to lose competency over time.”
Often, said Haines, financial capacity is the first thing to go. While many people assume they’ll be able to continue making their own financial and health care decisions indefinitely, that’s not always the case. It’s well worth understanding the different ways to provide financial caregiving for a family member—including what type of legal role to assume, what legal documents are required, and what kind of caregiving agreement might be required.
Here, you’ll find an overview of the main issues related to the legal aspects of financial caregiving for a senior family member and what you need to know about family caregiver rights.
Your legal role as a caregiver
Your legal role as a caregiver will depend on your unique situation.
One of the most common and straightforward vehicles is power of attorney, a voluntary delegation of authority to somebody else. The person named with the power of attorney gains the ability to act on someone’s behalf in legal or business matters. In senior caregiving situations, a durable power of attorney is usually the best choice (see details below).
Another common vehicle for defining a caregiver’s responsibilities is an advance health care directive, also known as a living will. This is a legal document where an individual specifies what actions should be taken for their health in the event they become unable to make decisions for themselves due to incapacity.
In some cases, the person requiring assistance no longer has the ability to make decisions or assign authority. A conservatorship may be appropriate for such individuals who have not delegated power of attorney or determined a health care directive.
Legal documents for financial caregiving
One thing’s for sure: The financial side of caregiving is rich in legalities. Here’s a quick guide to some of the documents, paperwork and legal topics you may encounter on your journey:
Power of attorney and durable power of attorney
Setting up a power of attorney isn’t complicated, Haines said: “If a person is competent, you can just get the form.” Some states even have a statutory form, and many law firms will also have their own paperwork to deal with specific situations.
However, it’s worth noting there are varying levels of power of attorney—most notably, a variation called a durable power of attorney.
Power of attorney involves helping someone shoulder legal responsibilities. But it comes to an end if the individual becomes incapacitated; it’s not considered suitable or “durable” during certain situations, such as end-of-life decision-making.
A durable power of attorney includes language indicating the agent will continue to have authority in the case of incapacitation. It can remain in effect until the person in question dies or revokes the power. This is usually the needed format for a senior caregiving situation, when mental incapacity may become a problem and when end-of-life decisions are a big part of the caregiver’s responsibility.
Setting up a durable power of attorney: To set up a durable power of attorney, the person requesting assistance will need to write out a document including details such as the date, your full name and clear language that identifies the document as a durable power of attorney. While the rules will vary depending on your location, most states require the presence of a notary when signing a durable power of attorney.
Living will / advance health care directive
A living will or advance health care directive must be signed to be valid, and in some states, it may require the presence of a notary to be considered legally binding. In others, it may not require a notary but may require witnesses.
Additionally, you’ll need to fill out a HIPAA Authorization Form. This form can easily be found online. By signing this authorization, an individual is consenting to have their health information used or disclosed for specific uses they have determined.
For more details, read our guide to important legal documents when caring for the elderly.
Caregiving laws
Curious about the laws around caregiving? Here are some of the most important topics you’ll want to know about. Keep in mind that caregiving laws can vary in different states and areas, and they can be subject to change. For more help, see our article on key legislation and resources for caregivers.
Know your rights as a family caregiver
Generally, caregiving laws focus on the rights of the caregiver—particularly, protection around time off from work.
The Family Medical Leave Act (FMLA) is a law stating that caregivers may be entitled to take extended time off from work to provide ongoing care for qualifying individuals. Employers are obligated to continue health insurance and restore employees to the same or equivalent positions.
Another program is the Senior Care Act, a non-Medicaid program that provides assistance for elderly individuals so they can keep living at home instead of in a facility. Through this program, approved family members can be hired and paid as care providers.
Taxes for caregivers
Caregivers may be entitled to certain tax breaks. For instance, taxpayers have long been able to use the Child Tax Credit (CTC) to claim a tax credit for children in their care up to age 16. In 2017, the federal tax law expanded the CTC, allowing taxpayers to claim as much as $500 as a nonrefundable “Credit for Other Dependents.” This includes elderly parents for whom they are providing care.
Dealing with family conflict
Families are complicated, and creating a financial caregiving plan often means navigating around marriage, divorce, potential inheritance, estrangement and other complicating factors.
Keep in mind some proactive steps you can take to help prevent potential conflicts:
Discuss the tough stuff in advance
A conversation about how to care for an aging parent can be uncomfortable—both with the parent and with siblings or other loved ones. However, as Haines said, “We’re all going to die. Nobody likes thinking about it, but we’ve all got views on what we’d like to have happen after.”
Having a conversation to define roles and responsibilities can be extremely helpful. But don’t stop there. Take the time to decide a process for decision-making in advance. As tough as these conversations may be, it’s short-term pain for long-term gain.
Hire a mediator
Disputes about financial caregiving can get bitter. It can be helpful to have an objective party involved; these experts are called elder mediators or adult family mediators. A mediator can help guide the conversation about care in healthy directions, helping groups find common ground and avoid conflict. It can help avoid costly legal battles and keep things civil.
Hire a care manager
Another option? A care manager. “I’m a huge proponent of care managers,” Haines said. “I even used one for my parents who have two loving children who get along. The care manager knows what kinds of resources there are out there in the community, what kind of supports to put in place to keep you comfortable, and how to put a care program in place.”
Form a team
Depending on how many assets the person requiring financial caregiving has, it may be worth assembling a team to reduce the overall burden.
“If people have a relatively small amount of money – $50,000 or less – that needs to be managed, it’s a pretty straightforward process. You put your money in their bank account, you pay their bills, and at some point maybe you need to apply for Medicaid,” Haines said. “But if they have more money that needs to be managed, then I usually think of it as a team process rather than an individual. It’s safer as a team process. You want people interacting with each other.”
For example, Haines noted that one client with a large number of assets had an estate planner, a CPA and a financial advisor.
Setting up a personal care agreement
Regardless of whether it’s a family member, a friend or someone else, whoever is providing care should have a personal care agreement. For instance, how will they be compensated? For a family member, is room and board enough, or will payment and/or insurance be required? While it may seem selfish to think about your needs and rights as a family caregiver, it’s much easier on everyone if you make things clear and specific, and put it in writing. After all, you can’t help anyone if you’re exhausted and financially overwhelmed.
A signed, dated contract listing specific duties and payment should be prepared to avoid ever-changing roles and confusion about responsibilities. Learn more for help on taking care of yourself and getting the caregiver support you need.
Caregiving considerations
The legal and financial end of caregiving can be overwhelming. However, when you break it down, it’s not necessarily complicated; it just requires a little advance consideration. With a little proactive planning and discussion, it’s possible to make a caregiving plan that doesn’t become a beast of burden.
