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John Legal
John Legal, Attorney
Category: Legal
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Experience:  Over 15 years legal experience.
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I have POA & am Trustee for my mother, who was living in Hawaii.

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I have POA & am Trustee for my mother, who was living in Hawaii. I had to sell her condo which was in Trust and am using the money to pay for her care in a care facility in WA, which isn't quite satisfactory. My sister & niece, a certified care giver, brought up buying a house & letting my niece take care of her there. I live in AZ and am not sure what, if any, legalities I need to be aware of before doing this. Thank you for your time.
Welcome! Thank you for your question.

It is great that you are thinking ahead and asking these questions. Your legality issue fall into two categories: 1. liability and tax; and 2. Future Medicaid eligibility.

First, If your niece is providing the care privately then you need to know that she would be looked at by the IRS and Workers Compensation as an employee. There is nothing you can do in a contract to change the fact that she is an employee. Since she would be only working for your family there is no way to call her a contractor. It would be best if you treat her as an employee, set up a contact to pay her and withhold payroll taxes and workers compensation. To protect against your mother being liable if she gets hurt on the job you would need to increase her personal liability insurance to protect against that risk. A million dollars should be minimum.

Second, for Medicaid the home needs to be purchased in your mother's name or in the name of her Trust. You also need to make sure that any payments for care are only done when there is a valid caregiver agreement in place. The caregiver should keep a log of hours worked and services performed on a daily basis to justify the payments received.

Here is a sample caregiver agreement.

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Customer: replied 3 years ago.

My niece will be a live in caregiver, and also will be getting paid for her services. Should I deduct rent for living there from the amount she is paid? Would it be wiser to rent rather than buy a home?
She would not be required to pay rent under the Medicaid rules. I would suggest paying less to compensate for a free place to live. Renting or buying a home does not make much difference in this situation.
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