My sister has been caring for our father with mid to late stage alzheimers for about 3 years. He lives in an addition he built on her house with her family (husband and 2 high school aged kids). It’s a very supportive and loving environment and they do an excellent job caring for him. He loves it there but his presence has created a major strain on their family, especially the kids.
Dad owns a house a couple of towns over that we rent for $1200 per month. Sister puts all of the proceeds in his savings account because his pension more than covers his living expenses. Her son (oldest child) is a great kid and tremendous help to her in caring for his grandfather. He plans to attend college in the town my fathers house is in, which is about 20 minutes from my sister’s house. He had planned to commute from home but now he doesn’t want to because he’s just tired of everything that goes with the arrangement, which I can appreciate, especially at his age.
He wants to live in dads house while he attends college (rent free). He also wants to let a friend live there with him who will pay for their utilities but otherwise rent free too. My sister feels like they have earned the right to use dads house because of everything they go through caring for him. She thinks that if dad had a clear head he would want it that way. I’ve been pushing back because I think it’s entirely wrong. Now she wants to pay me half of what would have been the rent to make me whole from an inheritance perspective. Hello, he’s still alive. What if his health takes a major turn for the worst and he needs his money? Four years of free rent equals almost $60k in earnings for dad. She says that his insurance would cover any expenses related to that. Is it wrong for me to protest? I’m very interested in the opinion of others who are caretakers like my sister. After all, I’m not living it first hand like she is. Any advice would be most appreciated. Thank you.
If it were me, I'd have them draw up a legal valid personal services contract for caregiving for the daughter he lives with; I assume for whatever reasons, you want to keep the college town house (why?), then perhaps move the house in the college town into a trust or an LLC with the grandson and the college roommate paying rent that feeds the trust or the LLC to pay for all property expenses (insurance, taxes, a kitty for maintenance, etc); maybe take a big chunk of the $ in the savings account to set up a special needs trust for dad that he can draw from and won't count as an asset for Medicaid (if he ever needs to go that route).
Personally, I think the free rent is going to be a big problem. Not just with family but also for the roommate, what if something happens, like toilet goes out or party goes too far and stuff gets damaged, then who pays or who is responsible issues.
What if you all find that one football weekend, a dz kids sleep over and party hard at the house, is that going to be an issue? Girlfriend moves in? If something happens, then grandpa as the property owner could be liable. See what the attorney suggests. Good luck!
I believe what you are saying is that the house in the town 20 mins over from your sister's house is "rented out" for $1200 a month, and this income would be lost to dad if the grandson were to live there free when going to coilege. If grandson and friend want to rent the house for $1200 a month - that could work - as long as they are good tenants. The whole arrangement seems to be quite loose financially, and driven by the son wanting a free place to stay with his friend. The suggestion to pay you half of what would have been rent as advance inheritance is irregular, at best, to me.
My opinion is that dad's finances should be kept separate from grandson going-to-college expenses. Making an arrangement so that dad loses $1200 a month income is not sound to me, nor good for dad's welfare. Talk about jumping the gun! As you say, you don't know what his future needs will be, I am assuming that your sis has POA. Regardless. IMO, she is not, in this suggestion, acting in dad's best interests. I wonder what a lawyer would think of it? Have you thought of consulting one?
I am not a hands-on caretaker as your sis is, but I am medical and financial POA for my mum, and would never enter into this kind of arrangement.
As Jeanne says your sis is entitled to be paid for her caregiving duties, and I would think that is true of her son also, if he has made any significant contribution.
Please urge sis to keep these various financial dealings clear, and separate, and don't participate in advance inheritance. unless a lawyer can assure it it is OK.
Take care and let us know whatv happens. ((((((hugs)))))) Joan
My advice still stands:
1) Do not divide up an inheritance until it is an inheritance!
2) Establish compensation for the caregiver in the here-and-now.
3) Caregiver can do as she pleases with the caregiving money, including buying herself luxuries or helping her kids through college.
What Dad decides to do for grandchildren while he is alive should be entirely separate from inheritance and from caregiving compensation. If he is going to in effect give one grandchild $60,000 for rent, is he planning to do the same for all the other grandkids? I guess it is not a requirement that he do so, but speaking as a grandparent I think that would be what most of us would want to do.
Having a fair compensation for the caregiver while the caregiving is happening reduces the complications of all the other intra-family transactions. The inheritance doesn't have to be adjusted because one child did more of the work. The grandchildren can be treated equally if that is what the grandparent wants. Financial decisions can be made based on what is best for Dad, not how it impacts the estate value for future inheritance.
And, yes, paying out money to the caregiver now lessens the amount that can be divided later. But that is fair, above board, and clear to everyone involved.
Sister is entitled to compensation for caregiving. A personal care agreement should be drawn up by an elder law attorney specifying what they do and what Dad pays. She should not have to wait for an inheritance to get compensated. If Dad paid for the apartment addition to their house, and if it increases the value of their house, then I suppose that is a compensation, too.
Personally, I don't think she should be able to evict you from a house you are paying rent on. (Is $1200 a fair market value, or does that represent a family discount?) Especially if it is Dad's house and he does not want to do that. I'm sure he loves the grandson, and yes, he owes the family that is caring for him, but I'll bet he loves you and your family, too.
If the only way the caregiving family could be compensated was by the use of the house, then I might have a different opinion. But it sounds like he can afford to pay his way, and that is what should be happening, in my opinion. He should pay a monthly amount. Then Sister can use it as she sees fit, including renting an apartment or home for her college-bound son.
Just my opinion, of course.