Additional Information:

I am in the position where I have to decide whether to put my father in a Massachusetts nursing home or not. I have found a facility in Greater Boston area that seems appropriate, it costs $4,500 per month. My brother has said he would like to keep him out of a nursing home.  Could my father pay my brother the $4,500 per month instead of paying it into a nursing home? What are the legal/tax implications if any, and can we do this? It would be great solution for all as my brother has had some financial difficulties over the last few years, and it would keep my father out of the nursing home.

ATTORNEY ANSWER:

The answer is yes, your brother can be paid but with some very big restrictions.  In Massachusetts, MassHealth assumes that all work a child does for a parent is from familial love.  All payments to a child are counted as disqualifying transfers unless the parent and child have entered into a valid contract for services rendered called a personal care contract.  The contract should be executed before the payments have begun.  A blanket fee paid to your brother will not pass muster in the event your father eventually entered a nursing home and needed to apply for MassHealth assistance.  Your brother would be responsible for invoicing your father for the hours worked at a reasonable fee.  Income taxes will be incurred on the fees.  Also, it is important who your father appoints as his attorney-in-fact under the power of attorney.

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The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida, Waltham, Massachusetts, and Salem, New Hampshire.