Liability Concerns from Parent Aging in Place

[CoolChange]

My elderly mother would like to do anything possible to avoid a nursing home or any other kind of assisted group living. She continues to live alone in the same small house, in the same small town, where she has spent the last 50+ years.

While she is also not thrilled about the idea of someone helping her in her own home, she is finally realizing that she does need some help with the daily chores of living. Currently this is just normal domestic things like laundry, cleaning, shopping, etc. She is still mentally sharp enough to manage her own medications and finances. Her body is just falling apart with age and wear.

We were looking at a home care agency for this kind of help. But, now my mother wants to just direct pay someone who she already knows to come in a few hours a week instead of going through an agency.

At this point, I am mostly concerned about my own liability. Here is some additional background that might be relevant:

• My mother put my name on her house title when I was a teenager.

• I am in the process of getting all PoA’s in place for managing her health and finances if she is no longer able.

• Mom’s entire net worth is less than $150K. She would be emotionally devastated if she lost this; but, the reality is I could support her current standard of living with little to no impact on my own.

• My net worth is currently hovering around the $3MM mark. While I do not advertise this, it would be easy for a talented lawyer to figure out that I likely have a relatively high net worth. This is what I need to protect.

I do hope that I am worry about nothing; but, risk management was a large part of my career. In that life, I would have had a team of MBA’s and lawyers to review and advise. Now, I am begging for your collective wisdom.

Thank you for reading through this; any insights will be appreciated.

 

[eyeonFI]

My elderly mother would like to do anything possible to avoid a nursing home or any other kind of assisted group living. She continues to live alone in the same small house, in the same small town, where she has spent the last 50+ years.

While she is also not thrilled about the idea of someone helping her in her own home, she is finally realizing that she does need some help with the daily chores of living. Currently this is just normal domestic things like laundry, cleaning, shopping, etc. She is still mentally sharp enough to manage her own medications and finances. Her body is just falling apart with age and wear.

We were looking at a home care agency for this kind of help. But, now my mother wants to just direct pay someone who she already knows to come in a few hours a week instead of going through an agency.

At this point, I am mostly concerned about my own liability. Here is some additional background that might be relevant:

• My mother put my name on her house title when I was a teenager.

• I am in the process of getting all PoA’s in place for managing her health and finances if she is no longer able.

• Mom’s entire net worth is less than $150K. She would be emotionally devastated if she lost this; but, the reality is I could support her current standard of living with little to no impact on my own.

• My net worth is currently hovering around the $3MM mark. While I do not advertise this, it would be easy for a talented lawyer to figure out that I likely have a relatively high net worth. This is what I need to protect.

I do hope that I am worry about nothing; but, risk management was a large part of my career. In that life, I would have had a team of MBA’s and lawyers to review and advise. Now, I am begging for your collective wisdom.

Thank you for reading through this; any insights will be appreciated.

Would an umbrella policy for you/mom address your concerns?

 

[Free To Canoe]

I think that there are a few of us with parents "ageing in place". Sorry no useful input but I do empathize. I want to see what I can learn for my situation. My mother is in worse shape but does not want any strangers involved.

 

[euro]

Specifically, what are you worried about being liable for? If she say accidentally burns down the house, or are you worried about paying the bills for the home care? Or specifically about liability if the "helper" suffers an accident while in your property? I could see the latter getting a bit murky under the wrong circumstances, especially if the helper is paid "under the table" (not reported, no workmans comp or taxes paid). That would be a reason to hire someone through an agency, I think.

 

[45th Birthday]

If your name is on the deed, then at a minimum you should be a named insured on her homeowner's policy and that location should be added to your umbrella liability policy (if you don't have one, get one). Worker's comp for any in-home caregivers would be another step, but probably not strictly necessary if only a few hours per week.

 

[Moemg]

My mother is in worse shape but does not want any strangers involved.

My mother only wanted to be cared for by family . When we finally pointed out that this was not possible she allowed me to hire an aide for a few days a week . After a few days my Mom loved the aide and the freedom it gave her not only did the aide food shop ,take my Mom to Dr's appts., do laundry she drove my Mom to the hairdresser for her semi weekly appts.. This care bridged the gap before she moved into an independent living facility.

 

[MarieIG]

Yes, what 45th Birthday said. Make sure that both you and your mother are named insureds on the homeowner's policy. There should be coverage for liability. Read the policy: make sure their is no "employee exclusion." (I don't recall seeing one on my homeowner's policy. Then get an umbrella, make sure that it covers your properties, that you are a named insured, and again that there is no employee exclusion. (If they are independant contractors you wouldn't buy wc insurance, but no matter what, if there is an accident you don't want the stress of a battle with the carrier as to whether an employee exclusion applies.) Pay them out of your mother's account (as she has the smaller net worth), and when hiring, you are acting on her behalf.

The liability concerns still exist even if the aides are hired through an agency although that can be mitigated if the agency agrees to defend and indemnify you for an claims arising out of the work/ services provided by their agency, including claims involving personal injuries to their employees to the fullest extent allowed by law, and further names you and mom as additional insured's on their liability policy. (Um, good luck on that though.)

 

[Brat]

Your Mother should pay SS tax. Treat her helper as an employee just like any other. Contact your state worker's compensation staff to see if you can obtain worker's compensation insurance for that occupation. Frankly using a payroll service can prevent a lot of administrative hassle. If your Mom says she can't afford that tell her you will provide the $ to see that she is well cared for.

I once worked for Fed Wage & Hour. The day will come when your Mom's helper will injure herself or walk out. Then the helper's friends and family will cagole the employee into filing with any/all agencies that can recover money. Sometimes those situations remind me of a bad divorce.

Don't buy a helper's request that s/he work off the books. Although the services are not tax deductible there is too much risk for your Mom. Remember, worker's compensation prevents an employee from suing the employer for injuries.

 

[MarieIG]

While wc prevents the employee from suing the employer, if mom is the employer, son as partial owner of the home may still be on the hook, and not entitled to the wc protection. (I am not saying not to pay ss tax and wc if she is an employee as opposed to an independent contractor.)

 

[euro]

My mother only wanted to be cared for by family . When we finally pointed out that this was not possible she allowed me to hire an aide for a few days a week . After a few days my Mom loved the aide and the freedom it gave her not only did the aide food shop ,take my Mom to Dr's appts., do laundry she drove my Mom to the hairdresser for her semi weekly appts.. This care bridged the gap before she moved into an independent living facility.

Same with my dad too - he resisted and resisted outside help and now he is very happy with the daily help he gets. turns out he is just a tightwad and didn't like the idea of paying for the help


(I know what you are thinking: yes, I have inherited all sorts of traits from him.... )

 

[ncbill]

you'll need to complete schedule h for home worker & pay SS tax.

I hired a payroll company to cut the weekly check since they'll handle both state & federal withholding.

 

[OldShooter]

A few thoughts:

@CoolChange, are you trying to substitute SGOTI for a lawyer who understands your state's laws? Not a good idea IMO.

I would hire through an agency, but you can do this by selecting the employee and then asking an agency to do the background checks, hiring, etc. and you can negotiate a fee and any other specific arrangements you might want to have. Yes, you will pay an hourly markup but you are off the hook for employment taxes, withholding, etc. AND the agency is insured. This will protect you from work comp and many of the other claims you might be worried about and it will protect your mother from losses due to malfeasance by the aide (if you become aware of them and can prove them.)

Be careful what you trust the aide(s) with. Access to a checkbook is a bad idea, as is use of a credit card in your mom's name. Also, secure any valuable jewelry and other possessions. Sadly, petty and not-so-petty theft is frequent in these situations. If you want the aide to buy food the best arrangement would be for him/her to use a grocery delivery service with the bills going directly to you for review and payment. That makes it more difficult for the aide to put his/her family food on your mother's tab. Install other protections as they come to mind. Better safe than sorry.

Re having your name on the deed, make sure you understand the basis step-up on death. You may be better off if the house is exclusively owned by your mother. Check with your attorney on this.

 

[CoolChange]

Thank You for Both the Moral Support and Suggestions

I appreciate all of the kind words and thoughts on my specific situation.

Specifically, what are you worried about being liable for? If she say accidentally burns down the house[-], or are you worried about paying the bills for the home care[/-]? Or specifically about liability if the "helper" suffers an accident while in your property? I could see the latter getting a bit murky under the wrong circumstances, especially if the helper is paid "under the table" (not reported, no workmans comp or taxes paid). That would be a reason to hire someone through an agency, I think.

I am not worried about the price of the home care; but, all of the rest and more.

My mother only wanted to be cared for by family . When we finally pointed out that this was not possible she allowed me to hire an aide for a few days a week . After a few days my Mom loved the aide and the freedom it gave her not only did the aide food shop ,take my Mom to Dr's appts., do laundry she drove my Mom to the hairdresser for her semi weekly appts.. This care bridged the gap before she moved into an independent living facility.

I am hoping for a similar outcome. Thank you for sharing.

Yes, what 45th Birthday said. Make sure that both you and your mother are named insureds on the homeowner's policy. There should be coverage for liability. Read the policy: make sure their is no "employee exclusion." (I don't recall seeing one on my homeowner's policy. Then get an umbrella, make sure that it covers your properties, that you are a named insured, and again that there is no employee exclusion. (If they are independant contractors you wouldn't buy wc insurance, but no matter what, if there is an accident you don't want the stress of a battle with the carrier as to whether an employee exclusion applies.) Pay them out of your mother's account (as she has the smaller net worth), and when hiring, you are acting on her behalf.

The liability concerns still exist even if the aides are hired through an agency although that can be mitigated if the agency agrees to defend and indemnify you for an claims arising out of the work/ services provided by their agency, including claims involving personal injuries to their employees to the fullest extent allowed by law, and further names you and mom as additional insured's on their liability policy. (Um, good luck on that though.)

Thank you for the specific pointers. I am already planning to discuss with our insurance agent; this will help guide those discussions (and my policy review).

Your Mother should pay SS tax. Treat her helper as an employee just like any other. Contact your state worker's compensation staff to see if you can obtain worker's compensation insurance for that occupation. Frankly using a payroll service can prevent a lot of administrative hassle. If your Mom says she can't afford that tell her you will provide the $ to see that she is well cared for.

I once worked for Fed Wage & Hour. The day will come when your Mom's helper will injure herself or walk out. Then the helper's friends and family will cagole the employee into filing with any/all agencies that can recover money. Sometimes those situations remind me of a bad divorce.

Don't buy a helper's request that s/he work off the books. Although the services are not tax deductible there is too much risk for your Mom. Remember, worker's compensation prevents an employee from suing the employer for injuries.

This will likely be a battle but definitely one that I need to win. (This is a small town with a lot of work being done off the books, especially when family/friends are involved.)

I know the IRS has specific guidelines to differenciate independent consultants from employees. Assuming we can make sure the caregiver fits the IRS definition of an independent consultant, do we still need to worry about WC insurance, FICA, etc.?

While wc prevents the employee from suing the employer, if mom is the employer, son as partial owner of the home may still be on the hook, and not entitled to the wc protection. (I am not saying not to pay ss tax and wc if she is an employee as opposed to an independent contractor.)

Any thoughts on my question above about the helper being classified as an independent contractor vs. an employee?

Same with my dad too - he resisted and resisted outside help and now he is very happy with the daily help he gets. turns out he is just a tightwad and didn't like the idea of paying for the help


(I know what you are thinking: yes, I have inherited all sorts of traits from him.... )

Mom's resistance comes from several angels; some of these seem to be:

• Too tight to pay for something she could do herself or doesn't need done

• Private, introverted person in general

• Fear of someone else being in control

Yes, I have inherited a fair number of her traits as well. My DD is already waiting for me to becoming a dottering old pain in her bum.

 

[CoolChange]

Agency vs. Payroll Company et al

I like the idea of using a payroll company at a minimum. I am struggling a bit to understand the benefit of forcing an otherwise independent contractor to work via a 3rd party home care agency, assuming we are insured appropriately. Am I missing something obvious, or even something not obvious?
Thank you all again!

you'll need to complete schedule h for home worker & pay SS tax.

I hired a payroll company to cut the weekly check since they'll handle both state & federal withholding.

A few thoughts:

@CoolChange, are you trying to substitute SGOTI for a lawyer who understands your state's laws? Not a good idea IMO.

I would hire through an agency, but you can do this by selecting the employee and then asking an agency to do the background checks, hiring, etc. and you can negotiate a fee and any other specific arrangements you might want to have. Yes, you will pay an hourly markup but you are off the hook for employment taxes, withholding, etc. AND the agency is insured. This will protect you from work comp and many of the other claims you might be worried about and it will protect your mother from losses due to malfeasance by the aide (if you become aware of them and can prove them.)

Be careful what you trust the aide(s) with. Access to a checkbook is a bad idea, as is use of a credit card in your mom's name. Also, secure any valuable jewelry and other possessions. Sadly, petty and not-so-petty theft is frequent in these situations. If you want the aide to buy food the best arrangement would be for him/her to use a grocery delivery service with the bills going directly to you for review and payment. That makes it more difficult for the aide to put his/her family food on your mother's tab. Install other protections as they come to mind. Better safe than sorry.

Re having your name on the deed, make sure you understand the basis step-up on death. You may be better off if the house is exclusively owned by your mother. Check with your attorney on this.

Not trying to substitute for a lawyer review; just trying to gather thoughts before reviewing with my firm. I have generally found that preparation going into discussions with any professionals is time well spent.

If only she had grocery deliver in her area. (I know Amazon works for some things; but, not so much for milk, ice cream fresh vegetables, etc.) I am hoping periodic reciept review handle this. We have no intention of allowing access to checkbook, etc.

Thank you for the pointer on basis; but, I don't believe this will be a major issue for me (at least under current tax code) since I was non-contributing to the purchase. Even as a teen, I did not think this was the best idea; but, it is what she wanted and still does. At this point, whatever makes her sleep well is worth any potential minor additional tax I may owe down the road. (House and land is 20%-25% of mom's net worth but is important to her.)

 

[Luck_Club]

You don't mention the area. I hired an agency for 24/7 in home care in south Florida running $170 a day.
In New England they want well over $300 per day.

Big variation, but neither could your mother afford.

If she has someone in mind to help out. Make periodic gifts.

If she has someone already in mind. Just make periodic "gifts" for their kindness to your mother.

 

[pb4uski]

I would explore getting the title to the house changed so it is solely in your mother's name but would have a transfer on death to you if that applies to where the house is located.... the end result is similar but you are not responsible for anything happening on the property while your mom is alive since you are not an owner. To be clear, I am not a lawyer so if you explore this alternative and it is available where the house is located consult a lawyer.

Then have it sensibly insured by your mom... especially for liability.

Would your mom be this home care provider's only client or does s/he do housework for other clients? If the latter, then it might be easier to consider the provider as an independent contractor and avoid withholdings, 941s and all that stuff.

 

[Blueskies123]

On another point, there might be an inheritance problem with your name on the deed. If you were not on the deed, and you inherit the house, you get a stepped up basis. It is probably too late but you should talk to a tax accountant.

 

[97guns]

Agency or not, be careful of the care giver stealing from you, I have and have seen multiple first hand experiences. We delayed my dads placement into a nursing home for as long as we could but I had already been retired at that point and was able to care for him until then. He had COPD and only lasted 6 months in the nursing home, the admission to the home was mainly because he needed 24/7 care, at $5500/mo it can wipe out your moms $150k nest egg quickly so plan right.

 

[pb4uski]

+1 We also had stuff stolen from my aunt while she was in the nursing home so keep any valuables at home.

 

[gayl]

Just my 2c;
1. Retitle the house back to get stepped up basis (apx $14)
2. Have your CPA handle payroll puts your assets further out of reach
3. Increase your umbrella insurance to 4m

 

[OldShooter]

... I am struggling a bit to understand the benefit of forcing an otherwise independent contractor to work via a 3rd party home care agency, assuming we are insured appropriately. Am I missing something obvious, or even something not obvious? ...

Obvious or not, I don't know, but using an agency does brings to you additional liability protection, particularly against claims by the care giver. It also relieves you of the biweekly or bimonthly task of reviewing time cards and data entry to a payroll service or, worse, of doing the whole thing as a QuickBooks payroll. And, going through a service may actually benefit the caregiver due to possibly availability of health insurance and retirement savings programs. Finally, it is a little easier to fire a caregiver via an agency rather than direct and may reduce your risk if the caregiver is in a protected class and decides to claim discrimination.

When I had my business we always hired by selecting the person, then running them through an agency for at least a six-week trial period. For us this avoided the hassle of setting up payroll, benefits, etc. until we were sure the person would work out. AFIK no employee ever complained about this.

Re independent contractor, your caregiver will probably not qualify. You will be setting hours, telling him/her how to do the job, he/she will probably not have other customers buying the same services, etc. There is an IRS list of 20 questions used to determine classification. You should probably look at that.

Miscategorizing can be painful, too. I am a SCORE small business mentor and I used to co-mentor with a former CPA. His scenario was roughly this: You let the independent contractor go, he/she files for unemployment. State discovers that the person was improperly categorized and was really an employee. State comes after you for unpaid work comp, unemployment, etc. and also tells the feds. Feds arrive and can force you to pay all of the back social security with no statue of limitations and regardless of whether employee has already paid self-employment tax. That is what I remember; maybe your CPA or someone here could bless or correct it.

Re stealing, remember that anything not nailed down, like small antiques, must be watched. I would consider putting a couple of internet-enabled cameras in your mom's place. More as a deterrent than as something you have to monitor. Lots of stories out there of people getting mistreated in nursing homes, evidence being from a camera that the family has installed.

 

[CoolChange]

Thank you all again for the comments and suggestions. I really appreciate you taking the time to help me think through this.

 

[Free To Canoe]

My mother only wanted to be cared for by family . When we finally pointed out that this was not possible she allowed me to hire an aide for a few days a week . After a few days my Mom loved the aide and the freedom it gave her not only did the aide food shop ,take my Mom to Dr's appts., do laundry she drove my Mom to the hairdresser for her semi weekly appts.. This care bridged the gap before she moved into an independent living facility.

Thanks for sharing. Since she has dementia, logic does not apply with my Mother. She doesn't realize that there are problems. I am sure that having a caregiver will help her stay in her home longer. Once we get a caregiver in there, she will probably warm up to it.

 

[Brat]

The OP's Mother appears to be of sound mind. Maybe a gift the OP could give her is a visit with an attorney who serves the elderly. That attorney could help her change the title on the house and do other things like prepare a will, POA for health care etc.

I understand why so many 'helpers' want to work off the books. If that 'helper' also has other clients then there may be a basis for claiming that person as an independent contractor, keep in mind the fact that your Mother will need to know who else the helper works for. The problem is that it works until it doesn't. Also, if the helper receives more than (as I recall) $500 over the year she will need to prepare a 1099.

 

[pb4uski]

A friend of DW does a lot of home care for the elderly.... and frequently under-the-table. She has no idea how screwed she will be in about 10 years when she is physically no loer able to do that work and will be getting a piddling SS check because she has paid in so little because she has worked under-the-table so much.