What Minefields Can Be Avoided in Paying a Family Caregiver?

Posted August 22, 2025

Family caregiver

Question:

What are the minefields families should be aware of when they become a caregiver to an older loved one? (I heard the story of a man wanting to get paid his lost salary and benefits from his deceased mother’s estate since he left his job to care for her but no legal document about this agreement was in place and he lost his lawsuit.)

Response:

The biggest issue is that there’s often no agreement ahead of time. It’s not unusual for a family member to step in when needed, perhaps not intending their role to be long-term. When it does become a big sacrifice, the other siblings may feel a mixture of relief, guilt and blame, that the sibling did not have to sacrifice so much or that they would have made other decisions.

In some cases, the parent may begin compensating the child on the side or change their estate plan favor them. However, without at full discussion and transparency, this may be viewed as undue influence and either get challenged in court or permanently harm family relationships. It’s best that all these issues get hashed out while the parent is still alive rather than after the fact.

Any agreement about care and compensation should be put in writing and be open to modification. Often people have different understandings of conversations that are not revealed until they are written down. The act of writing often brings up new issues that need to be discussed. And, of course, memories change over time.

Circumstances also change over time. A parent’s care needs can grow. A child who was available to provide care at one time may not be able to do so down the road. Everyone needs to be open to modifying the agreement as needs and situations dictate.

Turning to taxes, if a child is paid, the question is whether it’s a gift that does not have to be reported to the IRS or taxable income. Strictly speaking, it’s the latter if it’s compensation for services, but since it’s among family members it’s rare that it’s actually reported.