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Tracy Stewart
Tracy Stewart
Home Healthcare for Mom & Dad: Do Your Homework
Helping your clients learn how to do their homework before hiring home healthcare helpers can save them money and peace of mind.

September 22, 2011
by Tracy Stewart, CPA, PFS

Whether your clients live near their parents or several states away, at some point they may need to make some sort of assisted-care arrangements for their aging parents. It is not unusual for an incident or crisis to prompt action and they’ll have to make quick decisions.

In these situations, especially if there are no nearby relatives available to help, they may be under pressure, leaving no time for thoughtful research. Most elderly people prefer to stay in their own home, instead of moving to assisted living. Generally, there is a choice of either hiring home healthcare individuals or contracting with a home healthcare agency that supplies the home healthcare assistants.

Hiring an individual who is not affiliated with a bonded, insured agency has its risks. Over the years, Richard Talbert, estate planning attorney and CPA in College Station, Texas, has developed tips for his clients to consider when they are in the market for home healthcare assistance for their aging parents. “Home healthcare providers can provide good physical care and/or companionship, when it is greatly appreciated or needed,” Talbert explains, “but not all caregivers off the street have your sole interests at heart.”

Richard Talbert’s Home Healthcare Helper Hiring List

  • Background check. Begin with getting their driver’s license and Social Security numbers. Have your client either run a simple Internet search, which may turn up a criminal record, or get permission to do a background check. Unless your client is a private investigator by trade, have them hire a company to do the check. Some applicants could be opportunists hoping to steal jewelry and silver pieces that fit in their pockets. Some want to get identity theft information for their own use or that of accomplices. Others are looking for pain medications, to replace with placebos and sell Mom’s prescription on the street.
  • Hire as an employee, not as a subcontractor. For home healthcare individuals, your client is the one setting the aid’s hours, providing the workplace and the equipment. As such, your client will likely have payroll tax liabilities. The Internal Revenue Service (IRS) has severe penalties if your client runs afoul of employment tax procedures. Ensure that your client sets this up correctly before they hire a home healthcare employee.
  • Risks of paying with cash. Your client may be tempted to pay their employee with cash to save money or avoid the hassle of payroll tax reporting. Advise against them doing so. Later, if a few of the silver spoons go missing and your client accuses their employee of theft, the aid may claim injury on the job or improper handling of their Social Security taxes. This will lead to bigger and more complicated issues for your client.
  • Get workers compensation insurance. If your client’s employee is injured while helping their parent get out of the bathtub and they do not have workers’ compensation insurance, your client has essentially set themselves up for another liability.
  • Driving risks. If your client wants the home healthcare individual to drive their parents’ vehicle to run errands and take them to the doctor, it is strongly advisable that your client checks the aid’s driving history before hiring them. In case of an accident, your client is personally liable for all negligent entrustment if they’ve handed over the car keys to someone with a prior driving while intoxicated (DWI) conviction or revoked license. Your client’s personal liability is much greater than the value of that vehicle.
  • No substitutes. When your client hires an individual who is not affiliated with an agency, there is no guarantee that anyone will show up every day. The absenteeism will likely happen on a day when your client will be unable to drop what they are doing to stay home with Dad.
  • Executor liability. Consider that an executor has personal liability for, among other things, tax compliance of the decedent. After the funeral, home healthcare assistants can file job claims against the estate. If your client is the executor, they will be personally liable for that claim.

Save This List for Later

It is tough enough to see parents go from being there for you to needing you to be there for them. Getting tied up with the police or the IRS is not going to make your client’s life easier.

Send this article to your clients with aging parents. For the personal touch, send it by snail mail and enclose some tape so they can tape on the inside of a closet for future reference.

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Tracy B. Stewart, CPA, PFS, CFP, CDFA specializes in family law litigation support in Houston, Texas. She helps clients protect their wealth during property settlement negotiations. She is a member of the AICPA Personal Financial Planning and the Forensic and Valuation Services sections. Stewart is a board trustee for the Collaborative Law Institute of Texas as well as on the Executive Board of Texas Society of CPAs. You can contact her through www.texasdivorcecpa.com.

* The AICPA’s PFP Section provides information, tools, advocacy and guidance to CPAs who specialize in providing tax, retirement, estate, risk management and investment advice to individuals and their closely held entities. PFP Section members, including PFS credential holders will benefit from additional resources on aging parents and other elder planning related topics in Forefield Advisor on the AICPA’s PFP website at aicpa.org/pfp. All members of the AICPA are eligible to join the PFP section. For CPAs who want to demonstrate their expertise in this subject matter, apply to become a PFS Credential holder.