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Providing compensation to an agent under a power of attorney is a delicate issue, and it depends in large part on whose eyes are doing the beholding. First, let’s be clear about terminology. Compensation is different from reimbursement for expenses paid- instead, it is payment for services and it should be treated as taxable income. Second, you must consider who will be questioning the amount. Is it siblings who might think you’re taking too much of their rightful inheritance or the Medicaid agency, which may treat the payments as a transfer rather than payment for services? In either case, one question is what would it cost to hire someone else to perform the same services in your community. Unfortunately, this may be difficult to determine since there may be no service that does exactly what you describe, but you may be able to get some guidance at least for some of what you list. Then you may want to discount it, since many if not most family members provide these services at no charge.

If you’re concerned about other family members, it’s best to talk with them first and come to an agreement on the proper compensation. But the Medicaid agency may still object to the amount, arguing that there is no obligation on your mother’s part to make the payments in the absence of a service agreement. You may draw up a written agreement, but if you’re signing as both parties – on your mother’s behalf under the power of attorney and on your own as the service provider – it could appear a little self-serving. That said, it may be the best way to go. In any case, we recommend meeting with one of the experienced attorneys at Alperin Law to determine what is best for your situation.

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