All too often, land that’s been in a family for decades is sold off and developed, simply because no one made a clear plan for the future. And while farmers and ranchers face unique planning challenges, they’re not the only ones who put off this essential step. Business owners, parents, and property owners all risk losing what they’ve worked hard to build by not taking estate planning seriously.

Below are three common estate planning mistakes agricultural families make—and how to avoid them.

Mistake #1: Putting Off the Plan

One of the biggest challenges farmers and ranchers face is figuring out who gets what—especially when only some children want to stay in the family business. How do you keep things fair without compromising the future of the land and operation?

That indecision often leads to inaction. But skipping the plan entirely leaves your family in a difficult position, with no clear direction on what to do with land, livestock, equipment, or even debt. It’s a common issue, and not just for those in agriculture. The same mistake happens with family homes, investment properties, and small businesses.

The solution? Start now. Estate planning doesn’t have to be all-or-nothing. With the right team—attorneys, accountants, insurance advisors, and financial planners—you can create a plan that reflects your goals and preserves your legacy, even if your situation is complex.

Mistake #2: Using Joint Ownership as a Shortcut

It may seem simple: add a child’s name to the deed and avoid probate, right? Unfortunately, this common move can create more problems than it solves.

Joint ownership comes with legal and financial risks. For farmers and ranchers, it can jeopardize eligibility for USDA programs and subsidies. It also means giving up full control of your property—and once the paperwork is done, reversing it can be expensive and trigger unexpected tax implications.

A better option? Hold land in a trust or a legal entity like an LLC, corporation, or partnership. These tools help you stay in control, reduce liability, and protect your eligibility for benefits—all while keeping your estate planning goals intact.

Mistake #3: Forgetting About Cash Flow

Death and incapacity don’t just bring grief—they bring bills. Medical expenses, long-term care, legal fees, and taxes add up fast. And because most farm and ranch assets are tied up in land, equipment, and livestock, they can’t be easily sold for cash.

When families don’t plan for liquidity, they often end up selling assets quickly and at a loss just to cover immediate costs.

The fix? Build liquidity into your estate plan. This could mean setting up life insurance, a line of credit, or other financial tools. A good estate planning team can also help you explore advanced options like life insurance trusts or structured buy-sell agreements that prepare your family for the unexpected—without forcing them to sell what matters most.

Final Thoughts: Your Land Deserves a Future

Whether you work acres of farmland or manage a ranch, your estate planning needs are personal—and essential. This isn’t just about protecting assets. It’s about protecting a way of life and the people who depend on it.

Consulting with professionals who understand the farming and ranching way of life when estate planning will provide peace of mind, knowing that your legacy is secure and your wishes will be honored.

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In Texas, water rights depend on whether the water is groundwater or surface water.

Generally, Texas law has held that groundwater belongs to the landowner. Groundwater is governed by the rule of capture, which grants landowners the right to capture the water beneath their property. The landowners do not own the water but have a right only to pump and capture whatever water is available, regardless of the effects of that pumping on neighboring wells.

Surface water, on the other hand, belongs to the state of Texas. It can be used by a landowner only with the state’s permission.

Groundwater

Water found below the earth’s surface in the crevices of soil and rocks is called percolating water or, more commonly, groundwater. Texas groundwater law is judge-made law, derived from the English common law rule of “absolute ownership.” Groundwater belongs to the owners of the land above it and may be used or sold as private property. Texas courts have adopted, and the legislature has not modified, the common law rule that a landowner has a right to take for use or sale all the water that he can capture from below his land.

Because of the seemingly absolute nature of this right, Texas water law has often been called the “law of the biggest pump.” Texas courts have consistently ruled that a landowner has a right to pump all the water that he can from beneath his land regardless of the effect on the wells of adjacent owners. The legal presumption in Texas is that all sources of groundwater are percolating waters as opposed to subterranean rivers. Consequently, the landowner is presumed to own underground water until it is conclusively shown that the source of supply is a subterranean river.

The law with respect to ownership of subterranean rivers is not settled in Texas. Both stream underflow and subterranean rivers have been expressly excluded from the definition of underground water in Section 52.001 of the Texas Water Code.

The practical effect of Texas groundwater law is that one landowner can dry up an adjoining landowner’s well and the landowner with the dry well is without a legal remedy. Texas courts have refused to adopt the American rule of “reasonable use” with respect to groundwater.

Winds of change are blowing with regard to groundwater.  The case of Cactus Water Services LLC v COG Operating LLC is now before the Texas Supreme Court.  At the root of the case is who owns produced water.  This case will determine whether or not produced water from oil and gas drilling belongs to the landowner.

Produced water is the water that is comes back up out of the well bore as the well is completed.  Produced water is highly concentrated with salt and chemicals from the fracking process, thus making it harmful to fresh groundwater supplies as well as fields and pastures used for agricultral production.

Produced water must be handled carefully to make sure it does not spread out on the surface and leach or migrate back into the ground.  That much salt on property will kill the grass for a long period of time.  Thus, produced water has been a 100% waste product and almost all of it has been traditionally, injected back into deep formations through injection wells.

Technological advances have transformed  produced water from a waste product into a potentially valuable resource.  Therefore, now we have disputes over ownership of this water.

The importance of Cactus Water Services LLC v COG Operating LLC is that the Texas Supreme Court (TSC) will now decide whether this produced water belongs to the landowner or the oil and gas company.  Over 14 briefs have been filed with the TSC from different entities.  Some on behalf of the oil and gas companies and some on behalf of the landowners.

You don’t have to wait and see how the TSC answers this issue.  You should be thinking ahead, particularly if you enter new oil and gas leases.  These leases should have provisions clearly addressing the ownership of produced water and any associated royalties.  Even if the TSC determines the oil and gas companies own the produced water, there is a way to contract in your oil and gas lease to ensure that you, the landowner, get a royalty and a revenue back.

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Recently, a client came in for assistance because they had sold property to another person by verbal agreement.  In Texas, the transfer of property must be by a written agreement and the description of the property must allow the property to be located on the ground.  My client’s verbal agreement was not valid, worse yet they tried to type something up on their own later that the buyer used to create a false document.  This created a bigger problem that will require a lawsuit to resolve.

A divorce is not something you want to tackle without competent legal advice.  You will find a plethora of  do-it-yourself divorce kits and a whole host of do-it-yourself forms available on the internet.  The problem is that many of these forms are too general, not Texas specific, incomplete, contain unnecessary clauses, or they are just wrong.

You will find that most judges do not like to handle do-it-yourself divorces.  Despite what you might think, this is not because they are out to make attorneys more money or because they are mean and hateful.  It is because judges know all too well the many pitfalls involved in divorce matters.  They are trying to help the do-it-yourselfers, and themselves, from future headaches and problems.

Legalzoom advertises itself as a cheaper alternative to an attorney.  Unfortunately, many people are lured by this promise of lower cost and do not seek the advice of a trained professional.  They believe the document created by LegalZoom will be just as effective as one created by an attorney.

I have reviewed many software programs and took a spin on LegalZoom.  While they look state specific, had I not been a Texas attorney who focuses on estate planning, I might have trusted that the site was providing me with accurate and current information.  Just a few glaring mistakes I found were:

LegalZoom’s advice with regards to Oral Wills.  LegalZoom would have you believe they are valid in Texas.  However, in September 2007, Texas repealed Sections 64 and 65 of the Probate Code, which authorized oral Wills.  In fact, under current Texas Law, oral Wills are ONLY valid if made before September 1, 2007 and in VERY limited circumstances.

Another mistake I found was with regard to providing for pets.  According to LegalZoom, Texas Law does not have provisions for taking care of your pets.  However, Section 112.037 of the Texas Property Code, enacted in January, 2006, does authorize pet trusts.

Almost every attorney I know who works with the formation of business entities has spent hours correcting DIY business formations.  Here is just a list of some of what we fix:

– Selecting the wrong entity

– Failing to complete all steps of formation

– Not correctly obtaining an EIN

– Picking a name that violates a third party’s trademark

– Failing to have a buy out agreement

– Failure to hold the Organizational Meeting or Annual Meetings

Without exception, all of these DIY providers have a disclaimer stating they are not acting as your attorney and their information should not be used as a substitute for the advice of an attorney.

If you are considering are selling or buying real estate, seeking a divorce, formation of a business entity or preparation of a Will, seek the assistance of an attorney.  They can best help you negotiate the minefield of problems that could arise later and the judge or your family will be most appreciative.

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Another factor to consider, that is often overlooked, is protection of your assets.  When you add another person to your accounts it opens you up to liability.  While it is unlikely the child or person you add to your account would take your funds without permission, it is a possibility.  But the danger I am talking about is accidental loss.  If the person you add to your accounts is ever in a lawsuit or audited, then the attorney on the other side is not going to care it was Mom or Dad’s money.  They just see another source of money for their lawsuit.  Texas provides access to accounts through a statutory durable power of attorney that gives the person(s) you want to have access, but no ownership.  Thus protecting your asset.

However, if it is your intent that a particular account with a financial institution pass to a named survivor immediately upon your death, this can be achieved if the account is set up properly.  As is too often the case, the devil is in the details.  The language sufficient to create survivorship rights is the key.  You do not want your loved one(s) to end up in a legal battle with the financial institution over whether this is the case.

There is a provision in the Texas Estates Code § 113.151, to assist in this regard.  Until this provision was enacted, there was no uniform type of signature card or account agreement governing bank or financial accounts.  The language varied from institution to institution.  In many instances, the agreement was expressed in Uniform Commercial Code legalese, conveying the distinct impression that the primary objective was not to give the customer meaningful information as to the rules governing the account, but rather to protect the bank or financial institution in every conceivable situation.

Estates Code § 113.151 reflects an admirable effort to give the consumer clear and understandable information as to the different types of accounts that are available and the legal consequences attached to them.  However, many banks and financial institutions in Texas still do not use the Uniform Account Form (i.e., statutory safe harbor language) provided in Estates Code § 113.151.  It is unlikely any of the national investment accounts use this language.

The importance of the language used on the bank or financial institution’s signature card being sufficient to create survivorship rights was highlighted by two recent appellate cases.  Armstrong v. Roberts, 211 S.W.3d 867 (Tex.App-El Paso 2006, pet. denied) and In re Estate of Wilson, 213 S.W.3d 491 (Tex.App-Tyler 2006, no pet.h.).  In the Armstrong case the bank had signature cards that stated “Ownership: Joint w suv.”  The issue before the trial and appellate courts was whether this language was sufficient to create survivorship rights.  The court indicated that this language, standing alone, was insufficient.  However, the front of the card made express reference to the back of the card which did contain language substantially similar to Estates Code § 113.151.  In the Wilson case, both the trial and appellate courts agreed that signature cards marked with an “X” next to the designation “Joint with Right of Survivorship” and which referred to a deposit agreement stating that “when a co-owner dies, the balance of the account belongs to the surviving co-owner(s)” was sufficient to create survivorship rights.

To avoid problems, financial institutions should follow the statutory safe harbor language when creating multiparty accounts and give serious consideration to using the statutory form in Estates Code § 113.151.

Another factor to consider is will there be  items such as real estate, vehicles and funeral expenses that must be paid as part of your estate.  If settling your estate will require dealing with these matters, then naming a person as a pay on death beneficiary may leave the executor without the funds to cover these matters.  Additionally, if you have a concern that your beneficiary may need assistance with managing funds you leave them, then naming them as a pay on death beneficiary does not allow the executor the ability to help manage the funds.

When working on your estate plan, your attorney and financial planner should work together to make sure potential problems are avoided.  It is not sufficient that your bank or financial institution have you sign a signature card stating joint account with right of survivorship.  Your estate planning attorney should review the card or document to make sure it complies with safe harbor language of Estates Code § 113.151.  This is particularly important if your bank or financial institution is a national firm.

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Following fast on the heels of a decision to go into a particular kind of business is the decision about what kind of legal form it should take. The most common options are a sole proprietorship, a partnership, or a corporation. You may lean toward the corporate route because you like the sound of having “Inc.” after the company’s name, but there are  more practical considerations to take into account.

More so than with some of the other structures for a business, starting a corporation means complying with formalities required by state laws. Once the shareholders (owners) of the business agree on some basic matters, such items are embodied in articles of incorporation that must be filed with the appropriate state agency. These essentials usually include:

• a corporate name;
• the number of shares that can be issued;
• the number of shares each owner will buy and for what contribution of cash or property;
• the nature of the corporation’s business; and,
• the identity of the directors and officers of the corporation who will handle day-to-day operations.

The fledgling corporation will also need bylaws, which constitute a procedural rule book for the company.

Decision Making

The bottom line here is that whoever holds a majority of the shares of a corporation has ultimate control over it. Usually it takes a majority of the shares to elect the board of directors, which is charged with making the “big picture” decisions. If a decision is momentous enough for the company’s future, such as a change in the articles of incorporation or whether or not to merge with another company, the shareholders usually have a more direct role in that they themselves must approve the decision by a certain margin of votes.

The board elects the officers of the corporation, typically including a president, vice-president, secretary, and treasurer. The officers may or may not be salaried employees or shareholders, and in some cases one person may hold more than one office.

Accountability

At or near the top of the list of characteristics favoring the corporate structure is the fact that, since the corporation is treated as a legal “person” separate from the people who own and run it, the shareholders as a rule are not personally liable for the corporation’s debts. Instead, their risk is confined to their investment in the company. To every rule there is an exception, however, and here the exception has the colorful legal name of “piercing the corporate veil.” If the owners do not comply with the statutory requirements for running a corporation, or if they blur the lines too much between corporate and personal finances, the legal fiction of the corporation as a separate entity is ignored and the owners are on the hook for the corporation’s losses.

Transitions

As a separate entity in the eyes of the law, a corporation does not go out of existence if one or more of its owners die. Instead, a corporation stays alive until its owners decide otherwise. Transfer of the ownership of the corporation is accomplished by selling its stock. New owners are added either when existing owners sell some of their stock or the corporation itself sells more shares of stock. The smaller the enterprise, the more likely it is that the owners, for whom the corporation may be both their property and their employer, may agree to restrict the sale of the stock in order to maintain control.

The particular circumstances of each new business and the differences in the governing laws of the states make generalities difficult. That said, the factors on the debit side of the ledger for corporations include the costs of setting up the corporate entity, the need for a separate tax return, and the burden of “double taxation.” Double taxation means that the corporation is taxed on its profits, and the shareholders are then taxed on their dividends. On the credit side are limited liability for the owners and easy transfer of ownership.

Making the appropriate choice for a business form is one of the first, and one of the most important, decisions a new business will make. You should consult a qualified attorney when forming a business enterprise so that they can help you understand what business form is right for your specific needs.

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Yes, it is easier said than done, but consider a quick fact if you doubt the importance of this undertaking: According to some sources that study such things, state treasurers now hold over $32 billion (not million) dollars in unclaimed bank accounts and other such assets.

Then there is the prevalent problem of some large insurance companies failing to pay out unclaimed life insurance policies to beneficiaries, claiming that under the insurance contracts they are obligated to do so only when the beneficiaries come forward. When the beneficiaries are not even aware of the existence of the policies, obviously they do not come forward, and years of premiums may have been paid for nothing.

The take-away lesson is that it is just as important to keep estate planning documents well organized and in a safe place, known to and accessible by your heirs, as it is to properly execute the documents in the first place. Any virtue can become a vice if taken to extremes, so this does not mean holding on to every scrap of paper that could conceivably be of interest to those you leave behind. Nonetheless, to possibly save your heirs a significant amount of money, time, and stress, at least the essential documents should be kept together, such as with your attorney, in a safe-deposit box, and/or at home in a fireproof safe that someone can access when the time comes. Instructions on how to dispose of your estate will not mean much if you have not left instructions on how to find the controlling documents.

Essential Documents to Organize

So what are these essential documents that you should have well organized and accessible? Individual circumstances vary, but the first document for most people is an original will. Dying without a will means leaving the determination up to the state as to how your assets will be distributed, and if there is some writing, but not an original document, probate proceedings could become needlessly contentious and drawn out.

In addition to a will (and any trust documents), what follows is a nonexhaustive, but reasonably comprehensive, list of other important documents, the existence and location of which should be known to your heirs:

• Marriage license—A surviving spouse is likely to need it to prove that he or she was married to the deceased before being able to claim anything based on the marriage;
• Divorce papers;
• Durable health-care power of attorney (for health-care decisions if you are incapacitated), a living will, any do-not-resuscitate order, and an authorization to release health-care information;
• Durable financial power of attorney (for financial decisions if you are incapacitated);
• Documentation of ownership of property, including housing, land, cemetery plots, vehicles, stocks, bonds, etc.;
• Proof of loans made and debts owed;
• List of bank and brokerage accounts, with account numbers, and any safe-deposit boxes with the location of corresponding keys;
• Tax returns for the most recent three years;
• Life insurance policies and 401(k), pension, annuity, and IRA documents; and
• List of user names and passwords for Internet accounts.

With a little bit of foresight and planning, you can greatly reduce the administrative burden on your family and heirs after you pass, not to mention saving them time from having to discover and understand your affairs.

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The amendment gives Texans the constitutionally protected right to engage in farming, ranching, timber production, horticulture and wildlife management.  The reasoning behind the amendment was explained as helping to protect our future food security in Texas, and the need to do so by preventing overregulation of agricultural practices.

Separate from the constitutional amendment is the Texas Right to Farm Act.  The Right to Farm Act has been around since 1981, but was amended by the legislature in 2023.  The purpose of the Right to Farm Act is to support the development and improvement of the state’s agricultural lands to produce food or other agricultural products.

The Right to Farm Act works by providing support or defense for property owners in several different scenarios, including lawsuits against them by other persons for nuisance and related restraint actions.  It also provides protections from state or local regulations that prohibit their activities.  Formerly, it was only a defense to a nuisance action, but in 2023 it was expanded to any other action to restrain the agricultural operations.

For properties within city limits, the 2023 updates to the act limit a city’s ability to restrict agricultural activities within the city’s boundaries.  Any limitations by a city must meet certain standards first and the purpose of the limitation cannot be available through less restrictive means.  Then, the requirement must be necessary for protecting people residing in the immediate vicinity or on public property in the immediate vicinity from certain dangers.

To apply, there must be an agricultural operation, which is defined as:

(A) cultivating the soil;

(B) producing crops or growing vegetation for human food, animal food, livestock forage, forage for wildlife management, planting seed, or fiber;

(C) floriculture;

(D) viticulture;

(E) horticulture;

(F) silviculture;

(G) wildlife management;

(H) raising or keeping livestock or poultry, including veterinary services;

(I) planting cover crops or leaving land idle for the purpose of participating in any governmental program or normal crop or livestock rotation procedure; and

(J) the commercial sale of animals

That operation must be operating and remain substantially unchanged for one year or more prior to the lawsuit.

While development across the State of Texas is booming, so are efforts to preserve our farm and ranch heritage and values.  The future is unknown on what will happen with so much acreage around the State, but in the current development targeted areas we are at least seeing efforts using these tools to keep and preserve some of what Texas is known for – wide open spaces and the farm and ranch lifestyle.

Nothing in this column should be construed as permission to put a chicken coop in your yard at Elkins Lake.  Subdivisions still have restrictions that must be followed.

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Lawyers across the country are sending notice to their clients that they, along with millions of other business owners in the country, are now required to submit Beneficial Ownership Information (BOI) to FinCEN’s new database.

Beneficial Ownership Information (BOI) for the entity will include the entity’s name, address and tax identification number.  BOI for each owner in the entity will include the owner’s name, current residential address, date of birth, either driver’s license or passport number, and a copy of the current driver’s license or passport with a clear picture of the person.  The disclosure requirements for owners only apply to individuals that excercise substantial constrol over the entity, or who own at least 25% of the entity.  After submitting this BOI in an intial report, the entity will need to update the report anytime provided information changes (like an address).

The deadline to submit BOI to FinCEN depends on when the entity was formed.  Entities formed after January 1, 2024, must submit complete information within 90 days of the formation date.  Entities formed before January 1, 2024, must submit complete information by January 1, 2025.

Failure to comply with the CTA can result in civil penalties up to $10,000.00 and/or up to 2 years imprisonment.

This law represents a dramatic change for business owners.  You will likely have questions.  The best source for information is FinCEN’s frequently asked questions page www.fincen.gov/boi-faqs and FinCEN’s Small Business Compliance Guidewww.fincen.gov/boi/small-entity-compliance-guide.  FinCEN is still making adjustments to its requirements, so their official FA page is the best place to get the most current guidance.

As a policy, most law firms will not upload BOI on behalf of clients.  FinCEN has designed an online portal to submit information quickly and conveniently, see www.boiefiling.fincen.gov.  The portal is designed well enough for non-attorneys to submit their information without difficulty.

If you do not wish to submit the BOI reports yourself, my recommendation is to use a corporate service or registered agent service company.  PLEASE BE AWARE THAT THERE ARE MANY COMPANIES OFFERING TO SUBMIT BOI REPORTS AND SOME OF THEM ARE FRAUDULENT SCHEMES TO STEAL YOUR PERSONAL INFORMATION.  Therefore, it is recommended that you use only companies with an established record of providing corporate services.

As with any legal matter, if you have questions regarding the Corporate Transparency Act, you should consult an attorney familiar with business entity law.

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What is a 1031 Tax-Deferred Exchange you may ask?  An IRC 1031 Exchange permits you to sell property without paying tax on the gain of the sale, if you replace the property by following the rules.  Simply, a 1031 Tax-Deferred Exchange is the process of deferring the payment of taxes when selling investment property to a later time by investing the proceeds from the sale of one investment property into the purchase of another.

The 1031 exchange offers a pwerful tax deferral strategy for those selling farms and ranches.  This provision allows property owners in the agriculture sector to defer capital gains taxes by reinvesting the proceeds from a sale into so called “like kind” real estate.  Texas is experiencing growth like never before and much of what is now farm or ranch land is disappearing.  If you or your family owns farm or ranch land, you may want to take advantage of this tax deferral tool.

No type of real estate in America has more expansive possibilities for dererring capital gains taxes than agricultural land.  Whether you are buying more farmland, purchasing rentals or vacation homes, or acquiring hassle free passive real estate, the possibilities are numerous.  Much more than most people think.

Understanding the broad definition of like kind properties can significantly benefit sellers.  The misconception that exchanges must be between identical types of properties (e.g., farm for farm) limits many from exploring how this tax strategy can facilitate growth, creat diversification and increase cash flow, all without incurring immediate tax liability.  The definition of “like kind” property is very broad; it includes water and mineral rights, conservation easements, and even different types of commercial or residential real estate, creating a myriad of strategic investment opportunities. Additionally, leveraging Section 1031 in combination with Section 121 for the sale of a primary residence on the proprety can optimize tax savings, allowing sellers to maximize their financial outcomes.

The options for rural land owners are so varied that I can’t cover them in this one column.  So, I will focus only on the split treatment transaction this week.

A split treatment transaction involves the sale of a property used partially as a primary residence and partially for other purposes.  The landowner, in consultation with a tax advisor, must allocate the portion of the sales proceeds attributable to the part of the property that is used as a principal residence for tax exclusion under Section 121.  The remaining farm or ranch proceeds usually qualifty for Section 1031 deferral.  When closing on the sale, the landowner may receive the net sales proceeds allocated to the primary residence directly from the title company.  Before the sale closes, a 1031 exchange company (like Greg Lehrmann’s firm) acts as the qualified intermediary and must be in place for the business or investment portion of the transaction.  The landowner must meet other requirements also necessary for a 1031 Exchange.

An example: John and Mary have owned a 200 acre working ranch for 50 years and have always lived on the property.  Their tax advisor has allocated one acre as there primary residence.  The property is sold to a buyer.  John and Mary receive the portion of the sale proceeds attributed to the primary residence (net of the pro rata portion of closing costs) at the closing.  They then sign exchange documents for the remainder of the proceeds to go into their exchange account with the qualified intermediary.  Then through the qualified intermediary, they reinvest these proceeds into like kind property that has been identified for this purpose.  Thus, deferring taxes on those sale proceeds.

For sellers of agricultural properties, understanding and utilizing 1031 exchanges can lead to significant tax advantages and financila growth.  The inclusion of Section 121 provides an added benefit for those selling a primary residence, further minimizing the tax burden.  In essence, a strategic approach to selling agricultural property through a 1031 exchange can transform a simple sale into a substantial investment opportunity, ensuring long term benefits and financial security.

As many are aware, there are other opportunities with traditionally agricultural land.  Solar and wind fields have become popular, but there is growing evidence of economical damages caused by these options.  In future weeks, I will dicuss conservation easements, carbon credits, and other alternatives that can allow the property to still be used as the family traditionally has used it and still produce income.

Few buyers have property to trade, and not all sellers have located suitable replacement property when they’ve decided to sell.  That is when a real estate attorney and a title insurance company experienced in facilitating exchanges can be of assistance.

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I have seen situations where a family member suggest they be paid for caring for their elderly parent(s).  This reflects the views of many adult children who have elderly parents to care for.

Creating a caretaking agreement between relatives is something that benefits both the caretaker and the elderly relative.

However, a financial arrangement between a caretaker and an elderly relative can actually be a way to protect the older person.  There may come a time when they have to go into a nursing home and wish to qualify for Medicaid.  While I believe Medicaid should be an avenue of last resort, the caretaker agreement could help them qualify.

The financial arrangement must be an official one.  Any money given to a caretaker outside of the legal caretaker agreement could be construed as simply a gift.  This may cause a disqualification or delay in receiving benefits.

Although you may feel that you would gladly care for your mother or father for free, consider the benefits of a caregiver agreement.  Talk to your attorney about whether a contract of this kind could be useful to your family.  All situations are not equal, but if they are close to qualifying a caregiver agreement may be the ticket.

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