Picture this: Margaret and Robert, both 72, worked their entire lives to pay off their beautiful lakeside home in Minnesota. With their $850,000 net worth, they thought they were set for retirement. Then Robert was diagnosed with Alzheimer's.
Within two years, their life savings was hemorrhaging at $15,000 per month for memory care. Margaret watched in horror as everything they'd built together disappeared before her eyes. The worst part? She discovered too late that there are perfectly legal ways they could have protected their assets – one of them is something called a personal services contract.
Don't let this be your story.
What Exactly Is a Personal Services Contract?
A personal services contract, also known as a caregiver agreement, is a legally binding document that allows family members to be paid for providing help and care services. Think of it as hiring your own child or family member as a professional caregiver – except the payment comes from your assets, legally reducing your countable wealth for Medicaid purposes.
Here's the beautiful part: instead of paying strangers thousands of dollars monthly for care, you're paying your own family while simultaneously protecting your assets. It's like killing two birds with one stone.
How Does This Actually Work?
Let me paint you a picture with real numbers. Say you have $500,000 in savings and need care. Without planning, Medicaid requires you to spend down to just $2,000 in Florida and $3,000 in Minnesota before they'll help with costs.
With a properly structured personal services contract, you could pay your adult daughter $4,000 monthly to provide care services. Over five years, that's $240,000 legally transferred out of your estate – money that Medicaid can't touch.
Your daughter gets compensated for her time and sacrifice. Your assets get protected.
The Shocking Truth About Long-Term Care Costs
The numbers are staggering and getting worse every year. In Minnesota, the average nursing home costs $146,000 a year - and that was in 2024 - which was an 18% increase over the year before. In the North Port area of Florida, it was over $128,000 a year in 2024. That's enough to wipe out most families' life savings in just 3-4 years.
But here's what the nursing home industry doesn't want you to know: most people prefer to stay in their own homes anyway. A recent AARP study found that 90% of seniors want to age in place. Personal services contracts can help make this possible while protecting your wealth.
Why Traditional Estate Planning Isn't Enough
I've seen countless families who thought they were protected because they had wills and trusts. But when long-term care struck, they discovered their traditional estate plan was useless against nursing home costs.
Take the Johnson family from Venice, Florida. They had a $1.2 million estate with all the "right" documents – will, trust, powers of attorney. When Mrs. Johnson needed memory care, none of it mattered. They still faced the brutal spend-down requirements.
That's when they called our office. Using personal services contracts and other advanced strategies, we helped them protect their home and life savings.
The Four Pillars of an Effective Personal Services Contract
Not all caregiver agreements are created equal. After nearly thirty years of practice and teaching other attorneys across the globe, I've identified four critical elements that separate effective contracts from worthless pieces of paper.
Pillar 1: Fair Market Value Compensation
The payment must reflect what you'd pay a professional caregiver. In most areas, this ranges from $15-25 per hour for basic care to $30-40 per hour for specialized memory care.
This isn't about paying your child minimum wage to check on you once a week. It's about legitimate compensation for legitimate services.
Pillar 2: Detailed Service Descriptions
Vague contracts get rejected by Medicaid. Your agreement must specify exactly what services will be provided. For example:
- Personal care assistance (bathing, dressing, grooming)
- Medication management and health monitoring
- Meal preparation and grocery shopping
- Transportation to medical appointments
- Household maintenance and cleaning
- Companionship and safety supervision
Pillar 3: Proper Documentation Requirements
Every service must be logged and documented. This creates the paper trail that proves the contract is legitimate when Medicaid comes knocking.
Pillar 4: Strategic Timing
This is where experience matters. The contract must be established before care is needed and executed properly to avoid Medicaid penalties.
Real Stories of Families We've Helped
The Peterson Family: Protecting Their Home and Life Savings
David Peterson, 72, and his wife Carole, owned a home, had a 401(k) and some other investments. When Carole needed long-term care, traditional advice would have forced him to spend the majority of their own assets before his wife would qualify for benefits.
Instead, we created a comprehensive plan including a personal services contract with his daughter. She moved back to help her dad care for her mom. The result? They protected over $350,000 in assets.
The Martinez Story: Keeping Mom at Home
Rosa Martinez, 74, wanted to stay in her Venice home where she'd lived for 30 years. Her son Carlos was willing to provide care.
Our personal services contract paid Carlos $3,800 monthly to care for his mother. Over four years, this legally transferred $182,400 out of Rosa's estate while allowing her to stay home with dignity.
Common Myths That Cost Families Thousands
Myth 1: "It's Too Expensive"
I hear this objection constantly. "Attorney fees are too expensive." But consider this:
- According to the Department of Health and Human Services, over 70% of people over the age of 65 will need some sort of long-term care during their lifetime;
- The average length of care for a man is 2.2 years and the average length of care for a woman is 3.7 years;
- The average nursing home is now over $146,000 a year in Minnesota. That means the average married couple could be looking at nearly 6 years of care between them, and at $146,000 per year, means a total cost of care exceeding $876,000 – and those are 2024 numbers. Care costs for the average married couple are projected to exceed $1 million dollars in just a few years.
Our comprehensive planning typically costs less than one month of nursing home fees.
Which is more expensive – a few thousand dollars for proper planning or losing your entire life savings?
Myth 2: "This Can't Be Legal"
Wrong. Personal services contracts are specifically recognized under federal Medicaid law when properly structured. The Social Security Administration and Centers for Medicare & Medicaid Services have published guidance on their use.
The key is having an experienced elder law attorney who knows the rules and how to follow them.
Myth 3: "We Don't Need This Yet"
This is the most dangerous myth. By the time you need long-term care, it's often too late to implement these strategies. Medicaid has a five-year lookback period for transfers.
The best time to plant a tree was 20 years ago. The second-best time is today.
Myth 4: "Our Kids Won't Take Advantage"
I've been doing this for nearly three decades. I've seen families torn apart when hundreds of thousands of dollars are at stake. Proper legal documentation protects everyone – parents and children alike.
Why Experience Matters in Elder Law Planning
Not all attorneys understand the intricacies of Medicaid planning. It is a specialized area of law that even most estate planning attorneys do not practice in.
I've authored several books and regularly teach continuing education to attorneys, CPAs, and financial advisors across the globe – including professionals from the IRS, Treasury Department, and major financial institutions.
This isn't theoretical knowledge. It's legal strategies and tactics specifically authorized under federal law.
The Hidden Dangers of DIY Planning
The internet is full of generic forms and "simple solutions." But Medicaid planning is like performing surgery – one mistake can be catastrophic.
I know of a family who tried to create their own caregiver agreement using an online template. When Medicaid reviewed it, they found three fatal flaws that resulted in a $180,000 penalty period.
The cost of fixing their mistakes was more than hiring us properly from the beginning.
Personal Services Contracts as Part of Comprehensive Planning
Here's something crucial: personal services contracts work best as part of a comprehensive elder law strategy. They're one tool in a sophisticated toolkit that might also include:
- Medicaid Asset Protection Trusts
- Qualified Income Trusts
- Strategic gifting programs
- Long-term care insurance integration
- Veterans benefits optimization
At Roulet Law Firm, we don't just draft documents – we create customized protection strategies tailored to your specific situation and goals.
Time Is Your Enemy (Or Your Friend)
Every day you wait, your options become more limited.
But here's the silver lining: if you act now, you can create a comprehensive protection plan while you're still healthy and thinking clearly.
Remember Margaret and Robert from the beginning? If they had implemented a personal services contract just two years earlier, they could have saved over $200,000 of their life savings with that strategy alone.
What Makes Our Approach Different
We combine the sophisticated planning capabilities of a large law firm with the personal attention of a boutique practice. With offices in both Minnesota and Florida, we understand the unique challenges facing retirees in both states as the rules differ significantly between them; particularly retirees who move to Florida but that may move back to Minnesota to be closer to their families when the need for care arises.
Your Next Steps to Protection
If you're between 60-82, own your home, and have assets between $350,000-$3 million, the strategies we've discussed could save your family hundreds of thousands of dollars.
But remember – this isn't something you can put off indefinitely. The longer you wait, the fewer options you'll have.
The families who successfully protect their assets share one common trait: they took action before they needed to.
Don't let your life's work disappear into the nursing home industry's pockets. You worked too hard and sacrificed too much to let that happen.
Take Action Today
Ready to protect your home and life savings from long-term care costs? Then call us today to schedule your consultation at (941) 909-4644 for our Florida office, or at (763) 420-5087 for our Minnetonka, Minnesota office. Or you can fill out the contact form on this page and a member of our team will reach out to you to schedule your consultation.
If you are not yet ready to schedule your consultation, but would like to discover more, then download your copy of my guide, “Save Our Home: How to Protect Your Home and Life Savings from Long-Term Care and Nursing Home Costs” and join us in my upcoming masterclass where I reveal strategies I use with my private clients to help them protect their home and life savings by clicking the links below.
Download your free copy of "Save Our Home: How to Protect Your Home and Life Savings from Long-term Care and Nursing Home Costs" Click here to download
Join us in my upcoming masterclass where I reveal the strategies I use with private clients to help protect their home and life savings Click here to register
Don't wait until it's too late. Your family's financial security depends on the decisions you make today.
Remember: The best time to plan was yesterday. The second-best time is right now.
