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Personal Care Contracts, a blessing or a curse?

Posted on: May 20th, 2016

A New York appeals court recently ruled that a Medicaid applicant who transferred money to his daughter and son-in-law under a personal service agreement made uncompensated transfers because there was no explanation of the services provided or proof regarding their fair market value. Scott ex rel Dana v. Zucker (N.Y. Sup. Ct., App. Div., 4th Dept., No. 14-02106, 712, June 12, 2015).

David Scott signed a personal service agreement with his daughter and son-in-law. The agreement provided that Mr. Scott would pay them $5,000 a month for services and care, but it did not explain what services would be provided. Mr. Scott did not make regular payments to his daughter and son-in-law. Instead, they withdrew money when needed to pay their bills. When Mr. Scott entered a nursing home, he transferred $60,000 to them.

When Mr. Scott applied for Medicaid, the state determined he had made uncompensated transfers. Mr. Scott appealed, and after a hearing, the state upheld the determination. Mr. Scott appealed to court.

The New York Supreme Court, Appellate Division, affirms the state's decision that Mr. Scott made uncompensated transfers. According to the court, Mr. Scott "gave no explanation of the services that were provided other than transportation on occasion, did not submit any documentation regarding the services, and offered no proof regarding the fair market value of any services."

The moral of the story is to properly define the services contemplated in a personal services contract, and to be certain that the compensation for those services is either very well defined, or objectively reasonable.  

If you, or a loved one, is in need of a personal service contract, please contact us today to get into one of our FREE weekly, educational (and FUN) workshops at (716) 375-4213 / (315) 925-7800 or at!

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