I am my dads POA and my brother and I are the sole beneficiaries of his estate. My brother lives across the country so I am doing a ton of the caregiving and care management work myself. My brother has agreed to pay me an hourly wage for this management, but if we are the beneficiaries, does it make sense to wait and pay myself from the estate after he dies so I dont have to pay income tax on it?
Taxes are not due on shared living cost contracts, say mortgage, bills, food and etc in most instances, whereas a salary is taxed.
As to leaving it to the end? Nope. The will or Trust will dictate how things are divided and brother cannot at that time gift you some amount of his own money because that would be "gifting" on his part, and come with taxes due on it.
As you can begin to see, this is something for the experts to advise you of. And THAT is paid for by the POA document because you have a right to expert help in managing your Dad's estate.
Good luck. Seek experts, not a Forum of strangers for important advice when you can't afford to be wrong.
If you wait to get paid, there is a good likelihood your Father may run out of funds if he doesn't have robust savings and assets right now. 80% of a person's life savings is spent in the final 18 months of their life (for medical and other care, like facilities and aids).
As long as your brother is onboard with this and agrees to everything, and you submit timesheets with some detail on them so everything is transparent and understandable to him, it *should* be ok (as in, there aren't any other siblings who could come in and make accusations of financial abuse).
Currently, the POA should be paying you and at a rate that is reasonable and not slavery pay. I guess you still have to pay into your medical insurance. You also need to pay taxes because if you are not continuing with some type of paying taxes, then your social security at retirement will not support you.
POA is another 'thing'.
Being a beneficiary is another 'thing'.
Don't put them all in one pot and try to make sense.
If you want to get paid to care for someone, you should have set up some kind of payroll system. I myself would probably consult an atty about this.
POA means you 'might' have the responsibility to take charge of a person's care if they are ever deemed incompetent.
Being a beneficiary is after the death of the patient.
I do see people who are being paid to care for an elder and they are paid. After the person dies, they may or may not be recipients if any inheritance. Nobody is assured an inheritance. Don't plan on it and you won't be disappointed.
Trying to skip out on paying taxes will come back to bite you. As painful as it is to PAY them, you need to. Keep it all aboveboard to avoid any drama or legal ramifications.
IRS Announces Increased Gift and Estate Tax Exemption Amounts for 2024. The US Internal Revenue Service has announced that the annual gift tax exclusion is increasing in 2024 due to inflation. The exclusion will be $18,000 per recipient for 2024—the highest exclusion amount ever.” This is the max allowable. I don’t know if you can back gift or forward gift but this info may be helpful.
If the seniors gifts this amount to several family members per year, and then needs to go into a facility for AL or MC, they may not have enough funds left for this. FYI in most states Medicaid only cover LTC, which means the senior is permanently bedridden, requiring a 2-person assist to move them.
It was our attorney who suggest we do this, as he believed mom, and mom confirmed, that she wanted family members to get some kind of compensation before all of her money is spent down. I do not consider this enriching myself. In fact this suggestion is very offensive to me.
I have chose NOT to take any pay for myself. But I do pay my young niece. The reason I do not take the pay is because I want mom's money to last as long as possible, so that we can prolong her having her own funds to pay for the care of her choice. I do have all of my (and everyone's hours) logged in an legal ledger book.
For our family, the reality of probably having to apply for Medicaid is a huge factor in this. Your post doesn't imply this is an issue, but you don't say either way. If mom has to go into a skilled nursing facility her funds will be spent very rapidly. Then you may be called to account for the last 5 years of her spending (in most states).
The way our PCA agreement is written, the POA does not have to prepare tax documents. It is up to each recipient of pay to file their own quarterly tax reporting. Laws differ in different states, so you will have to work this out with your own attorney. I can't stress this enough, work with a qualified attorney. Don't just do it on your own, as you could end up in trouble down the road.
As far as estate taxes vs. income tax, I have not idea. Sorry I can't help with that. Good luck