My mother cashed in her life insurance policy. Not much, $7000. She wants to pay me for the care I give her. Possible?

It's a nice sentiment but that $7K won't go far once she starts doling it out a little at a time, I'm going to suggest you use it to pre pay for her funeral, which could be a big financial burden some day.

Don't take it if she will need nursing home paid by Medicaid in the next 5 years - it will be penalized as a "gift". Have her start finally paying for her share of the utilities etc. Maybe draw up a caregiver contract and have her pay you going forward.

Ditto to the input given by others. In some states Medicaid has a 3 and sometimes 5 year "lookback" (meaning they will scrutinize any money given to you by your mom in that time range and it will be an issue. The pre-paid funeral idea is a really good one. We needed to get my MIL into a good facility but we knew she could only do it through Medicaid as she was left penniless by her jerk husband. If you live in a state where there are waiting lists to get a Medicaid room, you could consider what we did which was to get MIL into facility of choice by making sure she had her own good private health insurance first (we actually paid for it for a few months). In MN this was enough to get her into a nice little SNF. Then once she was in place, we helped her apply for Medicaid and of course she qualified. She can't be kicked out and she will receive all the same care, but she will go into a shared room. I can't comment on how it works in other states. Going onto Medicaid may be your only option, so do a little research before you make any decisions.

You will need to do a caregiver contract. You should also have a room and board contract to ensure that Medicaid can't say that her payments for utilities or other expenses she shares are gifts.

She can not do this retroactively, it has to be present to future.

Search the internet and this site for a contract that you can copy.

Are her final wishes taken care of? If not it would be a good idea to find out how much and set it aside.

Good luck.

I was going to say "you've been supporting her for eighteen years, why ruin it now?!" - but actually, re-reading, it may be perfectly possible for your mother to pay you for the *additional* personal care she now requires; and that may arguably be important to her sense of self-respect.

How advanced is her dementia? If she has not been formally declared incompetent, and you can show that she is able to understand what she is doing, there is no reason why she should not create a caregiving agreement by which you can be paid specifically for personal care.

But I should leave her life insurance in place ready for funeral expenses (may she live forever). You say she's never paid for anything - so what happens to her SSI? Can she not pay you from that?