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Hall, Margaret Isabel --- "Care for Life: Private Care Agreements Between Older Adults and Friends or Family Members" [2003] ElderLawRw 9; (2003) 2 Elder Law Review 24

CARE FOR LIFE: PRIVATE CARE AGREEMENTS BETWEEN OLDER ADULTS AND FRIENDS OR FAMILY MEMBERS

Margaret Isabel Hall[1]

I. THE CARE A GREEMENT: ATTRACTIONS AND PITFALLS

A private care agreement involves a senior’s transfer of property (usually the family home) to a friend or family member in exchange for a promise of care and support in the home. Sometimes, the senior will put the property in both names, with the survivor taking full ownership when the other dies. The parties to the agreement usually contemplate that the senior and caregiver will live together in the family home. These arrangements are almost always made orally and without legal advice, or detail as to terms.

Private care agreements may be attractive to seniors as a means of staying in the family home, but can have very negative consequences for seniors and for caregivers. Seniors may lose their homes where the living relationship breaks down, or continue to live in caregiving relationships that have become unhappy or even abusive. Caregivers are also vulnerable, where a senior’s deteriorating health places increased demands on the caregiver far beyond original expectations, for example, or where the transfer is challenged by the estate after the death of the senior (to whom the caregiver had provided years of care).

Despite the dangers to seniors it is important to emphasise that private care agreements are not inherently a form of financial abuse or exploitation. There are cases of abuse in which seniors have been tricked into conveying property by friends or family members promising care they have no intention of ever providing. These are not care agreements but examples of fraud or theft. Caregivers must not be stereotyped as greedy, and seniors getting involved with care agreements must not be stereotyped as fools or dupes. Most legitimate care agreements seem in fact to be initiated by the senior who- unaware of the ‘what ifs’ or pitfalls- might see the care agreement as simultaneously attaining a number of important objectives. Staying at home is a priority for many seniors, even after truly independent living becomes difficult, unsafe, or uncomfortable. Helping younger family members and friends is also a priority for many seniors,[2] and the private care agreement appears to provide security for the caregiver while (at the same time) providing for the senior’s own needs. While objectively sensible, ‘downsizing’ may involve moving to a different neighbourhood, or other changes in lifestyle that the senior wishes to avoid. Some seniors will be concerned about the costs associated with professional home care, especially where preserving assets for the family is a concern. A senior may prefer a live in caregiver for reasons of companionship and security, although regular home care visits might be objectively sufficient, and may prefer to have a friend or family member providing care and support (as opposed to a stranger). Certainly, fear of institutional care - the ‘nursing home’- is a strong motivation for seniors seeking out private care agreements with family members or friends.

Private care agreements clearly have the potential to degenerate into abuse, however, even where both parties go in with good intentions. The stresses on caregivers can be intense, especially where needs increase in ways that neither party has foreseen or made provision for. Other unforeseen and unplanned for developments that may cause difficulties include:

What if the caregiver pre-deceases the senior?
What if the caregiver becomes ill, or otherwise develops problems that prevent him or her from looking after the senior properly?
What if the senior (70 at the time of the conveyance) lives for another 30 years? Is the caregiver prepared for that event? What of the caregiver’s own increasing age, and ability to continue in a caregiving role?
What is the effect if a senior enters a care facility?
Who makes the decision about when the caregiver can no longer provide adequate care, and admission to a facility becomes necessary? Will this be a subjective decision to be made by the caregiver or the senior, or an objective decision to be made by a doctor?
Does the promise to care require the caregiver to personally perform caregiving services? Who would pay for homecare or other professional services, the senior (who may have few assets, having disposed of the property under the care agreement) or the caregiver?
What if the caregiver marries subsequent to the agreement? What if the senior marries? or, what if the senior or caregiver, married at the time of the conveyance, is subsequently divorced, or widowed?
A caregiver’s financial difficulties may result in serious problems for the senior: what if the caregiver loses what (is now) his or her own home, leaving the senior with no place to live and no means of support?
What if the caregiver need to relocate? Does the senior expect that the promise of care will include remaining in the ‘family home’?
Does the promise to provide care include nursing-type services, or is it limited to the provision of food and lodging?
What is the level of care expected? Misunderstandings about what the caregiver has promised to do may trigger problems in the relationship, where expectations have not been clearly stated.

Most private care agreements in Canada are made informally- orally, without legal advice, and without documentation. Even where the agreement is written down, terms tend to be very general - a promise of ‘care for life’. In many cases, especially where parents and children are involved, the senior may feel that asking for documentation or seeking legal advice indicates suspicion or a lack of confidence, and may be reluctant to do so for that reason. Informality makes it much less likely, however, that the parties will have discussed and made provision for the kinds of ‘what ifs’ listed above. Where expectations have not been discussed, and agreed upon, it becomes much more likely that the agreement will fail to work out for the mutual benefit of the parties. A formal written agreement or contract documents the true nature of the exchange as a bargain- not a gift- providing important protection for the senior in the event that the arrangement does not worked out as hoped for, and so makes it more likely that the senior will receive what he or she ‘paid’ for. Itemising and valuing services can also protect the caregiver from subsequent challenge that the transfer was unconscionable or made on the basis of undue influence.

Informality can also cause significant problems of legal interpretation. Most notably, the transaction may look like a gift, with the ‘taker’ obligated to give nothing in return, a very unfair outcome for the senior. While the senior may be able to prove the existence of a bargain or agreement in court, the demands of the court process- in terms of time, expense, and personal conflict- may be beyond the resources of many seniors. Moreover, to the senior who has ‘given away her house’ which now ‘belongs’ to someone else, it is probably not intuitively apparent that anything can be done about it posing a significant barrier to legal access.

The most careful and detailed of written documents may not be able to overcome all of the pitfalls latent in the private care agreement, however. Upfront payment creates a disincentive to provide caregiving that is consistent in quality, for example. Where this disincentive is combined with caregiver fatigue, care of the senior may become inadequate. The parties may also find that living together in a caregiving situation creates strains in their relationship that neither could have predicted; the consequent relationship problems may make living under the care agreement impossible, and can be the cause of lasting damage to family harmony.

II. INTERPRETING INFORMAL AGREEMENTS: EXAMPLES FROM THE CASE LAW

Where the care agreement consists of a broad, oral promise to ‘care for life’ it is difficult to determine the terms of the agreement and, therefore, the circumstances in which those terms will have been breached. Is the agreement ‘breached’ if the senior enters a care facility at some point, for example? What is the standard of care required under the agreement?

This was the contention of the plaintiffs (the estate) in the case of Simpson v Simpson.[3] The written agreement in that case stipulated that Mrs Simpson’s son and daughter-in-law would pay rent to Mrs Simpson and other expenses associated with the property, and that Mrs Simpson would be provided with an apartment on the property. The son also made a verbal promise to ‘care for’ Mrs Simpson. In exchange, Mrs Simpson transferred ownership of her home to the younger couple. After Mrs Simpson’s death, her other children sought to have her conveyance set aside on a number of grounds, including breach of contract, alleging that the promise to care had been breached when Mrs Simpson moved into a care facility. The plaintiffs also alleged that Mrs Simpson’s inadequate living conditions prior to being moved constituted a breach of the promise to ‘care.’ The court rejected both arguments:

There is no doubt that the condition of the suite, and, indeed, the condition of Mrs Simpson, was not always impeccable in the years after 1987. However, that does not mean that Lloyd and Marilyn [the defendants] were not living up to their contractual obligations... Not content to pursue these groundless allegations the plaintiffs at trial alleged that Mrs Simpson’s admission to a nursing home was contrary to the agreement that Mrs. Simpson could live in the apartment for life. Common sense dictates that the time may well come in anyone’s life when institutional life is a practical necessity. Short of outfitting the suite as a quasi-hospital, such was the case with Mrs Simpson.



This entire claim for breach of contract is, in my opinion, frivolous.

Admission to a suitable care facility after the point at which home care became unfeasible is interpreted here as an implied term of the promise to ‘care for life.’ This conclusion is not self-evident, however, and ambiguity about this point may in some cases result in a caregiver’s ‘soldiering on’ with the promise long after he or she is capable of providing adequate care, with possibly dangerous health consequences to the senior, and increasing the chances that the relationship will degenerate into abuse as the caregiver loses control.

Despite the obvious problems created by declining health, the anecdotal evidence and available case law suggests that most care agreements fail because of relationship breakdowns. The psycho-dynamics of the care agreement are conducive to a number of ‘triggering events.’ The senior may resent a caregiver’s assertion of control in the caregiving relationship (an appropriate restriction of the senior’s ability to drive, for example). It may be difficult for the senior to treat his or her ‘own’ home as really belonging to someone else, despite the legal effect of a conveyance, becoming resentful when the caregiver treats the property as his or her own (which in fact it is). The caregiver may even wish to sell the family home and buy another, or need to do so for reasons of work. If the agreement is to care for the senior, there is nothing to prevent the caregiver from selling up and continuing to care for the senior in a new home. The senior may not have expected this, perhaps implicitly understanding that the bargain included remaining in the family home in the old neighbourhood. Any one of these misunderstandings and/or triggers may put significant pressure on the relationship.

Misunderstandings may also arise, to the detriment of the relationship, about the services to be included in the promise to ‘care for life,’ where these have not been specified beforehand. Does the promise to take care of a senior include nursing type services, or is it limited to providing food and lodging? If the senior continues to cook meals and perform some housework duties, has the caregiver fulfilled his or her promise? Must the promise be fulfilled personally by the promisor? What is the level of care expected and required?

The caregiving relationship in Morgan v Morgan[4] appears to have broken down for a number of these ‘interpersonal’ reasons and conflicting expectations about what the promise entailed. In that case, a 76 year old plaintiff had conveyed her homestead property to her 51 year old son in joint tenancy with herself in exchange for a ‘promise that he look after her for the remainder of her life.’ Shortly after the son moved onto the property, he began constructing a new home for his mother and himself (the mother was living in a mobile home on the property). Asserting that she had not expected her son to build the home, which she did not like, the mother evicted the son and prevented him from continuing with construction of the house.

The mother contended that because she had continued to do the daily housework and provide meals after her son’s move onto the property, the promise to ‘look after her’ had been breached. The mother now alleged that her son had been ‘lazy and indolent’ during this period. The Court disagreed, noting that the son had been working hard on the new house:

Undoubtedly, subsequent to the home’s completion the defendant would have become more involved in looking after his mother. He testified he was prepared to do so particularly as her health and capabilities deteriorated with advancing age... I am satisfied the defendant carried out his part of the bargain and expended considerable sums of money in doing so until he was unable to do anything further to give effect to the agreement by virtue of his being evicted by the plaintiff. In fact, a large amount of money expended by the plaintiff has now been lost because of the effects of weather on the partially constructed house and his inability to complete the building.[5]

The mother had not established that the defendant did not ‘fulfill his promise to her’ as claimed; she had no basis for evicting him; and was not entitled to have the conveyance set aside. The Court went on to suggest that the mother’s real objections derived from her son’s new romantic relationship, not in existence at the time the agreement was originally made.

Relationship breakdown was also the major factor in Folia v Trelinski.[6] In that case a mother had transferred her house to her daughter and son-in-law in part exchange for a promise that they would care for her, and that she would continue to live in the house (the daughter also gave additional consideration for the exchange). The relationship unfortunately deteriorated soon after the parties started living together. The mother brought legal action, alleging unconscionability, undue influence, and that the contract had been breached when she left the home (the mother had been asked to leave the home during the course of litigation.

The Court found that, as the mother had not been permanently evicted, no condition of the contract had been broken and recission was therefore not appropriate. Daughter and son-in-law had made it clear that the mother was welcome to return after the conclusion of her legal action, and remained ready and willing to carry out the agreement. The mother was owed damages for the period she was absent from the house as, under the agreement, the couple was obliged to provide for her care.

In these cases, the care agreement came to a functional end when the relationship between the senior and caregiver broke down. In neither case was this sufficient grounds to have the transfer set aside. These cases raise awkward questions about what happened afterwards; legally, the agreement remained sound, but in practical terms, it is hard to imagine that the parties could happily carry on with the arrangement.

In Lynn v Paterson[7] the Court provided for this difficulty by implying a provision for termination, on the basis that such an implied term was necessary for the working of the contract, and to give effect to the intentions of the parties. The parties in that case were an older woman and her longtime (younger) friend, a nurse.

The case is unusual because it involves a written agreement, although the agreement was deliberately simple and devoid of detail. The two women had discussed whether their agreement should contain a ‘get out’ clause, or some provision for termination of the agreement, in case it did not work out, or provision for a trial period. They decided that such a provisions would not be necessary, expecting that they could work out a reasonable arrangement if agreement about how to proceed if the arrangement was unsuccessful.

Under the agreement, the older woman transferred a one half interest to her friend in joint tenancy. In exchange for this transfer, the caregiver (the nurse) promised to live in the home and provide care and companionship for her friend for the rest of the older woman’s life, or until she could no longer be cared for at home.[8] The Court found the implied terms on the basis that there might be a number of reasons apart from death or the hospitalisation (the two contingencies provided for in the contract) which would make the agreement for personal services unworkable and so require termination (the demands of the caregiving role might become too demanding, for example, or the caregiver might remarry or fall ill). The older woman could not compel performance of the personal service contract;[9] ‘[t]he contract of service would have been terminated, and the law would imply whatever provision was necessary to give effect to the parties’ intention that the agreement be terminated on reasonable terms.’[10]

A reasonable termination provision would allow for a reasonable period of notice or payment of damages in lieu of notice (where notice was not provided). A reasonable period of notice in this case, taking into account all of the circumstances, was found to be six months. The value of Ms Paterson’s services was estimated at $1500.00 per month (about half of her monthly wage as a full time nurse) for the six month period of notice, and also for the two and one half month duration of the agreement. Ms Paterson was also reimbursed for the out of pocket moving expenses associated with moving into the house.

The approach taken in Lynn v Paterson, whereby a reasonable termination provision is implied, sets out what seems a fair and workable resolution where the relationship has become untenable on a practical (if not a legal) basis. Although that case involved a written contract, the analysis seems applicable to the informal agreement, also.

III. THE CARE CONTRACT

There is no legal reason why care agreements cannot form the subject matter of valid contracts. Oral promises to ‘care for’ elderly friends and relatives may make dubious contracts because of their vague, informal and uncertain terms.

Detailed, formal care contracts are more frequently used in the United States, where they have developed to get around Medicaid rules about ‘impoverishment’. Under those rules, a senior who ‘gifts’ his or her home or other assets becomes ineligible for Medicaid benefits.[11] A ‘gift’ or ‘uncompensated transfer’ includes a transfer made in exchange for anything less than fair market value. The senior who wishes to protect family assets via a care agreement will need to do so under a bullet-proof contract, as Medicaid will scrutinise all such transfers to assess fair market values.

‘Medicaid-proofing’ is not an issue in this country, but the detail provided in the American contracts may also serve to establish the fairness of the bargain. This is important in and of itself, as the act of placing values on the exchange (the property vis a vis the value of caregiving) will force the parties to be clear about the what they are paying/receiving. Both parties may be surprised by the calculation of just how much ten or twenty years of caregiving is really worth, for example. It is better that readjustments be made before the agreement gets underway, and the element of surprise reduced as far as possible. Establishing the fairness of the bargain may also protect the agreement where unconscionability is alleged, or undue influence.

(a) Services and values

The ‘Medicaid proof’ care agreement contract will stipulate the services to be provided and their value, and the term over which they are to be provided (including and based on an assessment of the senior’s life expectancy, to ensure fair market value). One approach to valuation is to assign an hourly wage value to the services to be provided, calculate hours per week, and then multiply these figures by the life expectancy of the senior: W x H x 52x L=C (W is hourly wage; H is number of working hours per week; L is life expectancy; C is compensation).[12] Where a full range of services is provided, reference may be had to the wages of general care providers in the community in setting this hourly wage. Under a ‘classic’ care agreement in which the senior would live in the home with the caregiver, who would provide the full range of services, it may be most accurate to take as ‘W’ the cost of residential care.[13] The contract may stipulate that the non-professional or family caregiver will be paid at a lower rate, but professional rates provide a guide (and set an ‘upper limit’ which proves the market value of the exchange).

Going through the process of itemisation and valuation will also make the parties think in detail about what the promise entails, and discuss expectations with one another. Differing expectations about the range of services to be included in the promise to ‘take care of’ may cause misunderstandings and trigger relationship breakdowns, where this kind of discussion has not taken place. Explicitly setting out the services as terms of the contract will, of course, make it easier to determine when the contract has been breached.

It is the nature of the long term care agreement that needs will change over time, and despite its other drawbacks the broad promise to ‘care for life’ is flexible enough to provide for those changing needs. It has been suggested that one way to incorporate flexibility into the itemised contract would be to state that services are to be provided on an ‘as needed’ basis. [14]

Finally, itemising and valuing the services to be included in a promise to care may have the effect of revealing just how ‘expensive’ those services really are- perhaps to the surprise of both parties. The caregiver may decide that the exchange is not, in fact, worth it, or may scale back the range of services that he or she is obligated to provide under the agreement. It is better that this adjustment be made at the outset of the agreement, than after the transfer has been completed and the living arrangement is underway.[15]

(b) The Term

One problem with the broad promise to care for life is the question of what happens to that agreement if and when the senior is required to go into a nursing home. In its colloquial sense, a promise to ‘care for life’ means taking care of that person, in the home, until that person dies. This was the argument of the disgruntled heirs in Simpson v Simpson[16] who maintained that the caregiving sibling had breached a contract to ‘care for life’ when the elderly mother entered a nursing home. This argument was rejected by the court on the basis that it was sensible and reasonable to read ‘unless and until hospitalisation becomes necessary’ into the promise to ‘care for life.’ A contract which provides that services are to be provided ‘over the lifetime of elder, on an as needed basis’ explicitly provides for this flexible standard.[17]

A different approach is to structure ‘life care’ agreements so that they expire when the senior can no longer perform two ‘activities of daily living’ (ADLs) such as toileting, bathing etc., which will serve as the criteria for entry into a nursing home.[18] The method of determination should also be set out. This provision would require senior and caregiver to discuss and agree upon whether the decision that nursing home care is required will be made on an objective basis (for example, where two physicians state in writing that the senior is no longer able to perform two ADLs) or subjectively, by the caregiver. Again, it is better that this point be resolved at the outset of the agreement.

Consider the following example:

[Suppose] your client is a healthy 70 year old mother of three children, where only one of these children is willing to live with mom and provide meals, shopping, cleaning, gardening, administering prescription drugs, driving mom to the doctor’s, dentist, bookkeeping, or accounting services, etc. for either the remainder of mom’s lifetime or until mom is no longer able to perform the ADLs. Under these circumstances, a onetime lump sum transfer of real or personal property valued at $540 000 would not trigger ineligibility [would be a fair exchange] because the life expectancy of a healthy 70 year old female is 15.35 years [under life expectancy tables]. If the cost of care [as the services are valued] is $3000 per month, or $36 000 per year, the projected cost over a 15 year period is $540 000.

It doesn’t matter if mom has a massive stroke and is candidate for long term care six months later because she is no longer able to perform the ADLs so long as there was no pre-existing medical condition which would indicate a strike was likely to occur.[19]

In the event that the senior explicitly wishes to die at home attended by the caregiver, this extremely valuable ‘extra’ consideration should be identified and valued as such in the contract, above and beyond the ‘services’ of caregiving.

It has also been suggested that care agreements include both a probationary period and a termination clause to take effect on specified events. At termination the senior would be entitled to receive his or her property minus the cost of care provided: ‘The termination clause protects the resident from subsequent deterioration without the necessity of suing to rescind the contract.’[20] The probationary period may be a sensible precaution, given the anecdotal and case evidence which suggests that some agreements break down soon after the living arrangements begin, not because of declining health but simply because the parties find that living together is not the pleasant experience they had expected it to be.

IV. ALTERNATIVES TO LUMP SUM TRANSFER: MONTHLY PAYMENTS OF EQUITY; LIFE ESTATE

Detailed care contracts of the kind described above may provide more security for both parties, and avoid some of the more dangerous pitfalls of the informal care agreement. However, it has been suggested that the lump sum transfer is never wise.[21]

It has been suggested that a safer arrangement (from the senior’s point of view) would involve paying the caregiver on a monthly basis, as opposed to making the lump sum up front transfer. While this may be so, many people transferring property under care agreements will not have any other assets to pay their caregiver with. The care agreement is not a rich person’s solution (at least, not in Canada). If seniors had access to the cash to pay someone- a friend, family member or professional- to come into their home and provide care while retaining title, this might be the preferred solution. The point is that many seniors don’t- the house will be their only significant asset. Rather than cash it in and dissipate the proceeds by paying a professional caregiver (after acquiring new accommodation), the senior finds it attractive to ‘keep’ the house via a family care agreement.

An alternative structure would be to ‘stage’ monthly payment of equity. The senior would transfer the title to property in exchange for the care contract and a promissory note in favour of the senior (or the senior’s estate) in accordance with a pre-approved amortisation schedule.[22] This scheme would give the senior greater control than an inter vivos transfer of title and equity in one lump sum, while affording the caregiver greater control and security than a ‘will contract’ or testamentary promise.

Consider the following example. An elderly man transfers the title to his home to his daughter, who agrees to care for him in that home until he is no longer able to perform two ADLs. At that point the daughter will no longer be able to care for him, and the contract will be terminated. The equity in the home at the time of the transfer is $54 000, and the care to be given by the daughter has been valued at $3000 a month. A promissory note is held in escrow; if the contract is terminated, the amount of the note will be inserted by the escrow holder in accordance with the amortisation schedule, which equals the value of the services provided by the caregiver ($3000, in the example given above x the duration of the contract).

For example:

Soon after the agreement gets underway, the father suffers a stroke, and after two months he is unable to perform two ADLs. The father moves to a nursing home, and the contract is terminated.

The services have been valued at $3 00 a month. The amount of the promissory note will equal $48 000 ($54 000 - $6000 = $48 000) in favour of the father, payable by the daughter at a pre-approved rate of interest. With these figures, the caregiver would ‘earn’ the total amount of the equity after 18 months. At that point the promissory note would be returned to the caregiver without any amount ever being inserted.

This scheme would prevent the caregiver from benefitting from a ‘windfall,’ in the event that the senior dies or goes into a nursing home soon after the transfer. Another possibility, however, is that the senior will outlive the equity in the property (a ‘windfall’ for the senior). What would the senior’s position be, under this kind of scheme, once the entire equity has been transferred to the caregiver? Can the caregiver be obligated to provide care after that point, and would that be fair? The lump sum transfer contract, which establishes value on the basis of estimated longevity, is fair in that it allows for a windfall either way (if the estimate is wrong because the senior dies soon than expected, or lives longer). One serious attraction of the classic lump sum agreement, for the senior, may be knowing that home and care has been provided ‘for life’; who cares if the senior dies early and the caregiver gets a windfall (the caregiver being a friend or family). The estate might care, but that is probably not our hypothetical senior’s major concern.

Retention of a life estate would give the senior greater security, especially vis a vis third parties, than the lump sum transfer which typifies the care agreement (and another benefit of pro-active questioning would be the opportunity to suggest this kind of arrangement). The life estate does not replace the need for a detailed contract, however, where the parties wish to proceed with a care agreement. Retention of a life estate does not in itself resolve any of the ‘what ifs’ inherent in the long term care relationship, which may be provided for in a detailed contract.

What if the older person outlives the caregiver, for example? Consider the outcome in Re Witwicki.[23] In that case, the elderly parents had transferred farm property to themselves as life tenants with a remainder to their son, the son agreeing to provide his parents with ‘all the necessities of life.’ The son had unexpectedly pre-deceased his mother, and the mother now argued that his death had frustrated the agreement. The court noted that such an arrangement was very common in rural Manitoba, but fraught with dangers (one of them being that the child would not in fact survive the parents). Because the parents had reserved to themselves a life estate, remainder to the son, the effect of frustration would be to reconvey the remainder interest to the mother (the surviving parent); in effect, the farm would return to the parents. However, noting that such an outcome would be inequitable, given the son’s performance of his obligations up to his death, the majority of the Manitoba Court of Appeal held not the contract was not one for personal service (which would have been frustrated by the son’s death) but for financial maintenance only, an obligation which could be carried on by the son’s estate. The remainder interest, therefore, stayed with the son’s estate (the dissent found the agreement to include companionship and manly assistance in addition to financial maintenance, and found that the contract had indeed been frustrated). The majority reasons make much of the need to be fair to the estate of the caregiver son, who died leaving a widow and two children.

The ‘backstory’ to Witwicki is significant in that, apparently, the elderly mother’s actions were being manipulated by her other children, in order to free-ride on the care provided by their deceased brother, and claim his remainder as their inheritance. The court was able in that case to effect a fair outcome through interpretation of the contract, but the interests of the caregiver and expectations of the parties would have been more securely protected had this event been explicitly provided for. A detailed agreement may also provide for a breakdown of the arrangement during the lifetime of the senior; the monthly equity payment scheme described above might be used in combination with the life estate, for example. From the senior’s perspective, this arrangement may avoid the possibility of the caregiver’s ‘buying the property’ before the senior is ready to leave, although the senior might be responsible for purchasing care otherwise after the caregiver has ‘bought’ his or her estate under the terms of the agreement. A detailed agreement may also specify the relative duties of the parties during the lifetime of the agreement (who pays for what and the responsibilities of the caregiver)

V. LEGISLATION

Contracts are ‘made law’, in that the parties to the contract have themselves set the rules which will govern their relationship. In the event of a dispute, it is the court’s role to give effect to those private rules, not to replace them with rules that it might think more reasonable or in the parties’ best interests. This principle of freedom of contract is an important value in our legal system.

Older adults, like other adults, have the right to enter into free contractual relationships. Despite our concerns about the vulnerability of seniors when care agreements break down, it is important not to infantalise older adults but to respect their ability to freely contract; ‘[t]he law has never treated an old person as an infant.’[24] If the senior chooses to go forward with the agreement, it is his or her right to do so- unless, of course, there are issues about the capacity, or undue influence, or the unconscionability of the bargain.

In some jurisdictions, however, the characteristics and potential pitfalls of care agreements have been considered sufficient to justify legislation which would empower courts to intervene to set them aside or vary their terms.

This approach has been taken by the legislature of New Brunswick with section 24 of the Judicature Act. That provision permits the Court, on ‘such terms as appear just,’ to set aside or vary any conveyance or transfer of property the ‘consideration of which, in whole or in part, whether expressed in the instrument of conveyance or a collateral agreement, is the maintenance or support of any person.’[25] Section 24 has been applied only once, in the case of Hickey v Hickey.[26] In that case the court refused to exercise its discretion to set aside the conveyance on the basis that the deed accurately reflected the parties intentions and that the caregivers had performed and remained ready to perform their obligations.

The Hickey story dramatically illustrates how the care agreement’s mix of family, money, promises, and proximity can be damage family relationships beyond the immediate parties.

The elder Hickeys had transferred their home by deed to a grandson and his wife. The deed contained a maintenance provision whereby the younger couple agreed to provide a ‘home and shelter’ for the grandparents during their life. The deed was prepared by a lawyer, who was satisfied that all parties understood the nature of the transaction and that the deed reflected the wishes of the older Hickeys. Before entering into the agreement, the defendants and the plaintiffs had discussed it with, and obtained the approval of, all family members, ‘[b]ecause somewhat similar arrangements with other relatives had not worked out well in the past and because Percy Hickey did not want to create turmoil in the family through any misunderstanding.’ As it turns out, those fears were justified. After the grandfather’s first hospitalisation (shortly after the deed was executed) his care needs became much more demanding, and other family members expressed concern about the quality of care the grandfather was receiving. After the grandfather’s second hospitalisation (at which time his wife left the home) ‘open hostility’ erupted between the caregiving couple and other members of the family, who threatened to burn the house down (so that the defendants would have no benefit). The caregiving couple left the house to live in ‘rundown’ housing which was very inferior to the house they had lived in before moving in with the senior Hickeys. The defendants remained off the property, but had told the elder Hickeys that they would return at 24 hours notice to resume the caregiving arrangement (confident that the other family members would not burn the house down with the grandparents inside of it).

A flexible, legislative provision might be very useful where there is a formal care contract that does not make provision for relationship breakdown (no model contract I have seen makes explicit provision for relationship breakdown). Although the New Brunswick legislation was not applied in this way by the court in Hickey , there is no reason why unwillingness to live together should not be taken into account under this kind of provision.

A legislative power to vary may also be useful in situations like that discussed above in Re Witwicki, (where the caregiver pre-deceases the senior, with or without a life estate) to effect a fair outcome.[27]

CONCLUSION

One challenge for a Canadian researcher is the paucity of hard evidence about care agreements. Care agreements d unlikely to come before the courts, especially where family members are involved. However, we can draw some important conclusions from what we do know. We know that care agreements almost always involve informal, oral promises. We have some information about who is making these informal care agreements, and why. We have evidence that, with some frequency, these arrangements do not work out.[28] Professionals working with seniors tell us that when care agreements break down, seniors can find themselves essentially evicted. Although the law provides mechanisms which seniors can use to get their home ‘back’ (and the cases show that courts are often sympathetic), we also know that seniors are not likely to access the law. Prevention is, therefore, particularly important.

Prevention requires education, of the general public, especially seniors, and of the legal facilitators (lawyers and notaries) who should be aware that a care agreements may lie beneath apparent ‘gifts’ from seniors to friends or family members. A senior may be competent to transfer property, but may be doing so on the basis of an ill advised ‘agreement,’ which has not been thought through. The responsible lawyer or notary will satisfy him or herself that the senior is competent before proceeding with the transfer, but may also, in these red light situations, need to establish that there is no agreement which requires explanation and advice. If the parties decide to proceed, they will do so with a better agreement than the vague and informal promise they went in with. Legislation[29] may provide an appropriately flexible approach to informal agreements.

BIBLIOGRAPHY

1. Articles/ Books/ Reports

Hall, M, ‘The Care Agreement: Transfer of Property in Exchange for the Promise of Care and Support’ (2002) Estates, Trusts and Pensions Journal 209.

Kruse, C, ‘Contracts to Devise or Gift Property in Exchange for Lifetime Home Care- Latent and Insidious Abuse of Older Persons’ (1994) 12 Probate Law Journal 1.

Leonard, ‘The Ties That Bind: Life Care Contracts and Nursing Homes’ in Legal and Ethical Aspects of Health Care for the Elderly (1985).

Solkoff, S, ‘The Personal Service Contract in Long Term Care Planning’ (1998) 9 Elder Law Report 1.

Spencer, C, Diminishing Returns: An Examination of Financial Abuse Among Seniors (1996).

Wilkinson, P, ‘Uses, Terms and Provision of Lifecare Contracts for Elders’ (Paper presented at the NAELA Symposium 1996, 3).

2. Case Law

Emerald Resources Ltd. v Sterling Oil Properties Management Ltd (1969) 3 D.L.R. (3d) 603; (1970) 15 D.L.R. (3d) 256 (S.C.C.).

Folia v Trelinski [1996] B.C.J. No. 2135 (S.C.); [1997] B.C.J. No. 2417.

Hickey v Hickey [1988] N.B.J. 25 (C.A.).

Lynn v Paterson [1999] B.C.J. No. 1501 (S.C.).

Morgan v Morgan [1996] N.B.J. No. 470 (N.B.Q.B.).

O’Neill v O’Neill [1952] O.R. 742.

Re Witwicki 101 D.L.R. (3d) 430 (Man. C.A.).

Simpson v Simpson (1997) Vancouver No. 19971016 (B.C.S.C.)

3. Legislation

Judicature Act RSNB 1973, c J-2.


[1] LLB. LLM. Ms. Hall currently holds the position of Program Director, Canadian Centre for Elder Law Studies, British Columbia Law Institute. She has carried out all research, writing and consultation associated with the BCLI Project on Legal Issues Affecting Seniors. The first Final Report of that Project Committee, Private Care Agreements Between Older Adults and Friends or Family Members (Report No. 18) was published in 2002. This article draws on material gathered by the author in the course of that Project; the ideas and opinion expressed here are entirely those of the author, however, unless identified otherwise. See also, M. Hall ‘The Care Agreement: Transfer of Property in Exchange for the Promise of Care and Support’ (2002) Estates, Trusts and Pensions Journal 209 for a more detailed discussion of this subject.

[2] See C Spencer Diminishing Returns: An Examination of Financial Abuse Among Seniors (1996).

[3] (1997) Vancouver No. 19971016 (B.C.S.C.).

[4] [1996] N.B.J. No. 470 (N.B.Q.B.).

[5] Ibid 8.

[6] [1996] B.C.J. No. 2135 (S.C.); additional reasons [1997] B.C.J. No. 2417.

[7] [1999] B.C.J. No. 1501 (S.C.).

[8] The agreement stipulates that the decision about whether Ms Lynn was no longer able to reside at home should be made by Ms Lynn’s ‘medical advisors’ in consultation with Ms Lynn and Ms Paterson. Ms Paterson was required to make the arrangements for hospitalisation again in consultation with the older woman’s ‘medical advisors’.

[9] It is a general rule that the courts will not compel specific performance of a contract for personal services, apparently on the grounds of public policy: ‘that it would be improper to make one man serve another against his will.’ (Emerald Resources Ltd. v Sterling Oil Properties Management Ltd. (1969) 3 D.L.R. (3d) 603, 647 (Alta. C.A.) per Allen J.A.; affirmed (1970), 15 D.L.R. (3d) 256 (S.C.C.)).

[10] Lynn v Paterson [1999] B.C.J. No. 1501 (S.C.), 11.

[11] For a period of time, depending on the value transferred.

[12] See Scott Solkoff, ‘The Personal Service Contract in Long Term Care Planning’ (1998) 9 Elder Law Report 1.

[13] Patricia Wilkinson, ‘Uses, Terms and Provision of Lifecare Contracts for Elders’ (Paper presented at the NAELA Symposium 1996, 3).

[14] Solkoff , above n 12.

[15] The senior may not wish to accept the adjustment, and may indeed be willing to find someone else who will except his or her ‘bargain’.

[16] (1997) Vancouver No. 19971016 (B.C.S.C.)

[17] And the model contract set out by Solkoff , above n 12 contemplates that the ‘services’ to be provided to the senior under the contract will continue after hospitalisation or admittance to a nursing home, although of course they will be different in kind (‘over the lifetime of elder, on an as needed basis’).

[18] Wilkinson, above n 13, 10.

[19] Ibid.

[20] See Leonard, ‘The Ties That Bind: Life Care Contracts and Nursing Homes’ in Legal and Ethical Aspects of Health Care for the Elderly (1985); C. Kruse ‘Contracts to Devise or Gift PropertyinExchange for Lifetime Home Care- Latent and Insidious Abuse of Older Persons’ (1994) 12 Probate Law Journal 1.

[21] And that the senior, even with the contract, may still be unwilling to ‘use’ the law in the event of relationship breakdown, because of insecurity about how to proceed, not wanting to antagonise the caregiver, etc.

[22] This scheme was proposed and set out by Wilkinson, above n 13, 4. The example given is also taken from Wilkinson, above n 13, 5.

[23] 101 D.L.R. (3d) 430 (Man. C.A.).

[24] O’Neill v O’Neill [1952] O.R. 742.

[25] But not so as to affect the title of a bona fide purchaser for value: RSNB 1973, c J-2, s 24.

[26] [1988] N.B.J. 25 (C.A.).

[27] The British Columbia Law Institute, Private Care Agreements Between Older Adults and Friends or Family Members (2002) includes a legislative recommendation which would allow the Court to set aside a transfer of property made pursuant to a care agreement.

[28] Although, presumably some do work out, we have no real way of knowing, as working agreements will tend not to come to public attention.

[29] See discussion of New Brunswick’s Judicature Act, above n 25.

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