Caregiver’s Legal Rights, Responsibilities & Liabilities: A Guide for Kentucky Families

When a loved one needs help at home, most families focus on the obvious questions first: Who can help, how many hours are needed, and how much it will cost? 

But a second set of questions often determines whether the arrangement stays safe or turns into a legal nightmare: Does the caregiver actually have legal authority to act, are you accidentally becoming an employer with payroll, insurance, and contract duties, and could everyday caregiving choices trigger negative accusations? 

These questions matter more now than they did a few years ago, because across many regions the legal system has been moving away from informal “family handshake” care arrangements and toward clear documentation, worker protections, and enforceable compliance standards.

At Elder Law Guidance, we help Kentucky families protect the senior and protect the caregiver arrangement, using the right authority documents, caregiver agreements, and estate/Medicaid planning tools to reduce legal exposure.

Key Takeaways

• A caregiver can’t safely “step in” without the right legal authority (Power of Attorney, health care documents, and the right privacy permissions). HIPAA access is often the first roadblock. 
• If you hire help directly, you may become a household employer, triggering tax and compliance duties that change year-to-year 
• Kentucky families should treat caregiver planning as liability prevention by seeking the help of an attorney to prepare written writing agreements, maintaining cleaning financial records, and setting clear clearing boundaries. These are your best defenses against elder abuse/exploitation allegations and family conflict. 

The New Reality: Caregiving Is Personal, But the Law Treats It Like a System

Caregiving often starts informally, like a neighbor helps with groceries, a granddaughter manages medication reminders, a hired aide comes “a few hours a week.”

The law does not care how it feels. The law cares how it’s structured.

That structure determines:

• whether the caregiver has legal authority to make decisions or access information,
• whether money is being handled with fiduciary-level accountability,
• whether the arrangement looks like employment,
• whether a dispute later becomes a claim for wage violations, financial exploitation, or neglect.

So let’s break this down into four “shields” that protect Kentucky families.

Pillar 1: What a Caregiver Can Legally Do

A caregiver’s biggest hidden risk is acting without authority.

Decision-Making Authority Is Not Automatic

Even if you’re a spouse or adult child of a loved one needing care, you may not have legal authority to:

• sign contracts,
• move money,
• change beneficiary designations,
• consent to certain medical care,
• access complete medical records.

HIPAPA Access vs. Decision Making

HIPAA often blocks caregivers from getting answers during a crisis unless the right permissions exist.

• If a caregiver is a recognized personal representative, providers generally must treat them like the patient for access purposes (to the extent relevant). 
• Even without personal representative status, the patient can direct a provider to send records to a family member (typically in writing, signed, clearly identifying who receives what). 

A strong elder law plan coordinates (1) medical decision authority documents and (2) HIPAA authorizations so caregivers can act without crossing legal lines.

Pillar 2: The Money Shield 

The moment a caregiver manages money, like paying bills, using a debit card, handling bank logins, the risk shifts.

The Fiduciary Standard 

If you’re handling someone else’s finances, you need a system that can withstand scrutiny later, including:

• a clear paper trail
• separate accounts/cards where appropriate
• receipts and notes for purchases
• documentation for reimbursements
• consistency (no cash withdrawals without explanation)

The Medicaid Trap

This is where elder law and caregiving collide.

When families pay a caregiver informally, those transfers can look like gifts, not legitimate compensation, creating problems later if Medicaid long-term care planning becomes necessary.

That’s why many families use a properly drafted Caregiver Agreement/Personal Care Agreement to document:

• the services being provided
• the schedule
• the pay rate
• the recordkeeping expectations

Elder Law Guidance already treats caregiver agreements as both a family-stability tool and a Medicaid-protection tool. 

Pillar 3: The Employment Shield 

If you hire a caregiver directly (not through an agency), you may become a household employer. That can create exposure in three places:

1) Taxes and Payroll Compliance

IRS household employee thresholds change over time. For example, the IRS notes a cash-wage threshold of $2,800 for 2025 for Social Security/Medicare withholding; Publication 926 shows a $3,000 threshold for 2026.

2) Worker protections are expanding

States are increasingly formalizing domestic work protections. , New Jersey is a recent example, requiring written contracts beyond minimal monthly work and providing model contract resources. 

Even if you’re in Kentucky, these trends matter because they influence:

• how agencies structure agreements
• how courts interpret informal arrangements
• and how quickly local rules can tighten

3) Liability for supervision and safety

Independent hires can create more responsibility for the family regarding:

• training and supervision expectations
• documentation of tasks and incidents
• boundaries around medication management
• transportation safety
• and who is responsible when something goes wrong

Agency care can reduce some administrative burdens because the agency may handle payroll and certain compliance duties, but it doesn’t erase risk. Families still need clarity around:

• scope of services
• incident reporting
• privacy expectations
• and who makes which decisions

Pillar 4: The Allegation Shield 

Most families don’t realize how easily a caregiving situation can be misunderstood later, especially if there are siblings, blended families, or estate disputes.

Kentucky Reporting Obligations 

Kentucky law requires reporting suspected adult abuse, neglect, or exploitation. The Kentucky legislature’s statute language makes reporting mandatory when someone has reasonable cause to suspect harm, and Kentucky Adult Protective Services (APS) is the investigative arm. 

Kentucky also provides a state reporting portal for non-emergency situations. 

The Best Defense is Documentation

To protect the senior and protect the caregiver:

• use a caregiving agreement prepared by an elder law attorney
• keep a simple care log (appointments, incidents, concerns)
• document purchases and reimbursements
• use written agreements for paid care
• avoid mixing funds
• define what the caregiver can do (and what they cannot)

The Caregiver Checklist

If you want the safest possible plan, use this checklist as your baseline:

1. Confirm authority
   Make sure the right Power of Attorney/health care documents exist before a crisis.
2. Solve HIPAA access upfront
   Put HIPAA permissions in place so caregivers can speak with providers when needed. 
3. Put paid care in writing
   Use a caregiver agreement that clearly defines duties, schedule, pay, and recordkeeping, especially if Medicaid planning could be needed later. 
4. Decide: agency vs. independent hire
   Choose based on risk tolerance, not just hourly rate.
5. Don’t guess on payroll/taxes
   Household employee thresholds can change year to year; confirm current rules. 
6. Set financial boundaries
   Separate accounts where appropriate, save receipts, and create an audit-proof trail.
7. Create an incident plan
   Who calls 911? Who calls the doctor? Who reports suspected abuse? Document it.
8. Review the plan annually (or after a major health change)
   Care needs to shift. Your legal approach should shift too.

This information is educational and not individualized legal advice. A licensed elder law attorney 

Taking the Next Step With Elder Law Guidance 

Caregiving is an act of love. But love alone won’t protect you from disputes, Medicaid complications, or legal exposure if something goes wrong.

At Elder Law Guidance, we help Kentucky families build caregiver arrangements that are clear, documented, and legally defensible, so care can continue with less stress and fewer surprises.

Secure your family’s plan today. Contact Elder Law Guidance to schedule a consultation and begin building your legal protection strategy.