Your parent might have had a recent medical problem, is in the beginning stages of dementia, or is perfectly healthy, but tired and lonely. You are considering moving this parent into your home and want to know what things you should be thinking or talking about before you make that decision. Here are a few suggestions:
Your parent might fit into one of three scenarios:
Your parent may be financially independent, active, social, and in great health. He may anticipate that somewhere down the road he will need help so moving in with you is part of his retirement plan.
Your parent may currently have enough assets to take care of his finances, but will have problems if there is a need for additional medical procedures or assistance in the home.
Your parent may only have Social Security income and maybe a small pension which makes it hard to support himself.
Your finances will be affected differently in each of those scenarios. Your independent parent would most likely have the assets to provide for his own support, while the second and third scenarios would need your financial support in some way.
First, let’s consider housing:
Is your parent going to be happy calling one bedroom his “space,” or does he need an additional room or two? Does the independent parent need their own small house on your property? Do you need to make the bathroom more senior friendly? Is it wheel chair accessible? Does the house have an area on the first floor for your parent? If changes need to be made, who is going to pay for it? Will it be paid by your parent entirely, a combination of your parent and the adult kids, a new loan or a new house jointly owned?
Other things to consider:
Will other family members help contribute to the support of the parent?
If the parent pays you to take care of him, will your siblings complain that you are being paid out of “their inheritance?”
Does your parent own a long-term care policy which might help pay for in home care?
If the parent owns his own home with equity in it, would a reverse mortgage line of credit be feasible to provide additional cash to cover the in home care?
Most people who have a parent living with them make sacrifices to do so by cutting back on vacation and leisure activities and by dipping into their retirement and savings. Is this something you are willing to do?
If you are paying more than half of the financial support for your parent during the year and meet other IRS requirements, you may be able to claim him as a dependent on your tax return and claim his medical expenses as a medical deduction.
Please note that if your parent is on SSI, moving in with you could affect his benefits. He can live with you as long as he pays for his own food and shelter costs. Contact his case worker to see if there is special paperwork that you need to fill out to prove that he is paying those expenses. Also, make sure that you know what kind of things you can buy your parent that are not considered food or shelter.
If a military veteran qualifies, VA Aid & Attendance benefits can be applied for to help cover the costs of elder care assistance. Your parent must require help with the Activities of Daily Living at home but it does not have to be related to their military service. There are a couple of other VA pensions that might be applicable depending on your parent’s military service and any disability he might have. VA pensions can be used to pay a family member who is the caregiver except for a spouse.
In some circumstances, a family member can be paid by the government to care for a Medicaid-eligible person in the home. Program eligibility rules vary from state to state and the amount paid is a very modest amount.
Make sure you talk about who is going to take care of your parent. Is there a family member at home who is not working who can do that? If so, are they going to get paid? If you are working, consider who will be caring for your parent while you are at work. Who will make all of the doctor appointments, take them to the doctor and fill out all of the medical paperwork? If no family member is available, will you need an in home care agency to come into the house and take care of your parent while you are working? Who is going to pay for that service?
If a health concern or the death of a spouse triggers the possibility of moving your parent in with you, it’s helpful if the parent and adult kids can talk through some of the issues listed above before actually making the decision.
Marcia L. Campbell has worked as a CPA for 25 years specializing in seniors, trusts, estates, court accountings and probate litigation support. Reach her at Marcia@MCampbellCPA.com