With summer in full swing, for some of my Redding clients it means that the children are more “present” than they might otherwise be. The wallet might feel a little more leaky than normal, with summer camp expenses (and there *are* certain tax deductions for those, if you do it right), various activities for the family, and more.
But there is great joy in all of that, of course, and I’ve often said that it’s almost always worthwhile to invest in “experiences over stuff”.
That particular experience, however, isn’t what I’m writing you about today. There is another joy that some of my clients find themselves embracing, and that’s when Mom & Dad or other, older members of the family move in. Suddenly, there are multiple generations “present” in the home. And this can obviously change the dynamics.
But as you embrace this particular joy (and yes, it can also feel like a burden), there are important things to keep in mind as it relates to maintaining your legal and financial footing while you do so.
Here’s what I mean…
Three Practical Financial Tips for the Multi-Generational Caretaker in Redding
“The secret of change is to focus all of your energy not on fighting the old, but on building the new.” -Dan Millman
Time was, families used to be dealing with elderly parents, young children … and everything in between, all in one house! This is less common now, and as a result, many families are actually unprepared for how to handle it — simply because models are much less plentiful.
The reason I highlight it now, is that we can help — whether with specific practical assistance, or even just dispassionate advice. You might know somebody in this situation of being a caretaker — or you could be dealing with it yourself.
And depending on your perspective, all of it can feel like a double-whammy.
Certainly, as with children, it’s always a better idea to focus on the benefits of more time with your parents, etc. … but yes, I’ve seen many times how this can put a major drain on a family.
From what I’ve observed of adults thrust into the role of caring for their parents, the biggest struggle often comes from trying to keep their dual responsibilities segregated. They try to ensure that the needs of the aging parent don’t impact what’s going on in their children’s lives.
As an example, the adult children feel like they have to choose between making sure that Mom takes a walk for exercise, and attending a child’s piano recital. No matter what the adult parent chooses, he or she often feels like a failure at everything.
What you need to realize is that this process is not something that you can keep separated in your life. You’ll do your family a great service by viewing it as an experience to be shared with everyone in the family, and maybe even with some members of the outside community.
If you find yourself in this situation here are 3 practical tips I can offer:
1) Get the Actual Facts. You may have avoided talking with your parents about finances in the past. Whether you were taught that those things are private or “it just never came up,” now is not the time for surprises. You need to know how your parents are doing financially and whether they’ve made any provisions in case they become ill or suffer a long-term disability.
2) Ensure the Estate is Set Up Right. At this stage of your parent’s life it’s important to make sure that your parent’s legal house is in order. We can help make a recommendation to this end, if you need help.
But, no matter where you get it done, your parents absolutely need to have a financial power of attorney, advance health care directive (a health care power of attorney plus a living will), and a simple will. It may not be the best estate plan for your parents. It might not be proper Medicaid planning. However, it is the bare minimum you will need to help care for your parents.
3) Insure Against the Future. Now is the time to examine long-term-care insurance or assess whether savings will cover an extended nursing home stay, assisted-living facility costs or extended home-care services. You may be tempted to begin to liquidate your holdings or to stop saving for your own benefit, in order to help pay for the cost of your parent’s care. Big mistake.
Remember that there aren’t nearly the same kind of government programs or lending scenarios that will help you pay for your kids, or their college, or fund your retirement — as there are programs to help support aging parents. And it’s vital that you continue to save for your retirement.
I’m grateful for your trust, and for your referrals.
Dennis Fritz CPA