As parents and children age, the familiar family roles often
switch. And for some adult children that can mean helping elderly
Sandra Kiely Kolb says her father was obsessed with one wish as
he got older. "His mantra was he didn't want to be a burden," says
So when Kolb and her three siblings decided their dad's large
house was no longer suitable, they sought a solution that would
enable him to remain as independent as possible. About a year ago,
with the okay of her siblings and father, Kolb and her husband, who
are retired and live in Shaker Heights, Ohio, bought a condo for
her father in Red Bank, N.J., a few miles from his old house.
After their dad settled in, the family put the old house up for
sale. "We recognized that it would be difficult to sell the house
with a 91-year-old living in it, along with two old dogs," Kolb
says. Plus, she says, the family didn't want him stressed while the
house was on the market.
The proceeds from the sale pay for caregiving and condo
expenses. "I feel we're very blessed," Kolb says. "A lot of thought
and a lot of consideration went into this."
Kolb and her siblings spoke with their dad often before figuring
out what kind of help he needed and wanted. If you think your
parents could use support, it's essential to have a frank
conversation about finances. "It's a matter of assessing your
parents' situation," says Jim Holtzman, a certified financial
planner with Legend Financial Advisors, in Pittsburgh.
Ameriprise Financial found in recent research that "all
generations do a pretty bad job talking to each other about money,"
says Suzanna de Baca, vice-president of wealth strategies. Some
people worry such conversations will cause tension, she says, while
others say they feel like it's just not their business to ask.
However, de Baca says, "The earlier you can have a conversation
about money, the earlier you can identify parents' needs and
A conversation can get both generations on the same page. In a
Fidelity Investments study, 24% of children said they believe they
will have to help their parents financially, while 97% of parents
said they won't need help. "Both parties make different assumptions
because they have different information," says John Sweeney,
Fidelity's executive vice-president of retirement income and
If your family doesn't talk freely about money, de Baca says you
can "leverage current events" to start a discussion without causing
tension. "Give Mom or Dad an article about health care and ask,
'What do you think about that?' It's not about their money, but
about a financial topic," she says. Perhaps you can discuss a news
report about proposed changes to Social Security or Medicare. Or,
Sweeney says, ask what your parents think about the
Siblings need to keep the lines of communication open, too. One
sibling could be appointed as the lead, or tasks could be divided
up among siblings. While Kolb paid for the condo, her brother who
lives near their father handles day-to-day needs.
Financial Assistance Comes in Many Forms
Once you start talking about money, ask your parents if they
want you to review their finances. Perhaps you can spot expenses to
trim or ways that your parents could create a steady income stream,
such as using a line of credit from a reverse mortgage or an
It may be worth paying for a few hours of assistance from a
fee-only certified financial planner. The adviser could help your
parents figure out how to improve cash flow. Also, because you need
to fund your own retirement and perhaps pay for some of your adult
children's expenses, an adviser could suggest ways for you to
assist your parents without jeopardizing your financial future.
For some families, it may work best to pay utility, medical or
other bills directly. Constance Stone, president of Stepping Stone
Financial, in Chagrin Falls, Ohio, says one client decided to pay
long-term-care insurance premiums for her mother--which would
protect the adult child from catastrophic costs if a parent needs
expensive care. "Paying bills directly for parents who don't have
enough cash flow saves them from draining assets," says Stone.
For some families, assistance with housing might make sense. If
a parent needs to move, such as in the case of Kolb's father, you
might consider buying a home for your parent to live in with the
parent paying rent. Because you would be serving as a landlord, you
could take tax deductions for repairs, insurance premiums and other
Or consider moving a parent into your own home. Frank Erickson's
95-year-old mother lived on her own in a state-subsidized apartment
in Ohio until last year. When Erickson and his wife moved from Ohio
to The Dalles, Oregon, his mother moved in with them. "She does
contribute to rent and cable TV, but she is paying less than when
she lived alone," says Erickson, 70. The couple provides his mother
meals, takes her shopping and performs other caregiving tasks.
Another option is to provide outright gifts. You can give up to
$14,000 to each parent in 2013 without having to file a federal
gift-tax return. With the current federal lifetime estate- and
gift-tax exemption exceeding $5.2 million, the gift tax may not be
a big concern, although your state may have a lower exemption. If
you're in danger of exceeding the lifetime threshold, paying
medical bills directly, which won't count toward the threshold, may
be a smart move.
If you buy property for a parent to live in but don't charge
minimal rent, the IRS may consider the house a gift. "Charging rent
helps mitigate" that problem, says Holtzman.
Besides direct financial help, you can assist parents by
researching federal and state benefits that they may be eligible
for. If your parent is a veteran, he may be eligible for long-term
care, home loans and disability benefits. Erickson helped his
mother with the process of qualifying for her subsidized apartment
and other state benefits. Start your research by visiting
, a free service by the National Council on Aging that helps
seniors identify benefits.
Check with an elder-law attorney to make sure any financial help
you provide won't disqualify your parent from receiving certain
benefits. Some programs, such as Medicaid-covered nursing-home care
and veterans' Aid and Attendance benefits, limit the amount of
assets and income a senior can have.
Haven't yet filed for Social Security? Create a
personalized strategy to maximize your lifetime income from
Social Security. Order
Kiplinger's Social Security Solutions