One of the trends of recent years has been a rise in multi-generational living. Whether it’s for economic or health reasons, when Mom and Dad or other, older members of the family move in, there are important things to keep in mind as it relates to maintaining your legal and financial footing with multi-generational caretaking
Here’s what I mean…
Multi-Generational Caretaking Tax Planning for Chicago Families
“Love only grows by sharing. You can only have more for yourself by giving it away to others.” – Brian Tracy
There used to be a time when Chicago families with elderly parents, young children (and everything in between) living together all in one house was much more common than it has been in recent years. So when the financial struggles of recent years came calling and all kinds of situations changed, many of our Chicago tax client families have been unprepared for how to handle it — simply because “models” are much less plentiful.
This shift can feel like a blessing or a burden. And depending on your perspective, 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 multi-generational caretaking can put a major strain 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, or helping a child with homework. 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 you can keep separated in your life. You’ll do your family a great service by viewing caretaking as an experience to be shared with everyone in the family, and maybe even with some members of the outside community (if medically possible).
If you find yourself in this situation, here are three practical tips I can offer:
1) Get the actual financial 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 correctly.
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 to someone good at this stuff in the Chicago area if you need help.
But, no matter where you get it done, your parents absolutely need to have a financial power of attorney, an 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.
You may not be aware of this, but 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.
So take advantage of those areas where there *is* assistance available so that you can keep sight of your own goals.
To your (extended) family’s lasting financial and emotional peace…
Bell Tax Accountants & Advisors
Bell Tax Accountants & Advisors