Establishing a financial plan for moving a parent into your home

As our parents get older and begin to decline in vitality, many of us consider letting them move into our home. After all, it's easier to care for an elderly mom or dad in a nearby room rather than across town or even in another state.

But you should also be aware of the potential economic impact of such a move, particularly if your parents have limited resources. Experts say that the financial ramifications are often greater than most people anticipate.

Here are some key factors to consider - and to plan for - if you're contemplating such an invitation.

Remodeling or renovation costs

Your home may be just fine for you, but what about for Mom or Dad? Do you have the room to afford them the privacy they're accustomed to and still maintain privacy for you, your spouse and family? Additionally, an aging parent with physical issues may not be able to climb the stairs in a two-story residence.

Living arrangements can quickly prove inadequate, and the costs of fixing problems can add up. Even if major renovations aren't required, it's a good idea to plan on upgrading some basic areas, such as installing handicapped-accessible toilets or showers and tubs with handlebars and grab rails.

Cost of hiring medical or professional help

All of us want to be there emotionally, physically and even financially for our parents when they need us most. But not everyone has the ability to provide day-to-day care, such as bathing, feeding or dressing an aging parent who may be frail, forgetful or physically ailing. For boomers on the cusp of retiring, or those already in retirement, spending several thousand dollars a month on a parent's care isn't economically feasible.

Typical expenses include anything from groceries and household goods to prescription drugs or medical copayments made on behalf of a parent. If you're taking time off work due to caregiving responsibilities rather than hiring professionals, you should consider preparing a formal legal document called a Personal Care Agreement, which we covered in our last post.

Government aid lowered

The law presumes that immediate family members taking care of one another without an agreement do it out of love and affection, which might have an impact on a parent's eligibility for government benefits like Medicaid and Supplemental Security Income. For this reason, it's best for many families to have a rental agreement under which parents pay fair market rent. Plus, if the adult children are going to be caregivers, it would be a detriment financially to have no written agreement.

Tax breaks available

Fortunately, if you take in a parent under your roof, you may be eligible to receive some financial benefits like cash payments or tax deductions. If you pay more than half of an elderly parent's expenses for food, housing and medical supplies, you can claim them as dependents on your tax return in order to deduct medical expenses-including doctor's visits, dental care, insurance premiums, medical equipment and home care-that exceed 7.5% of your adjusted gross income.

Modifications made to your home to accommodate your parent's health care needs-such as installing handrails on a stairway, putting in a ramp, or widening doorways-are also considered medical expenses. The key is to keep good financial records, and have a caregiver agreement that demonstrates that your parent is paying for your services, and not merely receiving care as a gift.

There may come a time when your parents have difficulty keeping track of their finances. It may become necessary for you to become more involved in his/her personal finances, including paying bills, monitoring accounts and managing retirement accounts or investments. Although it can be a difficult conversation, it is helpful for you to discuss your parents' financial affairs and get as much detailed information as you can.

You may also want to look into getting a power of attorney for finances, which would provide you the authority to make financial decisions on your parents' behalf. To avoid misunderstandings, run your ideas past an elder care lawyer or financial planner.

Packing and moving out of a house is a significant chore for anybody, but for the older adult who has decades' worth of memories and possessions, moving can represent a tremendous emotional challenge. In our next post, we'll talk about some resources to help you better manage the move. For more resources for family caregivers, visit our website at

Reflections from your editor, Cindy Sher, on people living their Jewish lives each day. ... Read More

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