Tuesday, January 15, 2008

Parents moving in...

After the controversy about loaning money to family, another step in family finances is what to do when your parents move in with you?

How do you handle the financial aspect of a parent moving in? Do you allow them to live rent free and not contribute to the household? Do you expect them to contribute equally?

And of course this is further complicated if you have siblings. If one sibling takes on the responsibility of allowing the parent(s) of moving in rent free, should the others contribute? Or should that child which steps up responsibility expect to inherit a larger portion of the parents money? Should that child use the money to care for the parents? Or will siblings feel that their "inheritance" is being squandered?

This is currently the predicament ongoing in my family. I doubt my grandmother can live alone. And she is not rich, nor does she have any money. Instead her children have always had to support her. Since she currently lives alone in my mom's second house, she needs to move out. At 80 years old she can't manage the upkeep or cleaning of the house.

But what to do? Financially it will be tougher on any child that takes her in obviously. But should they take her tiny monthly pension and social security? It amounts to less than $800/month.

I think this is a financial predicament likely to hit many boomers as they age. How to handle moving in with their children.


SJean said...

Interesting. I would think that all children would contribute, according to their ability. If there really is an "inheritance", it should be spent and squandered on the parents while they are alive. No one is entitled to that these days.

Jim ~ mydebtblog.com said...

This may offend, but there are other options than having to let them move in. A lot of senior citizens need daily interaction and I think retirement communities are great for that. They are somewhat expensive though, but hopefully retirement savings was intended to be used for their retirement not their sibling’s inheritance. I have noticed my dad and uncles discussing what might happen when my grandma (their mom) passes. She has recently been looking at these retirement communities. They are much better than a nursing home. If you don’t mind them using the guest bedroom, why not let them move in with you?

Living Almost Large said...

Jim, retirement places cost WAY more than the $800/month my grandmother makes. Yes that's social security and pension. And it's likely she'll cost more than $800/month in costs. They are renovating the bathroom for handicap use, making more room, etc.

Now my other aunt is looking to convert a half bath to a full bath on their first floor, again way more than $800/month.

Um, my mom has already allowed my grandparents to live basically rent free for 20+ years.

So yes there are other options, but they don't exactly exist when you are poor. I already told my mom I don't expect and inheritance, but what to do when they are broke?

Anonymous said...

sjean, I agree with you. Any money the parents have should be used for their care while they are alive rather than choosing the lowest cost options so that there's an inheritance left for the kids and grandkids.

If in the case, as presented here, the parent doesn't have any savings and only receives a small social security or pension check, then some of that money should go toward the increased groceries and any medical and personal expenses the parent has. If that doesn't cover it, then the other siblings with the parent is not living should contribute what they can afford.


Living Almost Large said...

Spot on. Sorry sjean, but my grandma doesn't have any money. Inheritances are for people with money.

louise said...

it's very difficult, I had a similar situation with dad, he had no savings, in fact he owed money which we have paid.

He had the pension and we had the expense of day care every day as well as general living, there are no siblings to help with money, they actually stole his home (long story!).
I think it is reasonable to expect parents to contribute towards food and board. It's just very hard when there is no savings there to use up.

Matt Schonert said...

I prefer having the siblings pay the host child while the parents are living, rather than holding out and expecting the host sibling to receive a greater inheritance.

In the "inheritance method", I see two potential problems:

1. The parents may not be leaving much of an inheritance. This is especially true if they are depending on their family to care for them.

2. Estate issues can get dicey. Even in cases where there is an understood (or written) agreement that the host sibling will receive a greater portion of the inheritance, the apparent favoritism, despite its fairness, could still foster resentment between siblings.

3. Estate taxes (and litigation costs) complicate the matter of calculating what one child's net inheritance will be, so it might not be easy to compensate Child A for X amount of estimated caretaking expenses.

If the children pitch in while the parents are still living, you hedge your bets against someone taking things personally. In addition, everyone gets to enjoy the spirit of giving and takes part in caring for a loved one, which has benefits beyond the financial gains.

carrie said...

I am in the same situation. I have been caring for my mom for the last 8 years ( Since I was 24) My mom's income is very limited. and there will be no inheritence. I pay all of the expenses and my 2 older brothers contribute nothing. All the stress has always been on me to make sure that she is taken care of NO MATTER WHAT. I just wish my brothers helped me to help her.

Living Almost Large said...

It happens more than you think. It's expensive to live so long now. I don't think people are as prepared as they should be.

Anonymous said...

I think it's fair to have them contribute to purchasing groceries and perhaps utilities, but otherwise their money should be kept for medical expenses they incur.

I personally am counting on moving my parents in with me (or conversely me moving home with them) at some point -- in fact I'm counting on it. It would be a privilege to care for them in their last years, just like they cared for me in my first years.

Shannon Ingram said...

There is a way to get government financial help for elders with little or no income, allowing them to be in an assisted living community where they can enjoy contact with people their own age. Check with Social Security.

Toshiba Satellite M645-S4061 said...

I think... It's expensive to live so long now.