Is It My Place To Help My Parents Manage Their Affairs?

It is very difficult for children as a parent ages to know how actively involved they should be in their parents’ affairs.

Crown-agency-395258-unsplashAs our population is getting older, many children find that they need to assist their parents in managing their health and/or financial affairs, and are struggling with weighing the privacy of their parents against the need to know in order to be able to assist them.

Also, in light of the filial responsibility statute in Pennsylvania (see prior blog entitled “Filial Responsibility in Pennsylvania”), children need to know what is occurring in their parents’ lives, to avoid being could be held personally responsible for nursing home bills even though they were not a part of, and may not have even known anything about, what was occurring.

This is a very sensitive topic, however, because often people of the older generation are very private.

It is essential for children of elderly parents to educate their parents about why it is important for the children to be involved, and it is important for the children to educate themselves on the issues relevant to their parents’ care and needs as part of the process of getting more involved in their parents’ affairs.

Knowledge and information are power, and the parent’s understanding of why it is important for a child to have information, and what could occur if they do not, is key. It is often helpful to have the parent speak to a professional who can explain the importance of the children’s participation, and discuss the level of that participation, and perhaps to also help manage the relationship.

We're offering a FREE elder law bootcamp for financial professionals.  And you'll get CE credit for joining us!  Just click here to let us know you'll be coming and we'll make sure we save you a spot.

Jeffrey Bellomo, Esq.


Should I Give My House & Stuff To My Kids To Protect My Assets?

This is a common question from clients, who were told that is the best way to protect their house and their “stuff” from the nursing home. 

However, doing so is very risky, and rarely worth the benefit.  Although the tax laws allow most people to give away $15,000 a year to every family member, and $11.2 million from each spouse, without incurring any gift tax, there is a difference between what you can, vs. what you should, do. 

Once a gift is made, it is irreversible. Thus, if you and your child don't see eye to eye in the future, or your child gets divorced, needs nursing home care, or is responsible for a horrific car accident, the property you gave them could be at risk. Also, a gift can result in significant capital gains if the child sells the property.

Neonbrand-258972-unsplashOn the other hand, if the parents retain the asset in their names, or have them in a trust that they control, upon their deaths the children will get a stepped-up basis on the property’s value. The children will pay 4.5% inheritance tax, but will avoid a 15% or 20% capital gains tax. 

Also, what if your child dies before you? The child probably will leave all assets to the child’s spouse, your in-law, who can do what he or she wants with them, and has no obligation to take care of you.  

Further, Medicaid has a five-year lookback penalty period for all gifts you made. 

These situations may not occur, but is the risk worth taking, when there are ways parents can largely control their assets and still receive asset protection and a stepped-up basis? It is important to talk to a certified elder law attorney to help you weigh the risks. 

Are you a financial professional wanting to learn more about estate planning options for your clients?  We're hosting a FREE Elder Law Bootcamp on Friday, June 8th that offers CE Credit!  Just click here to RSVP and we'll save you a seat!

Jeffrey Bellomo, Esq.

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