|
|
 |
 |
Jordan Goodman is the author of Everyone's Money Book, available at 888-201-6300. This is the third edition of the book. You can also visit his Web site at www.moneyanswers.com. He talks with us on Thursday mornings.
|
|
October 9, 2003
"When Your Parents Need Your Financial Help"
More and more people in their 70s and 80s are running out of
money because they have not saved enough for retirement -- and they're turning to
their children to help them out financially. Many Baby Boomers are being
forced to pay everything from medical expenses to mortgage payments and
credit card bills.
If your parents are starting to ask you for financial help, what can you do?
Here are a few tips that might help a bit:
Buy your parent's assets: If your parents have assets that have a value to
you, you can purchase them, giving them cash and giving your valuable
property at perhaps a bit lower than the market price. The most common asset
that parents might own is their home, which they can sell you and then you
rent back to them at a fair market rent. You might qualify for a mortgage
that your parents would not, so you get the house and mortgage deductions,
and they get to live in their house and get the capital out of it to invest.
A way to make it easier on you is to buy the house with installment
payments.
Support your parents to get a tax deduction: If you contribute more than
50% of their support, you get to claim your parents as dependents on your
tax return. This counts if your parents have less than $3,050 in income this
year.
Convince your parents to get a reverse mortgage: If they own their home
and are at least age 62, they can have the bank make a payment to them every
month instead of the other way around. When your parents die or move out of
the house, the bank will sell the house and recoup what they lent. In
the meantime, your parents get to live in their house and don't have a
mortgage payment.
Keep separate bank accounts: It may be tempting to mingle your finances
with your parents, but it is a bad idea. Keep separate bank and brokerage
accounts, and have your parents sign a power of attorney so if they become
incapacitated, you have the legal right to run their financial affairs.
In general, knowing this problem is coming might help you get your parents
to start saving at an earlier age or monitor their finances a bit better.
If they don't do a good job with their finances, you, the child, may
end up paying for it for years to come.
For More Financial Tips From Jordan Goodman
|
|
