As Americans are living longer, more and more seniors are turning to family members for care and support as they age. In some cases, seniors are even moving in with their adult children. For some families, this dynamic of multiple generations living together in a household meets many needs for those involved. Seniors no longer combat isolation. Adult children no longer worry about a parent’s safety or well-being. Even younger children benefit from the wisdom, oversight, and help of an older adult in the household.
The adult children who welcome aging parents into their homes are among the “sandwich generation,” a term used to refer to middle-aged adults who are caring for elderly parents as well as children at the same time. For some families, the addition of a parent to a household can be seamless. For other families, however, an extra person in the home could present logistical challenges to finances, providing care for a senior, or even upgrading the home’s safety measures to meet a senior’s needs. With every family who opens their doors for an aging loved one, there are key considerations to make as a family to ensure everyone’s needs are met.
Identifying a Level of Care
Identifying as senior’s care needs are important for everyone’s well-being. Part of this plan includes knowing a parent’s medical conditions and seeking a senior’s health provider’s recommendations. Perhaps, an aging parent simply needs some assistance and can live fairly independently. In other cases, an aging parent’s health and abilities have deteriorated where they cannot be left alone. If a person has physical or mental conditions that make it difficult for them to be alone, the family should work together to identify those needs and find solutions. Often those care solutions could involve a sitter (even a family member) or an in-home care provider. In many cases, a person’s care needs change with time. No matter what level of care, it is key to figure out whether an aging adult’s health and well-being can be met indefinitely in the home setting. The next step is to consider how to pay for that care and who is responsible for paying.
Preparing the Home
Having a parent move into a child’s home could include modifications to the home based on a parent’s needs. Some modifications include a separate structure like a mother-in-law suite. Some modifications could include adding a ramp to a home’s entrance or widening door jams to accommodate a wheelchair or walker. Smaller upgrades could include lighting on stairwells or hallways or handrails in the bathroom. In some families, a parent and an adult child decide to purchase a home together. At the heart of these modifications lies the question of who will pay for these home improvements. If the aging parent intends to pay these costs, there could be some risk involved without additional legal planning.
Other practical considerations would include conversations about divvying household duties, privacy and personal space, and laying expectations for the household.
Considering the Financial Impact
Many families open their doors for parents because they want to help those they love. But families don’t always consider the financial impact or that the financial impact could last a long time. Having a parent move in can be financially beneficial for all family members because costs can be cut by combining households. Still, additional people in a home means more expenses for food and utilities. Other costs could include gas for trips to a doctor, paying caregivers, and paying for medications. What are the expectations for the household in handling these expenses? Who is responsible for these costs?
Before a parent moves in, consult with an elder law attorney or a tax adviser or a financial planner to make sure everyone’s needs are met. There may be tax advantages from certain arrangements. Importantly, however, if a parent’s care needs ever required applying for a public benefits like Veteran’s Administration Aid & Attendance or Medicaid, how an aging adult spent their funds to become eligible for benefits will be scrutinized. For instance, the Veteran’s Administration employs a three-year look-back period to determine whether a veteran or veteran’s spouse made any gifts in the three years preceding an application for long-term care benefits. Medicaid applies a stricter five-year look-back period to determine whether an applicant gave anything away for less than fair market value in the five years before applying for benefits. It would be devastating to learn that a parent’s spending habits of the recent past could render them ineligible for long-term care benefits—especially if the aging parent has no more funds to pay for their care needs.
Here are some considerations to ease an aging adult’s transition into a home with other family members:
- Ensure Powers of Attorney for financial and health decisions are in place: If an aging person is capable of executing a Durable General Power of Attorney or a Health Care Power of Attorney, these documents are some of the most important legal documents an adult could have. These documents allow a person to appoint another person to make financial transactions or health decisions. A Power of Attorney with asset protection provisions could be especially important in planning for long-term care benefits. Without these documents, some families have to undergo a public guardianship proceeding
- Formalize an agreement for care needs and expenses: A parent may be capable of paying for their own expenses. In many cases, a parent may insist on paying their “fair share” of rent, food, or utilities. While it is admirable for a parent to want to help defray costs, it is advisable to formalize a parent’s payments for household expenses or other costs in a written agreement. The agreement should be thorough and address a parent’s care needs like home health aides, social needs like attending church or other activities, and needs like groceries, cooking, and laundry or even rent and utilities. Entering into a formal agreement might seem embarrassing, but an agreement will help ensure that payments a parent makes to an adult child will not be detrimental if the parent ever applies for benefits like Medicaid. Medicaid could view such payments without a contract as a gift intended to fraud the Medicaid program, which results in a delay of benefits at a time a parent needs them most. Without an agreement, those payments could be seen as taxable income to the adult child. An elder law attorney can draft an agreement that meets the needs of those involved.
- Consult an elder law attorney before investing in a piece of real estate or giving money to children: Some aging parents want to give money to an adult child to purchase a larger home or to modify an existing home. Other aging parents want to transfer their home to their children. These choices could have unintended tax consequences or pose problems with eventually qualifying for Medicaid. The way these transactions are structured make a critical difference between protecting assets and a parent’s eligibility for long-term care benefits or losing those assets and risking a parent’s vulnerable care needs. An elder law attorney can make recommendations and strategize how to protect a parent’s needs and goals.
While the challenges of caring for a parent at home are real, the rewards and benefits are just as real, too. For many adult children, this phase of life is a chance to reciprocate the love and gratitude a parent offered earlier in life. The enriching experience of having a mom or dad in your home cannot be matched or replaced.