Caring for Elderly Family Members

October 30th, 2013 by The JetSetter Team | 2 Comments »

Slide1As we get older, our family members are also aging. Though we don’t like to think about the possibility that they’ll need care beyond what they or a spouse can provide, it will be useful to have a plan in place, should your loved ones require additional support. And while mental preparation is a great start, making room in your budget for these types of expenses will also benefit you.

Jason Hartman recommends anticipating problems before they begin, and in the case of elderly relatives, it is no different. To get a general idea of how much money will be required for care, find a person’s annual income, including pensions and Social Security. Subtract this amount from $40,000 to get the approximate amount required from other sources. Add up your elder’s investments and savings and divide by the first number—this is approximately how many years of care this money will provide.

There are a few helpful things to know as you begin to think about planning for an elderly friend or family member. First, you may gift someone up to $13,000 per year without filing a gift tax return. If you are married, you may give a $26,000 gift without filing it. If you pay for someone’s medical expenses, this doesn’t count as a gift and may be provided in addition to the $13,000 or $26,000.

Next, remember that a person for whom you provide over half of financial support for counts as a dependent on your tax return if he or she makes less than $3,700 annually. In addition, you can claim any of that dependent’s medical expenses as a deduction on your tax return.

Finally, to help cover expenses, an elderly person with a home with little to no mortgage can borrow against the home through a reverse annuity mortgage in which the lender pays a monthly payment based on the home’s overall value to the homeowner. This reduces a home’s equity and repays the bank, including interest, upon the sale of the home.

While it may prove an unpleasant thing to think about, establishing a plan for elder care will make your life, and the lives of those you love, a little bit easier when the time to seriously consider such things comes. If you’re living in a far-away state or even country, this planning becomes especially important—don’t let it catch you off guard.  (http://www.flickr.com/photos/pedrosimoes7/393217457/)


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