Preserving a family’s assets generally requires careful planning and preparation to prevent an elderly parent from running out of funds in the future. Adult children may otherwise find themselves dipping into their own savings or retirement plans to provide financial support for their parents’ housing, living expenses or medical care.
Because older adults may no longer have the ability to maintain a career, many turn toward their working relatives to provide additional support. Although it may not be an issue at first, financial setbacks could occur when a parent living on a fixed income begins to ask an adult child for assistance. After a few years of helping a parent out with his or her expenses, it may become a genuine financial hardship. When siblings become involved, resentment and negative feelings may fester toward one who does not provide a parent with his or her share of support.
Providing parental support is common
According to a study conducted by TD Ameritrade, 13% of adult Americans surveyed disclosed that they supported a parent financially. As reported by Money magazine, the study found that 19% of millennials are already supporting a parent financially. While many families find this arrangement agreeable, some adult children may struggle to maintain their own living expenses along with a parent’s household.
Setting up a trust may provide for parents’ needs
With an estate plan, families may set up a trust to help them manage an elderly parent’s living arrangements. By transferring assets to a living trust, a parent may apply for housing or medical benefits available to elderly adults. If he or she qualifies, it may reduce some of the responsibility placed on adult children to cover burdensome expenses.
When a sudden need to cover a parent’s expenses prohibits an adult child from providing for his or her own family’s requirements, the entire estate may suffer. Trusts may also help a family avoid probate and reduce tax liabilities where possible.