Parent/adult child creative financial planning
February 21, 2016 2:46 PM   Subscribe

I am an only child in my early 30s; my mom is in her late 50s. I have a good income, while she does not really make a living wage and has no retirement savings or pension. I am committed to taking care of her, and I want to try thinking about our finances in a unified way.

Location: US, specifically Maryland (my current residence) and Virginia (her current residence).

Yes, I am planning to consult a financial professional eventually. But first I want to educate myself, and I want to do so quietly before making specific promises to Mom (which could be implied in the course of ferreting out details that the financial pro might want). Suggestions about what to look for in a financial advisor are welcome, though. It occurs to me that someone who worked with gay couples before marital advantages were available might have some good ideas.

I also realize that there are whole lot of feelings and interpersonal tensions involved, but right now I primarily want to evaluate whether various strategies would even make sense on paper. I will say that we have a great relationship, and Mom is my biggest source of emotional support. You could say MYOB and let her flounder, but the reality is that I have and will continue to write her checks in emergencies...

...But some of those emergencies arise because of the way that people with cash-flow problems get screwed: overdraft fees, not being able to afford adequate insurance, etc. We've had an arrangement for ~5 years that if she's about to overdraft, she should pay for something with one of my credit cards or transfer money from my checking account, and that works great. So I want to expand on that. I can afford to help her significantly, but I still need to do it efficiently. Here are some ideas:

1. Retirement savings. For 2016 and beyond (just got a new job with a huge raise), I expect to be able to fully fund my tax-advantaged accounts and have some left over. Would it make sense to gift her $6500 to be put into an IRA? (I am in the 25 to 28% marginal tax bracket; she would be 15% or below.) Would money in her name be vulnerable to her declaring bankruptcy or threaten her eligibility for various benefit programs? Like for example, I know that if she owned real estate and needed to go into a Medicare-funded nursing facility one day, they'd take it -- does that kind of thing also apply to IRAs?

2. Work. Her health situation is really no longer compatible with working full-time; she also hates her job and it doesn't pay enough to make ends meet. She wants to take around a year off and then look for something part-time that she enjoys more. I totally support this! But I can't afford to maintain a separate household for her 200 miles away from me...

2. Housing. Her current housing situation is going to fall apart in the next year or two, so I have floated the idea of her coming to live with me. This would also help me since my new job will involve periods of temporary relocation beginning around that time frame, and I'm not sure I want to sell or rent my condo. Moving up here appealed to her to begin with, except that she was worried about inconveniencing me, and the idea of helping me has made her more excited about it. Anyway: I could afford to support her taking time off if she lived with me, but I am unsure how to think about medical costs...

3. Health insurance. She is already on an ACA plan, and the premium would drop if her income dropped, right? But if she were my dependent for tax purposes, would it skyrocket based on my income? I would like to add her to my insurance, but my new employer's options do not list dependent and/or co-resident parents as an insurable relationship category. How/who could I push for that to be allowed? (My new employer is in VA, commutable from my home in MD.)

4. Other medical costs. The 'leak' I am most worried about is becoming liable for large medical bills that she might incur. It seems like we should preserve her ability to declare bankruptcy in a worst-case scenario, since she has minimal assets, while protecting my growing assets. Is this straightforward or would, for example, sharing my own insurance policy with her or claiming her as a dependent get me entangled somehow?

5. Other people. I am childfree, not dating, and not looking to marry, although it's not out of the question long-term. Mom is in a casual long-distance relationship, but I would not be surprised if she wanted to remarry or at least cohabitate at some point. Based on her previous relationships, I would have no problem with a boyfriend of hers visiting my home -- and I'll be out of town for long periods anyway -- but I would ask her, for example, not to allow him to stay long enough to gain tenant's rights to my home. Are there other lines like that that I should draw at the outset to prevent any financial entanglement between me and people Mom may become involved with?

So: I'm interested in comments on the above ideas as well as other suggestions regarding how I can help my Mom (financially) while protecting myself (financially). I am well aware that this is an interpersonal minefield, but let's leave that discussion for another day.
posted by ecsh to Work & Money (6 answers total) 4 users marked this as a favorite
2. I would let mom know that you are okay with her leaving her job and living with you. I would not be so thrilled with "Take a year off and THEN look for work." It can take a long time to get a new job. She should be working on this a lot quicker than one year later.

3/4. You probably cannot make her a dependent on your health insurance. You could look into Direct Primary Care coupled with catastrophic coverage.

5. I would encourage mom to not bring men "home" but, instead, to go see them at their place. If you are well off, her bringing anyone there opens up the potential for theft, casing the place, etc. I know: You want to think your mom is savvier than that, people are nicer than that, etc. But this would likely be my position if it were me: YOU can stay here, your "friends" cannot. Go see them elsewhere.

I say that as someone who practiced that during my divorce. No man ever met my teenaged sons or came to my home. I interacted with them online, by phone or by meeting them elsewhere. I did not get my family involved and I did not put them at risk for anything. I kept it strictly between me and whatever guy I was seeing. Men who could not respect that got dumped. So, while that may sound harsh to you, I am telling you that is how I handled it from my end when a similar question arose in my own life.
posted by Michele in California at 3:18 PM on February 21, 2016 [3 favorites]

I'm concerned about the year off. Not having anything that structures your time can be really hard and depressing unless you are extremely good at being self-directed. Also, age discrimination is a real thing, and it's harder to find a job if you don't already have a job. If she does quit her job, I would strongly encourage her to do some kind of regular volunteer work for the sake of her own mental health as well as making it easier to find another job.

However, she cannot be your dependent for tax purposes if she earns more than $4000/year.
IRS rules on dependents are here.
posted by FencingGal at 5:59 PM on February 21, 2016

I appreciate the concern about the year off, and I had typed up a lot of details, but I think they would make Mom identifiable to anyone who knows her. Part of the issue is that she needs to physically recover from a major surgery and resulting cascade of other problems. The other part is that she just needs to be absolved of responsibility for a while. She has been performing eldercare at home while working full time for years. She's never 'off' except when she visits me, and there's such a difference! I have lots of activities in mind for her -- e.g. there is a class at the community college for over-50 jobseekers. I think that as soon as she starts to feel better, she'll want to get a part-time job just to have her own money. But it would help to TELL her she has the year if she needs it.
posted by ecsh at 7:59 PM on February 21, 2016

If she's having a lot of health troubles, does she qualify for disability? That could solve a lot of problems. She might still be able to pick up a part-time job or do volunteer work to keep busy. My dad's serious health problems started in his late 50s and I wish we'd been able to get him onto disability at that point. It's not a lot of money, but if you're there to help her with living expenses it could be a much more stable arrangement.

Seriously, you pay taxes, presumably she's paid taxes, these programs are there for a reason. Disability might well take time for her to get, but if she's an adult with no savings whose health is declining to the point where she no longer has the physical ability to do what she's been doing, full-time? It seems like worth looking into. If she's going to be fine in two months, that's one thing, but if the best she's looking at long-term is part-time, you don't have to shoulder that burden completely yourself. Among other things, it would let her get on the lists for subsidized housing and the like. It's one thing for you to supplement that, but if her health isn't good enough for her to support herself... it's not that you can't start a great new career at 60, but it's not necessarily a reasonable expectation to start a great new career at 60 with health problems. You don't recover from them at that age the way you do when you're 30, especially when you've spent your whole adult life poor or working class.
posted by Sequence at 9:38 AM on February 22, 2016 [3 favorites]

My mom is a workaholic. When she quit work to take care of my dad full time who had Alzheimer's and was dying, she promptly bought a bunch of paint and wallpaper to have something to do (while caring for him 24/7).

I recently submitted something to projects. You might want to take a look at that. You could run it past your mother and suggest she pursue that for a year and if it doesn't turn into real money, then she can job hunt. If she is anything like my mom, giving her something to work on from home might be the only way to keep her from job hunting while she needs to recover.

Best of luck.
posted by Michele in California at 10:30 AM on February 22, 2016

Seconding Sequence - see if you can help your mom get on disability. It should be fairly easy (for a given value of "easy") to get disability if your mom is in her 50's, does physical work (being a home care aide is definitely physical work!), and doesn't have a college degree. It shouldn't be the horrible struggle that many well-educated people in sedentary jobs have. In any case, I think it's worth a try, for the same reasons Sequence noted - being on Social Security Disability will mean that your mom is eligible for subsidized housing, Medicare, and probably other programs as well.
posted by Rosie M. Banks at 2:37 PM on February 22, 2016 [1 favorite]

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