You may have clients in a seemingly swimming situations: not so young anymore, but standing in a good light – a nice career, mortgage nearly paid, children schooled and living independently, retirement plan on track.
If they’re lucky, their parents are still around, but they’re aged and could face a health crisis at any time. Clearly, the kids – for that they remain, no matter their age – will want to help with the expense.
If long-term care is required – and most Americans who reach retirement will need it eventually – the cost can be high. Even if the parents have prepared via savings, insurance or other means, care costs are so elevated – in 2019, a year of in-home care topped $50,000– that the road could get rough.
Medicare is your first stop for assistance. If the parent served in the military, the Veterans Administration may offer useful benefits, too. If this isn’t sufficient, examine your parents’ life insurance policies. If the cash value is high, you can take a withdrawal or borrow on the accumulated funds. They may also be able to claim an accelerated death benefit, with the amount subtracted from the final benefit.
If the medical expenses exceed 10% of the parents’ adjusted gross income, they can deduct any unreimbursed medical costs from their taxes. If one of the children paid for the services, they are eligible for the tax break. This isn’t an easy process – the affected parent will need to be claimed as a dependent – so speak to a qualified tax specialist before plunging in.
Reverse mortgages have taken a lot of bad press, but if you understand the rules, they can quickly solve the problem. By law, loan recipients cannot be forced from their homes for any reason and the loan is not payable until both parties pass away or move to a new home. If your parents want to stay put, a reverse mortgage may be a fine solution.
For more information, please read:
4 Ways To Pay for Your Parents’ Long-Term Care | The Motley Fool