When Parents Need You to Step In

I am getting quite a few letters from people who are concerned about their parents or other aging relatives. More and more adult children must get involved in their parents’ financial affairs. This letter is typical and it makes me sad because I’m sure these ‘children’ are beside themselves.

Dear Gail. We don’t know what to do. Our father is in a horrible mess. Ever since mom died things have gone from bad to worse. She took care of all the details. He literally handed her his paycheque every week. She passes four years ago and he’s just gone from bad to worse. His health is failing. He has been sent to collections for a $15,000 outstanding debt. We – his three daughters – are beside ourselves. What do we do? Will we inherit his debt? Do we sell the house we grew up in and put him in a home? How do we even go about doing that? Two of my sisters live some distance away and I have four kids of my own and a job. Help!

First, if he’s gone to collections his credit history is already in ruins. If there is money available to pay this debt, wait for the next call and offer $7,500 to settle the debt. Get their agreement in writing before you send a penny. Keep in mind that “debt” cannot be inherited. If your father dies in debt, those debts will be paid out of his estate. If there is not enough money to pay the debt, the lender has to eat the loss.

You don’t say whether your father has any equity in his home. If he does, then you’ll want him to gift you some money to a) get it out of his hands before you seek an assisted living situation since his income/assets may affect his ability to get into a space and b) have it available to use by you for his care. I would not recommend this willy-nilly since some children can be quite selfish, but if your intention is to help him with payments anyway, getting that money to you for his future needs may be a good thing.

There is no gift tax in Canada if your father wants to give you a gift of cash (as per Revenue Canada Agency Miscellaneous Receipts NO: IT-334R2 section 4) so amounts received as gifts, are not subject to tax in your hands (as long as you’re not a spouse or a minor child).

Okay, onto the care issues. Provincial governments provide in-home care through a regional health agency like the “health authorities” in B.C. or “community care access centres” in Ontario. You’ll need a referral from his doctor or you can contact your local health agency directly. They’ll send a case manager to assess your father’s needs but you shouldn’t expect more than 2 hrs a day in help. If you intend to pay for a personal care worker for your dad, it’ll cost you $20-$28/hr if you go through an agency. Full-time help can $1,800-$3,000/mo plus room & board (or add another $1,500 to $2,000 a month if you don’t provide room & board.) These costs will add up fast, so make sure you’re prepared before you take this route.

If your father agrees to sell and move, then you’re looking at a retirement home. He can have his own space put will share meals, housekeeping help and social activities with other residents. Costs associated with “assisted living” help – help with bathing, taking medicine and the like – are substantially higher. Private retirement/assisted living resources can run from about $2,800-$8000 a month. The difference in cost is the difference in facilities, location and services provided. Publicly subsidized assisted living services are charged based on income and vary by province. For those whom the rate would cause serious financial hardship, reduced rates are possible.

Since facilities and costs vary dramatically from region to region (even within a province) you’re going to have to do some legwork. Start by researching the assisted living facilities in the area you want your father to live. Get recommendations from friends/family/co-workers. The Internet is a great place to gather basic info, but won’t give you a feel for the place. For that you’ll need to do a visit. Pay attention to things like cleanliness and how the staff seems to be interacting with residents. Do the rooms look comfortable? Try to go for a visit around mealtime so you can see the quality of the food.