Hi, I have a 91 year old mom & need some financial advice. I have talked to her tax accountant and two financial advisors. I teach school & half of my salary is going to her care. I have a nurse's aide for her from 6am-5pm Mon.-Fri. ($990) and a weekend nurse (8am-5pm & Sun. 8am-12. ($330). I have a wheelchair van man who is the only one who can lift her out of bed. She is too frail for the Hoyer lift. He takes her to church, doctor's appointments, & for her hair at ($110 a trip). Her weekly supplies at the drug store run about $150 for gloves, pads, desitin, etc. The financial advisors have just told me that they would diversify my stock and take 10% of what I have when I retire. I am retirement age. Her tax accountant just said No & that this is the way it is when I asked if she could be considered a dependent. She has a small amount of stock that I haven't touched, but now am having to, to pay our bills. She owns the house & wants to stay in it. I don't want to get a reverse mortgage. I am renting my townhouse to help keep a float. I take care of her when the nurses are not there & try to grocery shop and run errands. I wouldn't want to put her in a nursing home. I want to make sure she is well cared for and loved. She seems relatively happy. I am the only child, so there aren't any problems with other family members. Any suggestions of who to talk to, am I paying too much, etc... She gets a small pension that covers half of the monthly cost of the nurses. Thanks for your help! -Old Maid
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Do you have a 403B through your job where your retirement funds are currently invested?
Do you know and understand what your options are at retirement with regard to those funds?
Your mother's investments should be drawn down to cover her expenses. What is the point of 'saving' them?
You say you 'wouldn't want to put her in a nursing home. I want to make sure she is well cared for and loved.' Those are not either or statements. You can love and care for your mother if she is in a nursing home. I know there are some here who do not believe in placing family in care facilities, but many realize that it is a good option.
You are financially stretched now, most pensions are less than salary, yet your expenses will continue to increase if you keep Mum at home.
If in the US, talk to an Eldercare Attorney about Medicaid spend down. Even if you do not plan to place her in a nursing home at this time, you do not want a decision made now to impact her eligibility in the future.
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When I've had to get financial advice, I called our estate planning attorney, who works in a multi-practice firm. I've gotten recommendations from her on who to see for financial issues.
I would try to focus on the investments myself and dump the financial advisor. BTW, how have your investments performed under this man/woman's management?
The costs for the weekly cares sound very reasonable. I don't know about the driver cost though it seems a bit high to me.
A few rules of thumb that I have learned from various financial advisors:
--Do NOT take out reverse mortgages. They are very expensive up front. The lenders can foreclose on the house for many reasons. And when it comes time to sell, the selling price is low because the lenders don't care about the highest selling price, they just want to sell quickly to get their money back.
--When it comes to withdrawing money from your retirement, you should NOT withdraw more than 4% each year. On average, people will need the money to last for 25 years from the time we retire. If you take out more than that, you will run out of money in your last years.
--From what I remember reading, if you pay more than half of the living costs for someone, you can claim that person to be your dependent. You can check the IRS website to learn more.
--You need to first use your mom's money to pay for her care. Your money is to use for your care when you retire and when you are old and sick. You know how expensive it is. And from your screen name Oldmaid, it sounds like you don't have children and will not have anyone paying for your care, unlike your mother.
--If you are thinking that you will inherit the house and anything else from your mother when she dies and that will make up for the costs you are paying now, then you forgot to consider the inheritance tax. Also, you are paying for the care with your AFTER tax money and you don't get to claim her as your dependent. Taxes will eat up a lot of your money.
I don't know how experienced Elder Law attorneys are with taxes, so I can't say. But for sure, you need a good Tax attorney, not accountant.
You will also need a good Elder Law attorney to help advise you how best to pay for your mother's care. Perhaps, that attorney can recommend a good Tax attorney within or outside his firm to advise you on your retirement and inheritance issues.
A good place to start is the Agingcare directory /sources. Talk to a few attorneys and see who seems to understand your situation the best.
Good luck.
HER funds should pay for her home, her transportation and supplies.
See an eldercare attorney.