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Your parents spent a lifetime supporting you. Now that they’re older, you might be the one helping them manage their finances. Nicole Ewing, Director, Tax and Estate Planning, TD Wealth, joins Kim Parlee to talk about some ways you may be able to help without risking your own financial future.
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[MUSIC PLAYING]
We hear a lot about parents supporting their adult children financially, but sometimes it's parents who need the support. Perhaps they didn't save enough for retirement. Maybe they have expensive, unexpected health care costs. Maybe they've had to make some tough money decisions. Whatever it is, how can you help them without risking your own financial future? Nicole Ewing is director of Tax and Estate Planning at TD Wealth. She joins me now to discuss. Always a pleasure to have you here.
It's great to be here.
This is a hard topic. So if your parents do need financial help, how should you be thinking about that in relation to what your short-term and long-term needs are? I just keep thinking about the airlines, like put your own mask on first before you help somebody else, right?
100%. So if you have a clear sense of your own financial position first, that is going to help you be able to anticipate some of the questions and maybe some of the things you should be doing for your parents. Because we need to really assess what type of help they need. Do they need something as basic as ensuring that their bills are being paid on time? Perhaps they need some help with bank accounts or accessing those. Maybe they're looking for help filing their taxes or ensuring that their benefits are being claimed. Or they might actually need the financial subsidizing. And that's where, if that's what the need truly is, make sure that you're aware of your own financial position before starting to have that conversation.
And then the next step I would expect is just what you were doing, is, what is the problem? Understand what it is that they're actually asking for. Ask questions.
And how did they get here in the first place? So are they working with a financial advisor, for example, that has maybe not done the job that they expected them to do or maybe doesn't have the information that they need? Maybe they need to be introduced to your financial advisors, the people that you're working with that can help navigate them through that and really figure out what is the issue. What is it that we're solving for? Is it truly a lack of money? Or is it a lack of organization and planning? And we need to step back and have a look at that. So I would be pulling all of their information together. I want to see bank statements, credit card statements, what's going out and what's coming in. And that will allow you to have some insight into whether these decisions are intentional or whether there's some savings that can be found as well. And stepping back and thinking through, how are we going to get this information from them? This is a challenge. And people don't-- it's very uncomfortable for children to have these conversations with their parents. And there's often a little bit of a push and pull, too, between the family members. So maybe they're more comfortable telling one family member than the other. Maybe they're saying different things to different family members. So this is where, if you can work as a team together--
To find out what's fact.
What is fact? What is the situation that we're dealing with? And then, can we align ourselves to make sure that we're helping them?
What are some bad ideas? What are some risky things maybe that you've heard about that people will do to try and help their parents?
You're borrowing for them, maybe you're co-signing on a loan and expecting that money to come back in some other way. Maybe you'll have your siblings will pitch in and give you the share. Don't expect that. We cannot expect that any additional money is going to show up anywhere down the line. So we need to deal with the situation that we're in. And adding your name to their property can create a whole host of issues. It can create issues for your own estate and your own creditor protection. Now, if we're having--
Co-mingling.
--co-mingling all of this sort of thing, so we want to have that really clear idea of what's mom and dad's or what are what are they working on. What do they own? And then how can I actually help them without jeopardizing my own financial security, my own legal security, my own relationships with family members as well? Because you have your own family, where a spouse may not agree with the decisions or level of support you want to provide. And you may have siblings who have different ideas as well. So again, same page, getting everybody together.
What about are other things you can do that will be helpful to their organization but does not involve you? It's not financial on your side.
So you're not out of pocket any money but you're able to really benefit, so number one, making sure that they're aware of their taxes and the different benefits that they could potentially be claiming. And so oftentimes when people don't have money, they're not filing their taxes because they don't think there's no point. They don't have enough income to owe anything.
And that could trigger benefits.
It could trigger benefits. Once you're filing, you have the opportunity to be qualifying for other things. I would think that just even introducing them to the ideas, some of the new ways of helping and getting money, so Buy Nothing sites that might be in the community that your parents may not be online the same way that you are. They might not have access to all the different social media, and so if you're aware of those. Connecting them with other people in the community, so there's lots of services within our communities to help seniors, to ensure that they get those supports, so researching those and finding out what they are as well. And again, connecting them with other professionals who will be able to help them is probably the biggest thing you can do.
Yeah, and what about-- and I know we've talked about this before, but there's helping them understand what benefits might be available to them, but there's also benefits I believe for people who want to help, let's say an older family member live in a house, like the things like that, right?
There are a number of benefits that can be shared. So there's benefits that your folks may be able to claim themselves and others that you might be able to use. So if you're doing renovations, there's other credits that are available if you're doing renovations to accommodate things that happen with age. Medical expenses-- you can also use those against your own. You can claim on behalf of your parents if you're funding those as well. So there are tax strategies or tax benefits that you would want to have coordinated for the whole family, so depending on where those funds are coming from. And if you're able to demonstrate that they are fully dependent upon you for that support, then we have caregiver credits and other sorts of things. So it's well worth looking into what tax benefits are available and seeing which ones either they can claim or you can claim or somehow split them between the family.
And this always comes down to, but it's always worth working to professionals. And I think in your case, you're the kind of person that works with advisors, who works with clients to say, here's the financial picture. They have that knowledge. You have the expertise to bring it in to say what's going on.
Exactly, and beyond that, there's financial therapists, people who can help families talk through some of these issues and really understand what their options are, maybe what some of their trigger points are, where they're more likely to find themselves in trouble by making poor decisions that they would have in the past. So we want financial advisors, again, family counselors if that's appropriate, and getting everybody at that table so they can do that coordinated plan together.
Sage advice on a hard topic. Thank you.
My pleasure.
[MUSIC PLAYING]
We hear a lot about parents supporting their adult children financially, but sometimes it's parents who need the support. Perhaps they didn't save enough for retirement. Maybe they have expensive, unexpected health care costs. Maybe they've had to make some tough money decisions. Whatever it is, how can you help them without risking your own financial future? Nicole Ewing is director of Tax and Estate Planning at TD Wealth. She joins me now to discuss. Always a pleasure to have you here.
It's great to be here.
This is a hard topic. So if your parents do need financial help, how should you be thinking about that in relation to what your short-term and long-term needs are? I just keep thinking about the airlines, like put your own mask on first before you help somebody else, right?
100%. So if you have a clear sense of your own financial position first, that is going to help you be able to anticipate some of the questions and maybe some of the things you should be doing for your parents. Because we need to really assess what type of help they need. Do they need something as basic as ensuring that their bills are being paid on time? Perhaps they need some help with bank accounts or accessing those. Maybe they're looking for help filing their taxes or ensuring that their benefits are being claimed. Or they might actually need the financial subsidizing. And that's where, if that's what the need truly is, make sure that you're aware of your own financial position before starting to have that conversation.
And then the next step I would expect is just what you were doing, is, what is the problem? Understand what it is that they're actually asking for. Ask questions.
And how did they get here in the first place? So are they working with a financial advisor, for example, that has maybe not done the job that they expected them to do or maybe doesn't have the information that they need? Maybe they need to be introduced to your financial advisors, the people that you're working with that can help navigate them through that and really figure out what is the issue. What is it that we're solving for? Is it truly a lack of money? Or is it a lack of organization and planning? And we need to step back and have a look at that. So I would be pulling all of their information together. I want to see bank statements, credit card statements, what's going out and what's coming in. And that will allow you to have some insight into whether these decisions are intentional or whether there's some savings that can be found as well. And stepping back and thinking through, how are we going to get this information from them? This is a challenge. And people don't-- it's very uncomfortable for children to have these conversations with their parents. And there's often a little bit of a push and pull, too, between the family members. So maybe they're more comfortable telling one family member than the other. Maybe they're saying different things to different family members. So this is where, if you can work as a team together--
To find out what's fact.
What is fact? What is the situation that we're dealing with? And then, can we align ourselves to make sure that we're helping them?
What are some bad ideas? What are some risky things maybe that you've heard about that people will do to try and help their parents?
You're borrowing for them, maybe you're co-signing on a loan and expecting that money to come back in some other way. Maybe you'll have your siblings will pitch in and give you the share. Don't expect that. We cannot expect that any additional money is going to show up anywhere down the line. So we need to deal with the situation that we're in. And adding your name to their property can create a whole host of issues. It can create issues for your own estate and your own creditor protection. Now, if we're having--
Co-mingling.
--co-mingling all of this sort of thing, so we want to have that really clear idea of what's mom and dad's or what are what are they working on. What do they own? And then how can I actually help them without jeopardizing my own financial security, my own legal security, my own relationships with family members as well? Because you have your own family, where a spouse may not agree with the decisions or level of support you want to provide. And you may have siblings who have different ideas as well. So again, same page, getting everybody together.
What about are other things you can do that will be helpful to their organization but does not involve you? It's not financial on your side.
So you're not out of pocket any money but you're able to really benefit, so number one, making sure that they're aware of their taxes and the different benefits that they could potentially be claiming. And so oftentimes when people don't have money, they're not filing their taxes because they don't think there's no point. They don't have enough income to owe anything.
And that could trigger benefits.
It could trigger benefits. Once you're filing, you have the opportunity to be qualifying for other things. I would think that just even introducing them to the ideas, some of the new ways of helping and getting money, so Buy Nothing sites that might be in the community that your parents may not be online the same way that you are. They might not have access to all the different social media, and so if you're aware of those. Connecting them with other people in the community, so there's lots of services within our communities to help seniors, to ensure that they get those supports, so researching those and finding out what they are as well. And again, connecting them with other professionals who will be able to help them is probably the biggest thing you can do.
Yeah, and what about-- and I know we've talked about this before, but there's helping them understand what benefits might be available to them, but there's also benefits I believe for people who want to help, let's say an older family member live in a house, like the things like that, right?
There are a number of benefits that can be shared. So there's benefits that your folks may be able to claim themselves and others that you might be able to use. So if you're doing renovations, there's other credits that are available if you're doing renovations to accommodate things that happen with age. Medical expenses-- you can also use those against your own. You can claim on behalf of your parents if you're funding those as well. So there are tax strategies or tax benefits that you would want to have coordinated for the whole family, so depending on where those funds are coming from. And if you're able to demonstrate that they are fully dependent upon you for that support, then we have caregiver credits and other sorts of things. So it's well worth looking into what tax benefits are available and seeing which ones either they can claim or you can claim or somehow split them between the family.
And this always comes down to, but it's always worth working to professionals. And I think in your case, you're the kind of person that works with advisors, who works with clients to say, here's the financial picture. They have that knowledge. You have the expertise to bring it in to say what's going on.
Exactly, and beyond that, there's financial therapists, people who can help families talk through some of these issues and really understand what their options are, maybe what some of their trigger points are, where they're more likely to find themselves in trouble by making poor decisions that they would have in the past. So we want financial advisors, again, family counselors if that's appropriate, and getting everybody at that table so they can do that coordinated plan together.
Sage advice on a hard topic. Thank you.
My pleasure.
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