Helping your elderly parents financially

Dear Chuck,

I want to help my elderly parents who live on a fixed income. I don’t want them to get penalized with taxable income. Can you advise me?

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Helping My Elderly Parents

Dear Helping My Elderly Parents,

This is certainly not uncommon. Since I don’t have many specifics about you or your parents’ financial picture, my advice will apply to a broader audience than just your situation.

In 2025, you can give $19,000 to any number of people without penalty. If married, you and your spouse can give double that amount per recipient. You can pay medical bills directly to a healthcare provider on behalf of someone, and those payments (after insurance reimbursement) are not subject to gift tax.

In 2020, AARP reported that 32% of adults ages 40 to 64 provided financial assistance to their parents. 42% anticipated they would be doing so in future years. A survey at Caring.com revealed that over half of Americans ages 25 or older are claiming senior parents as dependents on their taxes in 2024.

If married, make sure you are united in the decision to help your parents. Secondly, do not compromise your own financial stability in the praiseworthy effort of assisting them. Even though they are on a fixed income, there may be underlying issues that need attention.

Ways to discuss

Approach your parents before obvious help is needed. Express honest concern about their finances and well-being. Listen carefully without revealing shock, anger, or disappointment if poor financial decisions have been made. Seek clarity but avoid making them uncomfortable. Once trust is gained, ask if they would be willing to assemble their financial records for you.

Meredith Stoddard, VP of Life Events Planning at Fidelity, suggests explaining why you’re interested in their money in the following manner: “I’d like to become involved now, so that if the time comes for me to take over, your voice will be in my head. I’ll know how to do things and what your wishes are.” For conversation starters, read the article here.

Ways to help

Instead of giving money, sort out their income, assets, and liabilities to get an overview of their financial status. Learn what debts require immediate attention. You may be able to settle medical bills and reduce others. Help them create a budget that includes a debt repayment schedule.

Request access to credit cards and bank accounts to track income and expenses and verify that bills are being paid on time. If financial stress is evident, seek a solution. Are they spending irresponsibly? If so, do not offer money or pay their bills. First, find ways to cut costs and ways to protect their investments/assets for future needs.

Should they move? Discuss the benefits of downsizing or a move to lower property taxes. Can they move in with you or a sibling or occupy a guest house on your property?

Do they have significant debt? See if creditors are willing to reduce payments based on their income. If they have credit card debt, reach out to Christian Credit Counselors. If they are responsible with money, explore a second mortgage. Interest rates are far less than what credit cards charge.

If they will follow a budget, computer coaching and security practices may be all that’s currently needed. However, it may be time to discuss and exercise your power of attorney. The challenge lies in honoring their wishes while helping them retain dignity. If it is decided that you will manage the finances, use a specific credit card or checking account to foster transparency for siblings.

Learn where documents are stored along with passwords, codes, keys to safes, and lockboxes. Record everything carefully. Is there an estate plan, long-term care, or life insurance? You and your parents may need to meet with their lawyer, banker, financial adviser, or accountant. If they have not used one, a professional may be needed to help with decision-making. Or seek wise counsel from trusted friends or family members.

Some people qualify for government and private program assistance that provides food, housing, utilities, and healthcare. Look into Supplemental Security Income (SSI).

Otherwise, you and others may want to help with the following:

• Surgeries, medical emergencies, and medications.
• Flights or travel expenses to visit you.
• Home and car repair and maintenance.
• Groceries and restaurant gift cards.
• Self-care (haircuts, pedicures, comfortable shoes and clothing, etc.).

Ways to be wise

• Cosigning on a loan with anyone is risky. You are as responsible for the debt as they are, and should they default, you will have to repay the debt.
• Avoid adding your name to the deed of your parents’ home. As co-owners, the portion they transfer to you will be considered a gift that they will have to pay taxes on. If you sell it at some point, a gift tax is your responsibility.
• Do not become the guarantor for their medical bills. You are not responsible for their debt. Do not sign as the guarantor on admission forms at medical facilities or nursing homes. You could end up responsible for the final costs.

The Bible instructs us in Exodus 20:12 to “honor your father and mother.” This is the first commandment with a promise. I am grateful you are doing exactly that and will be experiencing His blessings.

For help with budgeting, consider a Crown budget coach. He or she can work with you and your parents to develop a customized spending plan and debt-elimination strategy.