In most jurisdictions in Canada (Alberta and British Columbia are exceptions), adult children are legally liable for caring for their parents.

Generally, adult children are liable to pay parental support if their parent supported them financially when they were minors.  The support provided by the parent (or step-parent) during childhood does not have to have been luxurious or extravagant – so long as your parent(s) supported you, you will be expected to support them to the extent that you’re able.

The proportion of adult children providing care and/or financial assistance to a parent has more than tripled over the last 15 years.  With parents living longer, many Boomers have learned that unexpected obligations can cause their retirement plans to veer off course.

Related: Turning 60 – Some Things To Consider

It can be tough to talk to your elderly parents about their finances but it’s important to ensure that adequate advance planning has been done.

Besides ensuring that your parents have a proper estate plan and funeral arrangements in place, here are a few other issues you should consider.

Disability Planning

Powers of AttorneyChildren do not automatically have the right to manage their parents’ affairs in the event of their incapacity so it’s imperative that this be addressed while they’re still of sound mind and are able to sign the required documents.

If you and/or your siblings will be the people who will manage your parents’ affairs once they’re no longer capable of doing so, you should ensure they have proper powers of attorney in place, and you know where they are kept.

Health Care Directives and Living WillsAnother issue that should be discussed is their medical care.  Do they want you to have the ability to make medical decisions on their behalf in the event they can’t do so?

These documents should be in place so that there will be no dispute as to who has authority to make these decisions.

Long-Term Care InsuranceThis form of insurance pays out monthly amounts to insured individuals once they’ve lost the ability to perform certain basic life skills.

Related: Do you need long term care insurance?

The amounts paid vary depending upon the coverage and can be used for any expenses the insured chooses, such as long-term medical care or home care.

Critical Illness InsuranceThis is another form of insurance that your elderly parents may need in order to protect themselves and their estate in the event of a critical illness.  It pays out a lump sum of money in the event of a critical illness (e.g. stroke, heart attack, cancer).

The money may be used for any purpose, including private medical care, or even home renovations.

Many children are willing to pay the insurance premiums to ensure that their parents have the desired care, and also to avoid large payments in the future.

Tax Planning

There are some tax planning opportunities for those who are caring for an elderly parent.

Equivalent to Spouse CreditAn individual who is not married, or is married but did not support nor live with his or her spouse and was not supported by the spouse may claim an “equivalent-to spouse” tax credit for a qualified supported parent. 

Wholly Dependent Person CreditIf you provide care in your home for a parent who is suffering from a mental or physical infirmity, you may be eligible to clan an “eligible dependant credit.”

Caregiver CreditYou can claim this credit if you lived with and provided in-home care for a parent aged 65 or older.

Infirm Dependant CreditIf you are providing support to a mentally or physically infirm parent you can claim this credit as long as they reside in Canada.
Family Caregiver Tax Credit:  Beginning in 2012, taxpayers can claim an additional $2,000 credit per infirm dependant where care is given.

Disability Tax CreditIf you have a parent who is in failing health, consider whether he or she would meet the eligibility criteria for claiming this credit.  If the parent is not able to use the entire credit, the remainder can be transferred to a supporting child.

Nursing Care CostsYou may be able to claim nursing care costs on behalf of a parent as a medical expense.

Some of these credits are income dependant and some need supporting documentation.

In Conclusion

Given the advances in medical technology, people are living longer.  As a result, many people may find that their elderly parents will require medical care and attention much longer than previously anticipated.

If a parent becomes financially dependent on their child, that financial obligation could impact the child’s own estate.

Related: Senior Care

You should speak to your parents about their financial stability, and if you foresee financial problems in the future, speak to them as early as possible, but don’t take away your parent’s right to decide such matters for themselves.

It may be uncomfortable to raise these issues with your parents but it’s important to ensure that adequate planning has been done.

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