Dealing with the elderly parents over financial matters?

Anyone like to share stories a about dealing with the parents over financial matters?

My parents are both retired public servants with 3 houses, all mortgage free. One they live in, one they rent and one is a summer house.

So its a good position. However both pensions has been reduced over the last year. And they say that they rent they get from the house is all eaten up in tax.

My attitude has always been let them manage their own affairs and provision that my inheritance will be zero.

The thing is though the worry I’m getting down the phone (I live abroad, as do
my siblings).

They lost a six figure sum in Irish Bank shares and will probably lose all three houses if they some day need residential care.

Is it worth the effort to talk to them to get their affairs more in order (put properties in children’s names, move bank deposits to into another currency etc.)

Unless you have some expertise with this area, I would be wary of offering advice. This is a specialist area, and a specialist is what you need. Throwing advice out on such a sensitive and potentially financially significant area without understanding the subtleties could cause them and ultimately you, to lose more. I just googled inheritance tax specialists in ireland and this was the first link: smartfinance.ie/html/inheritancetax.html, dont have a clue about them, but this is the kind of thing I would be looking to the pro’s for.

You’d need to have a frank conversation with them next time youre home (not sure how such a conversation on the phone would go down).

Any inheritence decisions should be made with a tax consultant. Things like CAT come into play

revenue.ie/en/tax/cat/index.html

Regarding their future care needs, the HSE now have ‘Fair Deal’.

hse.ie/eng/services/Find_a_S … ices/nhss/

Do they have an accountant do their tax returns? Despite the fact that they have no mortgages on the rental property and therefore can’t write off interest against rent I am surprised to hear that all of their rental income goes in tax.

Over 65s and particularly over 70s have very generous additional tax reliefs (far too generous in the opinion of missed off thirtysomething moi!) and are they availing of all of these? It would be worth seeking processional advice even on a once off basis to check this. The accountant could also advise on your inheritance issues.

In addition, based on my experience of dealing with my parents’ finances I think it would be worth seeking advice from a paid professional advisor regarding their current financial situation. I found that my parents had also lost a lot of their (v modest) savings in the bust due to the fact that they don’t keep on top of letters from the banks etc, and also they insist on buying far too much insurance (eg. V expensive life insurance policy even though they have no mortgage and no dependents) and keep paying for policies they took out in the 1980s. I find they won’t listen to advice from me on this issue but they did listen to a professional.

I’d agree with the point on rental income. Surely this is treated the same as anyone else’s income. Its not ‘all’ gobbled up in tax. 40% of it is, or whatever average rate of income tax they pay.

On that subject, I fail to see why people discuss rental yields in terms of rent divided by price. Its not…its Rent less Tax Divided by Price. Big difference.

Thats a good point on life assurance.

Very first thing to arrange si power of attorney - it doesn’t have to be invoked for years, but it should be in place in the event on any issues which are staistically more likely to occur as parents get older.

I think you ought to probably wait until they bring issues up relating to financial affairs and succession planning and then work through them with them and a suitably qualified advisor. Then they will feel in control since they initiated.

I am in favour of (enduring) power of attorneys but slapping one in front them uninvited or shuttling them to sign assets over etc is likely to scare them.

I’d suggest you stay well away. As others here have said, get the parents to sit down in front of a professional. There are many of them out there.

The problems I have seen in this scenario are huge. When one family member starts to organise the parents, it can be the cause of huge resentment in families as someone will always feel “done” out of something which they never had.

There are loads of ways of planning for retirement/old age/death but it is a very complex area. You have CAT, CGT, income tax and stamp duty to contend with, so a detailed overview is necessary.

The first thing they should do is ensure their wills are up to date.

so 100% tax rate on rental income eh, interesting.

ah tis a tough life alright.

and so they should too, or are you implying that someone else pays the cost of their residential care while they keep their assets? hands up who wants to pay for that…

Easy now. I don’t think the OP was suggesting anything like that. It’s natural for people to worry about financial security in old age, and parents often worry about providing an inheritance for their kids, even when the kids mightn’t really need it… he/she was just asking how or if the subject should be broached.

Only the super wealthy will be able to afford nursing home care…currently at 6K per month in many establishments I understand.

We all know this state has failed its citizens.

Let’s hope James O’Reilly will keep the Fair Deal scheme on track and at least not fail our infirm citizens.

I believe Fair Deal isn’t on track presently. I recall it spent it’s 2011 Budget very early last year and had to stop new entrants coming on stream. Article below

irishtimes.com/newspaper/ire … 54084.html

Did your parents get one of those revenue letters about not declaring the old age state pension for tax?

5000 posts and so much bilous rage. You need to take a chill pill.

As far as I am aware its back on track.

I dealt with my parents on these issues a few years ago. I was the only family member in Ireland, my siblings were abroad. The issue came up because a friend of theirs had landed in an awful mess that divided their family. I took the opportunity to say that as I would be the one dealing with these things I would prefer if they sorted everything out. They agreed. I sourced a good solicitor who drew up their wills and the power of attorney docs. The finances I sorted out, in my case it was a number of bank accounts that in all had less than 20k. I closed accounts and put the money into an account that earned a decent interest and gave them access whenever they needed. They had no property other than the family home. I took things slowly but at the end of it all my mother said she was delighted that it was all done because she had ben worried about everything and didn’t know what to do. When my parents did pass away it was very easy to sort out the bits. Good luck.

In relation to fair deal I wouldn’t rely on it being in place or well funded into the future.