More and more adult children are giving shelter to financially struggling or infirm parents who can no longer care for themselves.
But as much as you may want to repay your parents for their care of you, you have to look at the financial and emotional ramifications of taking them in.
"When considering having a parent come live with you, there are direct costs and indirect costs," said Tom Murphy, certified financial planner at Murphy & Sylvestin Dallas.
Direct costs include groceries, household supplies and dining out. Indirect costs can include increased utility bills, higher auto insurance rates if the parent is still driving, and more laundry, hobby or activity costs of the parent, he said.
"Adding one person to a home with two will increase these variable expenses by an average of 23 percent, according to U.S. census figures," Murphy said.
For example, if you and your spouse spend $2,000 a month for food, utilities and other non-fixed expenses and one parent comes to live with you, you can expect your costs to increase to about $2,460, Murphy said.
SHARING THE BURDEN
"Parents, if financially feasible, may want to contribute to the household," said Jean Keener, certified financial planner at Keener Financial Planning in Keller, Texas. "Discussing arrangements to help with utilities or other costs helps facilitate this."
After Deb Sears bought a home in 1995, it was more than what she wanted to maintain by herself, so she moved her parents in.
"It was a good opportunity for me to get them in a better place because their business had closed and I wanted the help," said Sears, 53, of Flower Mound, Texas.
Today, things are different. Sears' father has died, and she was laid off from her job as an information technology manager in 2004.
Sears and her 81-year-old mother now are moving from their home to a two-bedroom apartment to ease the burdens of a house payment and the upkeep of the home.
IMPACT ON BENEFITS
Having your parents move in with you won't affect their Medicare or Social Security benefits. However, other benefits, such as Supplemental Security Income, could be affected, Salmeron said.
SSI is a federal income supplement program that helps low-income aged, blind and disabled people pay for basic needs.
"Unless the parent is paying rent, if that parent is getting SSI benefits, those benefits will be reduced," Salmeron said. "That's because SSI treats free room and board as in-kind support and maintenance, which reduces the SSI benefit."
Food stamps also could be affected because eligibility and benefit levels are based on household, not individual, circumstances, according to the U.S. Department of Agriculture.
Under certain limited circumstances, you may be able to claim your parents as dependents on your tax return, said James Smith, CPA at Smith, Jackson, Boyer & Bovard in Dallas. You may be able to deduct medical expenses you paid for your parents.
If you charge your parents rent, you would have to recognize the rent as income in your tax return, but then you could claim a depreciation deduction for a portion of the cost of your home, as well as a portion of the utilities and any general repairs to the property, Smith said.
If you don't charge your parents rent, the free room and board would be treated as a gift, but because the total rent value probably would not exceed the annual gift exclusion - $14,000 for 2013, he said.
Are your parents' estate planning documents in order? This includes more than just a will.
"Having an up-to-date general durable power of attorney will facilitate managing a parent's affairs," Keener said. "For medical issues, having a current medical directive, medical power of attorney, and HIPAA release (to allow sharing of your health information) is important."
Having access to your parents' main bank account also might be a good idea, Keener said.
"Be prepared to adjust your expectations of what they remember and what they don't remember," Sears said. "Don't get mad because they forget things; just be patient."