Five Ways of Keeping Household Expenses Separate

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Banks across the nation are offering senior citizen accounts. A child or sibling providing caregiving support should make sure each parent or sibling has a separate account. Because most “Golden Age” accounts are free, having separate accounts is not an onerous expense.

This will ensure a steady, dependable and legal means of demonstrating the independence of your parent’s household. There are tax and other financial benefits for this activity. Among these is protection for the caregiver that he or she did not benefit beyond the legal limits and therefore need not report added income on their own returns.

The IRS reported in 2000 that more than 35,000 caregivers needed to revise their tax returns due to faulty bookkeeping. According to the IRS, most did not need to pay additional taxes but were faced with audits for current and prior years. As everyone knows, audits are not easy to prepare for or to undergo.

If a parent or sibling is receiving government checks, it is important to demonstrate a clear paper trail demonstrating that the money was received and endorsed by the addressed recipient. If there are two parents, it is best to have two separate accounts and deposit the appropriate checks in these accounts for disbursement.

Should there be a horde of savings, stocks, or other financial instruments, caregivers should be careful to keep detailed records as to:

When these assets were liquidated
For what purpose were the monies dispensed
Documented how they benefited the parent or sibling
Demonstrate that the caregiver did not benefit
If gifts to children or others were included, demonstrate they were within the non-taxable guidelines established by the IRS.

An Awful Truth

There is another reason to maintain detailed records. In many cases, where more than one child is involved, disagreements over the estates of parents often get vicious. Many times, caregiving defaults to one or two children with other siblings less involved. Unfortunately, after the parents demise, angry disagreements break out over what happened to the monies.

Lawyers, ministers, judges and doctors can describe case-after-case of families torn asunder by these disputes. Often, the caregiver is accused of unduly benefiting from the parents by spending their money on him or herself.

Most observers believe that the opposite is usually the case. However, it is important to keep records, as they are often the only means of demonstrating their position against claims from relatives.