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Multi-generational households are becoming the new (or maybe it’s really old) in vogue way to handle the care of aging parents. And we’re all for it so long as you consider the implications and set your family up for success. Here are 7 expenses to consider when your senior parents move in.

With Mom or Dad moving in, you can anticipate some extra expenses, not just financially, but possibly emotionally as well. But it’s hard to know what to expect, and you might face costs you didn’t see coming. Having an elderly parent move in with you is a major life event that requires financial and emotional preparation. Here are some unexpected costs of caring for elderly parents to get you thinking about what lies ahead, if you decide to move mom or dad into your home.

Many people don’t think about the modifications they might need to make to their home to welcome an elderly parent. If your parent is living with you long-term, you will want to make him or her comfortable, which might entail adding a new addition to your home, creating a private living space out of a shared area, making accommodations for single-level living if your parent cannot navigate the stairs, or adding mobility adaptations such as a walk-in bath or chair lifts.

Moving your elderly parent in, helping him or her get acquainted with the area, and checking out activities can all eat into your work week. Expect further loss of productivity if you have to take your parent to run errands, to medical appointments, or to therapy sessions. You can look into senior transportation services if you are unable to take time off from work, but remember to budget for the extra expense.

In-home care can be a significant expense, but unless you are able to take time away from your busy day, your elderly parent might need it. Long-term care insurance will sometimes cover some or all of the costs, and you might be able to get assistance from certain programs through the VA or other community organizations.

The costs of simply having another household member can be unexpectedly high, especially if that member spends most of his or her day at home. You should expect such extra expenses as increased heat and electricity bills, special foods, and personal care products. Remember that elderly parents have special needs, and those needs can be expensive.

Even with insurance, your parent might have steep out of pocket costs for co-pays, prescriptions, mobility aids, supplements, vitamins, and other uninsured medical expenses. For certain conditions, these costs can quickly add up.

As your parent ages, his or her needs will change, too. These changing needs can result in unexpected long-term costs. When your parent’s retirement funds are exhausted or when they face deteriorating health, you might have to consider the staggering costs of long-term care in an assisted living facility or nursing home.

As your family size grows, there is lots to prepare for and consider. Welcoming a new family member can be a joyous occasion, and requires some planning. Adding a new family member can affect your finances and create a need for more protections. Reassessing your insurance coverage might not be at the top of your list, but policies should always be audited when changes in your family life occur to ensure your coverage will adequately protect your growing family. Remember this: insurance says I love you to the people you love. These are the insurance policies to review when you have a baby.

It’s always a good idea to increase your life insurance coverage whenever you add a new member to your family. Life insurance can provide your loved ones with valuable financial support when you die. Determining the right type and amount of life insurance coverage takes assessing your current financial standing and the future financial needs of your family. As your family grows, future financial needs will as well. Think long-term, take into account inflation and any expected big-ticket investments, such as education over the years, plus the needs of a single parent or named legal guardians to care for your children, if you pass on while they are unable to care for themselves.

And always remember that you can name legal guardians to care for the education and health of your children, while directing your insurance to pay to a trust for the benefit of your children, with a separate trustee named to care for the finances. This Trustee would work together with your named guardians to make decisions in the best interest of your children, until they could receive and control the inheritance themselves.

For some, a bigger family means a bigger home. If you are purchasing a new home or building a new addition to your current home, it’s a good idea to reevaluate your homeowner’s policy. Key factors to look for include whether your existing policy has sufficient coverage to repair or replace your home and whether your policy would replace your belongings if necessary. Also, consider adding riders to your existing policy to cover things like damage from natural disasters, which standard policies typically don’t cover.

A case on the Supreme Court’s docket for October could have a major impact on the parental rights of same-gender couples seeking to adopt or foster children. In February, the high court agreed to hear Fulton v. City of Philadelphia, which deals with whether taxpayer-funded, faith-based foster care and adoption agencies have a Constitutional right to refuse child placement with LGBTQ families.

In March 2018, the City of Philadelphia learned that Catholic Social Services (CSS), an agency it contracted with to provide foster care services was refusing to license same-gender couples as foster parents. This was in spite of the fact the agency consented to abide by a city law prohibiting anti-LGBTQ discrimination.

The city told CSS it would not renew their contract unless they abided by its nondiscrimination requirements, but CSS refused to comply, and the city cancelled its contract. CSS then sued the city, claiming it had a First Amendment right to refuse licensing same-gender couples, since those couples were in violation of their religious beliefs.

Both a federal judge and the 3rd Circuit Court of Appeals sided with the city, noting the city’s decision was based on a sincere commitment to nondiscrimination, not a targeted attack on religion. From there, CSS took the case to the Supreme Court.

LGTBQ adoptions are particularly contentious right now at the state level. The Supreme Court has yet to rule on the issue of the parental rights of non-biological spouses in a same-gender marriage. Given this, many married same-gender couples looking to obtain full parental rights in every state turn to second-parent adoption, as the Supreme Court has previously ruled that the adoptive parental rights granted in one state must be respected in all states.

That said, 11 states currently permit state-licensed adoption agencies to refuse to grant an adoption, if doing so violates the agency’s religious beliefs. In other states, the law specifically forbids such discrimination, but as we’ve seen in the Fulton case, those laws are being challenged.

We plan to write a follow up article once the Supreme Court rules on Fulton v. City of Philadelphia. Legal experts predict the case could have a significant impact on not just parental rights for same-gender couples, but nondiscrimination policies related to religious institutions at a broad level. In the meantime, same-gender couples should consider another potential option for gaining parental rights—one that doesn’t require adoption.

No matter how the Supreme Court rules, same-gender couples seeking parental rights have another option—estate planning. It may be surprising to hear, but it’s critically important for you to know that when used wisely, estate planning can provide a non-biological, same-gender parent with necessary and desired rights, even without formal adoption.

Starting with our Kids Protection Plan®, couples can name the non-biological parent as the child’s legal guardian, both for the short-term and the long-term, while confidentially excluding anyone the biological parent thinks may challenge their wishes. In this way, if the biological parent becomes incapacitated or dies, his or her wishes are clearly stated, so the court can do what the parent would’ve wanted and keep the child in the non-biological parent’s care.

Beyond that, there are several other planning tools—living trusts, power of attorney, and health care directives—we can use to grant the non-biological parent additional rights. We can also create “co-parenting agreements,” legally binding arrangements that stipulate exactly how the child will be raised, what responsibility each partner has toward the child, and what kind of rights would exist if the couple splits or gets divorced.

If you’re in a same-gender marriage—or even a committed partnership with someone of the same gender—and you want to ensure that your significant other has as many parental rights as possible, meet with us to discover the planning tools are available to you.

And whether you are married, or in a domestic partnership, even with no children involved, it’s critically important you understand what will happen in the event one (or both) of you becomes incapacitated or when one (or both) of you dies. Proper planning can ensure your beloved is left with ease and grace, not a financial and legal nightmare that could have been avoided.

With our guidance and support, you can ensure your partner or spouse will be protected and provided for in the event of your incapacity or when you die, while preventing your plan from being challenged in court by family members who might disagree with your relationship. Contact us today to get started.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

Although many strategies to save on your income taxes must be locked in before the end of the year, there are still numerous ways you can reduce your tax bill right up until the filing deadline, which has been pushed back to Monday April 18th due to a holiday on April 15th.

Some of these strategies are time tested and available every year, but with all of the legislative changes made during the past two years to deal with the pandemic, there are also a few opportunities that won’t be around much longer, with some only available this year. While there are dozens of potential tax breaks you may qualify for, here are 7 of the leading moves you can make to save big on your 2021 tax return.

The lower your income is, the lower your taxes will be, and tax-advantaged retirement plans, such as 401(k)s, 403(b)s, and individual retirement accounts (IRAs), are a great way to reduce your taxable income and save for retirement at the same time. And you have until the April tax-filing deadline to add money to your plan for the previous tax year, so you still have time to contribute.

For those with workplace retirement plans, such as a 401(k), 403(b), and most 457 plans, you can contribute up to $20,500 in 2022, up from $19,500 in 2021. For those 50 and older, you can make an extra catch-up contribution up to $6,500 in 2022 (no change from 2021) for a total contribution of $27,000.

For those with IRAs, both traditional IRAs and Roth IRAs, you can contribute up to $6,000 in both 2021 and 2022, or $7,000 for those 50 or older. However, the ability to deduct your traditional IRA contributions from your taxes comes with certain limitations, depending on whether you or your spouse is covered by a retirement plan at work and your adjusted gross income (AGI). Roth contributions are not tax deductible, since they are made after taxes are taken out; however, withdrawals from a Roth in retirement are tax-free.

Although you are typically required to take an annual required minimum distribution (RMD) from your traditional IRA, 401(k), or other tax-advantaged retirement account starting in the year you turn 72, the CARES Act waived the RMD requirement for 2020 due to the pandemic. The waiver also applied if you reached age 70 ½ in 2019, but waited to take your first RMD until 2020.

However, RMDs were reinstated in 2021, so if you are 72 or older, you were required to make a withdrawal from your retirement account before the end of 2021. Similarly, if you reached age 70 ½ in 2019 and your RMD in 2020 was waived, your 2021 RMD was also required to occur by Dec. 31, 2021. And if you reached age 72 in 2021, your 2021 RMD is required to occur by April 1, 2022.

If you failed to distribute the RMD, you may owe a 50% penalty on the amount not distributed. That said, you may be able to avoid the penalty by requesting a waiver from the IRS. You can request a waiver if your failure to take the RMD is due to a reasonable error, and you take steps to make the required distribution. To request a waiver, submit Form 5329 to the IRS, with a statement explaining the error and the steps you are taking to correct it.

As with tax advantaged retirement plans, if you have a high-deductible health insurance plan, you may be able to reduce your taxable income by contributing to a health savings account (HSA), which is a tax-exempt account you can use to pay medical expenses. The deadline for making a 2021 contribution to your HSA is April 15, 2022.

HSAs offer three different tax breaks: Contributions are tax-deductible, they allow for tax-free growth, and withdrawals are tax-free if they are used to pay for qualified medical expenses.

For 2021, if you had self-only health coverage, you could have contributed up to $3,600. For 2022, the individual coverage contribution limit is $3,650. If you have family coverage, the limit was $7,200 in 2021 and is $7,300 in 2022. And if you’re 55 or older, you can add an extra $1,000 catch-up contribution to your HSA.

To be eligible, you must have a high-deductible health insurance plan with a minimum deductible of $1,400 for self-only coverage or $2,800 for family coverage. The maximum out-of-pocket expenses cannot exceed $7,000 for a self-only plan or $14,000 for a family plan.

The American Rescue Plan’s expanded child tax credit was made fully refundable in 2021, and it was increased up to $3,600 per child through age 5, and up to $3,000 per child aged 6 to 17. Dependents who are 18 can qualify for $500 each. Dependents aged 19 to 24 may also qualify, but they must be enrolled in college full-time.

Eligible families automatically received half the total of the payments in advance monthly payments between July and December 2021, unless they opted out. When eligible parents file their taxes in 2022, they’ll get the remainder of the benefit they didn’t receive through advance monthly payments. If you did not receive the advance payments because you opted out or didn’t receive them for some other reason, you can claim the full credit when you file in April.

Because the IRS based these payments on your 2020 tax return, a change in income or the number of qualifying dependents in 2021 could have resulted in an overpayment. If so, you’ll have to pay that back when you file in April.

Even if you made little to no income, you are still eligible for the child tax credit, though payments begin to phase out when your AGI reaches $75,000 for single filers, and $150,000 for joint filers. To find out where you stand with this credit, visit the Child Tax Credit Update Portal on the IRS website.

The CARES Act allowed for up to a $300 deduction per tax return for charitable donations in 2020, even for those taxpayers who don’t itemize. For 2021, this benefit expanded to up to $300 per person.

This means if you are a married couple filing jointly, you could be eligible for up to a $600 deduction for your charitable giving last year, even if you take the standard deduction, which increased to $12,550 for single filers and $25,100 for joint filers in 2021.

If you care for a child under age 13, or a spouse, parent, or another adult dependent who is unable to care for themselves, you may be able to get up to 50% back as a tax break or refund for your care-related expenses. For 2021, the amount you can claim maxes out at $8,000 for one dependent and $16,000 for two or more.

For 2021 only, this credit is fully refundable, meaning that you can receive money even if you don’t owe taxes. Note that this credit is different from the child tax credit mentioned above, and qualifying for the child tax credit does not affect your eligibility for this credit and vice versa. Learn more about the requirements for the Child and Dependent Care Credit on the IRS website.

The American Opportunity Tax Credit (AOTC) provides undergraduate college students or their parents with an annual tax credit up to $2,500 for eligible education expenses incurred during the first four years of college. The credit can be used to cover 100% of the first $2,000 spent on tuition, books, school fees, and other supplies (excluding living expenses or transportation) plus 25% of the next $2,000 for a total of $2,500.

To qualify, the student must be pursuing a degree or credential and be enrolled at least half-time for one academic period (semester, trimester, or quarter) beginning in 2021 or the first three months of 2022. The credit can be claimed for a maximum of four years, and it can be claimed by the student or their parents provided they paid the expenses and the student is listed as a dependent on their tax return.

The full credit is available for individual filers with an AGI of $80,000 or less or $160,000 or less for joint filers. A reduced credit is available for individuals with an AGI over $80,000 but less than $90,000 or over $160,000 but less than $180,000 for joint filers. Taxpayers who earn more than that can’t claim the credit. The credit is partially refundable, so you can still receive 40% of the credit (up to $1,000) even if you had no income or owed no taxes.

The Lifetime Learning Credit (LLC) is another tax credit for qualifying educational expenses, but it’s slightly different from the American Opportunity Credit. The credit can be used to cover 20% of the first $10,000 spent on tuition and school fees for a maximum of $2,000. Unlike the AOTC, the LLC does not generally cover books or other supplies (unless those books or supplies were required to be purchased to take the course), and it also does not cover living expenses or transportation.

The LLC is not just for undergraduates; it applies to undergraduate, graduate, and non-degree or vocational students, and there’s no limit on the number of years you can claim it. To qualify for the LLC, the student must be enrolled in at least one course for an academic period beginning in 2021 or the first three months of 2022. The credit can be claimed by the student or their parents provided they paid the expenses and the student is listed as a dependent on their tax return.

The full credit is available for individual filers with an AGI of less than $59,000 or less than $118,000 for joint filers. A reduced credit is available for individuals with an AGI between $59,000 and $69,000 or between $118,000 to $138,000 for joint filers. Those who earn more than $69,000 or $138,000 can’t claim the credit.

The LLC is not refundable, so you can use the credit to pay any taxes you owe, but you won’t get any of the credit back as a refund. Additionally, you can’t claim both the American Opportunity Tax Credit and the Lifetime Learning Credit in the same year.

These are just a few of the tax breaks available for 2021. There are plenty of other deductions and credits that your family might qualify for depending on your circumstances. Meet with us, your Personal Family Lawyer®, to make certain you don’t miss out on a single one. Contact us today to schedule your appointment.

This article is a service of a Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.