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Using Parent’s Money

When they are older, and weaker, using your parent’s money can be very problematic. But using it when helping them is a gray area. What are the issues? How do you address the issues?

Using Mom's Money, Using Dad's Money, What To Use Your Parent's Money For
Using A Parent’s Money

In this Section, we’re focusing on senior parents with limited resources (under $1.5 million) and parents in the last decade or two of their life. Also, ignore this Section if your parent is under sixty and working. In every case, you can use it for general reference and ideas.

It Is OK To Use Your Parent’s Money On These Things

Using parents’ money for their benefit on things like rent (or mortgage), food, entertainment, transportation, and health is not the subject of this Section. The Section should be thought of as focusing on areas where you are using your parent’s money on things like rent (or mortgage), food, entertainment, transportation, and health that benefit you.

This section focuses on the gray areas. Areas like when you’re living at home and your parent is paying for your rent, food, entertainment, and transportation. The greyness occurs when you’re helping your parents with their day-to-day living.

The Grey Areas Of Using Your Parent’s Money

The concern is for parents with limited resources. They cannot work, and in the last decades of their life, their use of money for others may impair their ability to be comfortable in old age. Real needs for money are always a hard issue. Generous and loving parents always want to give. But sometimes, this giving will have a high probability of impairing their own life. This section attempts to shed light on these kinds of expenditures.

If we’re talking about using the money for your benefit, see Taking Money From A Parent here, or Having A Parent Move In With You here.

Between assisting your parents in spending money they need to live and using their money for your benefit, there are categories of gray. We placed them into three categories: easy calls, intermediate calls and hard calls.

Easy Calls On Using Your Parent’s Money

These are the easy calls.

Do It

  • Parent occasionally takes you to dinner, lunch or breakfast
  • Your living with your parents and helping out and they buy you groceries
  • Parent sends $100 or less so you can buy gifts for your kids on their behalf
  • Using parent’s money for your food and gas while you live with them and are helping care for them
    • If you have more expensive tastes than your parents (e.g., caviar, kombucha, Starbucks venti lattes, etc.) get family approval

Don’t Do It

  • Parent wants to buy you a car so you can visit more frequently
  • You tell your parents you need a car to work and they want to buy you a car so you can get to work
  • Parent wants to give you a check that represents 10% or more of their net worth for any reason

OK With Family Agreement (i.e., all siblings, majority if a sibling is estranged)

  • Purchasing you a car, when you’re living with your parent(s) and have agreed to provide caregiving services to them
  • Reimbursements or payments for your time or money taking care of your parent
    • Should be documented
    • Approve the range of activities and services for which payment or reimbursement is sought or desired
  • High end or extravagant food expenditures for yourself while your living with and caring for parents

Intermediate Calls

These are more difficult calls on when it’s OK to use your parent’s money.

Do It

  • Parent wants to pay for you to join them on vacation (less than $2,000)
  • You’ve been providing caregiving services to your parents, and they want to send you (or contribute) for you and your family to GOP on vacation (less than $2,000)
    • Help might be
      • spending a few weeks at your parent’s home helping them recover from an illness
      • managing a parent’s spouse’s funeral or treatment for a chronic illness (cancer, etc.)
      • managing and supervising the retrofitting of your parent’s home

Don’t Do It

Don’t use your parent’s money in these situations.

  • Allowing parents to purchase a car for you to drive your parent(s) to Doctor’s appointments
  • Parent wants to pay for you to join them on a vacation (greater than $2,000)

OK With Family Agreement (i.e., all siblings, majority if a sibling is estranged)

  • Parent wants to send you on a vacation (or contribute) for you and your family as an appreciation of your help (greater than $2,000)
    • Help might be
      • spending a few weeks at your parents home helping them recover from an illness
      • managing a parent’s spouses funeral or treatment for a chronic illness (cancer, etc.)
      • managing and supervising the retrofitting of your parent’s home

Harder Calls

These are the hardest areas on when to use your parent’s money.

Do It

  • Allowing your parent(s) to pick up the costs of accompanying them on an indeterminant length road trip
  • Taking money to help with a health crisis (less than $1,000), but document the money as a gift or loan (record the conversation with your parent)

Don’t Do It

Don’t use your parent’s money in these situations.

  • Allowing parents to purchase a car for you so you can drive your parents around on errands, and Doctor appointments

OK With Family Agreement (i.e., all siblings, majority if a sibling is estranged)

  • Taking money to help with a health crisis (over $1,000)
  • Allowing your parent(s) to pay you for help
    • Define tasks, amounts, and how long the agreement is in effect (you can revisit the agreement every six months or annually)

NOTE ON ABOVE: If your parent plans for these expenditures in an etstae plan, the estate plan should be followed. Also, see Should Advanced Age Seniors Give Money Away here.

Other Resources On How Children Should Use Their Parent’s Money

How to say no to your children’s request to spend your money here.

Interesting article on adult entitled dependence here.