financial affairs, coordinating care, managing legal and banking matters, advocating with health care providers, and the logistics around scheduling and arranging transportation to appointments. Conduct a Financial Inventory Ensuring that you understand your parents’ financial situation and your own will allow you to navigate what can be a stressful time with confidence. The first step is to get a full picture of your parents’ financial standing. This includes their income sources—whether through pensions, retirement funds, Old Age Security (OAS), and the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP). Tax Considerations Ensuring that you explore all tax credits and benefits available for seniors, such as the Age Amount Tax Credit, the Disability Tax Credit and the Medical Expense Tax Credit are also important steps to consider. These credits can reduce the amount of income tax your parents owe. Alternatively, if you are paying these expenses, you may be eligible for tax deductions and credits to help offset some of the cost, including: 1. Canada Caregiver Credit (CCC) If you provide financial support for a parent over 65 with a physical or mental impairment, you may be able to claim the Canada Caregiver Credit (CCC)— worth up to $7,999 (2023 amount) depending on your parents’ net income. 2. Medical Expense Tax Credit (METC) Many elder care costs—like home nursing, medical devices, and prescriptions—can be claimed under the Medical Expense Tax Credit (METC) if you cover these expenses. Be sure to keep receipts and check which expenses qualify. 3. Attendant Care & Nursing Home Costs If your parent lives in an assisted living facility or nursing home, some costs may be fully or partially deductible as medical expenses, provided the arrangement is for ongoing care due to a medical condition. 4. Income Splitting & Family Trusts If your parents have taxable income but lower marginal tax rates than you, strategies like pension income splitting or setting up a family trust could reduce the overall family tax burden. 5. RRSP Withdrawals for Elder Care If you need to access savings for caregiving costs, withdrawing from an RRSP vs. TFSA has different tax implications. Consider whether you can structure withdrawals to minimize taxes. 6. GST/HST Rebate on Medical Expenses If you’re paying for eligible medical services or devices that include GST/HST, you may be able to claim a GST/HST rebate on some expenses. Understanding your parents’ complete financial picture including medical expenses, debts and monthly living costs, will provide a better sense of their financial capacity. If they have pension income, substantial home equity, and are otherwise debt-free, the options will be quite different than if you have to support them financially. How Estate Planning for Parents Can Help One way to manage the financial burden of your parents’ care is to cover their upfront costs each month while they continue receiving pension or RRSP/RRIF income, with the intention of recovering those expenses from their estate at a later date. This approach can help ease immediate cash flow challenges while ensuring that financial support remains sustainable. However, it’s essential to have a clear agreement among all parties to prevent any misunderstandings. Ideally, these arrangements should be outlined in a legally binding document, such as a written agreement prepared by a lawyer or clearly stated in your parents’ will. Proper estate planning can help protect family relationships, ensure fairness and provide financial clarity for everyone involved. Protecting Your Income Through Insurance Protecting income is important for any family, but it’s especially true if you have multiple generations counting on you. Life insurance should be a top priority, with enough coverage to take care of major financial obligations and fund the future living expenses of your loved ones. 33 Issue 2 | 2025 | Supporting Your Practice
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