90 year old Mother in law is moving in!

My 90 year old Mother in Law has moved in with us 6 month ago. Next week we will close on her condo and she will be receiving over $100,000 dollars. She has no bills and owes nothing to anyone. What should she do with that money? Is a Roth IRA an option? Thanks!!! John

Also, does she qualify as a “dependent” living in our home for our taxes?? Just wondering… 🙂

Terry Says:  She should put that money in the bank, in a money market account.  Don’t worry about the low interest rates; you don’t want to risk a penny which will likely be needed for her care in future years.   Assuming your spouse has no siblings, your (or his) name should be on it jointly, so that in case she is incapacitated you can draw on the money for her care.  (If there are siblings,  an issue might arise having your name on the account.  It would be a convenience, but as a joint tenant, when she passes all that money will go to you, or your husband.)  If that’s the case, it’s time for a joint meeting of siblings — because YOU are the caregiver, and may need access to this money on her behalf in the coming years.

The absolute next thing you MUST do, is get an “estate” plan for her — a will, or better yet a revocable living trust.  Then you or your husband can be the “successor trustee” —  which is probably better than joint name, especially if you have siblings and the money will be divided at her death.  You need a qualified estate planning attorney to do this.  You should also get two more papers — a healthcare power of attorney, letting you make decisions if she cannot.  (Get several copies of this, and be sure to give one to her physician now, before an emergency arises.)  And also, she probably would want to make a “living will” — the end of life document that specifies her wishes about taking extraordinary means to save her life.  A copy of that should also be given to her physician.

The tax question is an interesting one — and I urge you to seek help from your CPA.  If you are contributing more than half her support (and counting any Social Security or pension benefits she is receiving), then you would be able to list her as a dependent on your tax return.  That assumes that you don’t make huge withdrawals from her savings to provide for her care, outweighing the “room and board and care” that you provide.  This could be tricky, thus the visit to the CPA.

And in case no one ever said this to you — you are a wonderful daughter-in-law to take her into your home.  Everyone should applaud you.