Emergency budget for ageing parents

[Junior]

As I see my parents are about more or less going to retire in 10 years and I don't know if they have enough savings to cover unexpected costs of ageing, and I am not sure if their SS will be sufficient to save money for emergencies (in theory it should, but I believe that sometimes, unexpected things can happen). So, I decided that maybe as I am their son and they have supported me in different occasions when I was growing up, that it could be a good idea to create an emergency budget just in case they needed some help (if they don't end up needing it, it will be extra money for my retirement). I was thinking about talking with my brothers about this, so we could all contribute in this saving effort (then if as I said my parents don't end up needing it, we could split it proportionally to our contributions), but I believe that it should be done in a good way and have all the details covered just to avoid future missunderstandings. Any ideas? (I was thinking about a notary)

In terms of where to place it, I was looking at savings accounts that allowed quick access to the money in any situation, but it seems that the interests they provide are really low (maybe above 1% the first couple of years but then they are something close to 0.3% the rest of the time) and most of them are limited to a maximum of 15k€. I don't want to assume to much risk on it as it's money that I could need to help them in a decade, so I was thinking about conservative ways to invest. Maybe bonds could be a good option.

Is there anyone currently living in Europe, or with Investments in Europe that could give me some orientation on that?

Thanks.

 

[joeea]

So, I decided that maybe as I am their son and they have supported me in different occasions when I was growing up, that it could be a good idea to create an emergency budget just in case they needed some help (if they don't end up needing it, it will be extra money for my retirement). I was thinking about talking with my brothers about this, so we could all contribute in this saving effort (then if as I said my parents don't end up needing it, we could split it proportionally to our contributions)

I think you have a good heart, but pooling money with your siblings is inviting problems.

Talk with your brothers. If you decide that an emergency fund for your parents is needed, you should each keep your own and invest as you each see fit.

If the money may be needed in the near future, you might need to live with a low return rate savings account.

 

[Walt34]

I think you have a good heart, but pooling money with your siblings is inviting problems.

Talk with your brothers. If you decide that an emergency fund for your parents is needed, you should each keep your own and invest as you each see fit.

What he said.

 

[Junior]

Some ideas that came to my mind are the following:

-Treat the money like a subsidy. For instance, if either one of the brothers decides to use the money, that person should provide a receipt to justify it was used on a health emergency related to my parents.

-Another thing is what would happen if any of the brothers dies (including me). The money would still be hold on that budget and be used for the original end until both parents die, and then, if there's still money, it would be split between the remaining brothers again relative to their contributions.

But some doubts also come to my mind like: what would happen in the improbable case that any of the brothers incurred in debt...would part of that emergency money be substracted by the debt collectors? Is there a legal way to avoid that?

 

[Junior]

I think you have a good heart, but pooling money with your siblings is inviting problems.

Talk with your brothers. If you decide that an emergency fund for your parents is needed, you should each keep your own and invest as you each see fit.

If the money may be needed in the near future, you might need to live with a low return rate savings account.

Thanks, I will have this in mind, it definitely makes sense. Probably keeping separate accounts is a better solution.

 

[AS2019]

Sounds like a lot of land mines. If you pool your money, who is responsible for filing with the irs? Who claims the gains and pays taxes when the time comes? If one of you goes bankrupt, is the account at risk? If you put it in parents name, then in case of catastrophic illness, every asset they own could be taken to pay bills, in which case it’s just money down the drain since it likely won’t be enough to cover massive hospital bills anyway.

Keeping it in separate personal accounts seems best. But then you’re going to be disappointed when you learn years later that they didn’t save as much as you did.
Just some things to consider.

 

[Rustic23]

This is how we did it. None of my siblings seemed to have enough cash on hand to pick up these expenses. So I told them I would, but I would bill it to the Estate. When DM died, I would be paid out of the proceeds of the sale of the home prior to others. Worked like a charm. Money was tied up for about three year. I did not charge interest, but my siblings would have been ok with it. As it turned out the amount was small compared to the value of the home.