Putting legal documents in

place

Make sure your parent has a

will and that it is up to date. If the estate is sizable,

he or she might consider establishing trusts. In addition

to saving on estate taxes, trusts can be designed to

accomplish many different objectives.

Your parent also should

have a durable power of attorney drawn up, a legal

document that enables your parent (who must be mentally

competent when the power is given) to give you or someone

else the authority to sign checks, pay bills and handle

his or her financial affairs. Be certain that the power

of attorney is durable, since only a durable power of

attorney remains in effect if your parent becomes

incapacitated.

Two other documents that

can make your care-giving task less complicated are a

living will, which sets forth your parent's wishes about

the use of heroic measures to sustain life, and a health

care proxy, allowing you or the person named in the

document to make medical decisions on behalf of a parent.

Legal requirements for

powers of attorney, health care proxies and living wills

vary from state to state. When executing legal documents,

make sure you consult with an attorney in the state where

your parent legally resides.

Taking tax breaks

There are several tax

strategies that can help to ease the financial burden of

helping elderly parents. If you provide more than half of

their support, and if certain other dependency rules are

met, you may be entitled to claim the dependency

exemption. This tax break applies whether or not your

parent lives with you.

If you and your siblings

share the costs of financially supporting your parent,

and none of you contributes more than half the amount

spent on support, you may enter into a multiple support

agreement. Under such an agreement, one of you, with the

permission of the others, claims the exemption. The

person claiming the exemption must attach Form 2120 to

his or her tax return.

If your parent qualifies as

your dependent, you also may be eligible to deduct the

medical expenses you pay for that parent. The medical

deduction is limited to the amount by which the medical

expenses you pay on behalf of your parent, combined with

your own family's medical expenses, exceeds 7.5 percent

of your adjusted gross income.

If your parent lives with

you, you may include as medical expenses any costs you

incur for installing special railings, ramps or grab

bars, or for widening doors for a wheelchair-bound

parent. Medical expenses are deductible only by the

taxpayer who actually pays them. You should not give your

dependent the money to pay the expense, but should

instead pay the provider or supplier directly, if you

wish to be able to take the deduction.

The dependent care credit,

the same tax break that helps working parents defray some

of the costs of child care, can help if you are caring

for a dependent parent in your home and need to hire help

to care for your parent while you work. The amount of the

credit depends on your income and on how much you spend

for the care.

If your employer offers a

dependent care spending account, check to see if you may

be better off using this option, which allows you to use

pretax dollars (typically up to $5,000 of the amount you

spend) for the care of a dependent parent living with

you. You can use one or the other, but not both.

CPAs, especially those

specially licensed to offer CPA elder care services, can

provide additional information and assistance to you when

sorting out the legal and financial issues involved with

caring for an aging parent.

The GSCPA is the premier

professional organization for CPAs in the state of

Georgia. With more than 9,800 members throughout the

state, the purpose of the GSCPA is to promote the study

of accountancy and applicable laws, provide continuing

professional education, maintain high ethical and work

standards, and provide information about accounting

issues to the membership and the public.

For information, access the

GSCPA web site at www.gscpa.org