You may think your parents’ money is none of your business, but you could actually find yourself on the hook for their bad habits. Maybe you have to pay for their retirement at the expense of your own, or give up on your travel goals to pay down their debt. Whatever the scenario, here’s what you can do when a parent’s financial behavior becomes problematic.


Here are a few common scenarios, and what options are available.

Your Parents Have No Nest Egg

Far too many people don’t have enough saved for retirement. And if your parents don’t have anything in their nest egg, it can be scary for you, because you may have to support them. If you feel a responsibility to care for them later on, you’ll probably want to say something as they approach retirement age.


Ideally, you want to encourage them to save. But there’s only so much you can do—ultimately, it’s their responsibility. Either way, you want to know exactly where they stand with their finances, so it’s time to have a conversation. Here’s how to break the ice:

Open up about your own finances : They’ll probably feel more comfortable sharing details if you share your own.

: They’ll probably feel more comfortable sharing details if you share your own. Ask them about their future : What are their plans? What kind of lifestyle are they hoping for? This can lead to a discussion about how, practically, they’ll be able to live that lifestyle.

: What are their plans? What kind of lifestyle are they hoping for? This can lead to a discussion about how, practically, they’ll be able to live that lifestyle. Suggest meeting with an advisor: Marketwatch suggests

Once you get the ball rolling, your parents may admit they need help managing their finances and ask you to take a look.

Help Them Manage Finances

If it’s time to help your parents take control of their money, consider a few guidelines for starting the process:

Lay it all out : Get the conversation started, then review every aspect of their finances: debt, budget, assistance, savings.

: Get the conversation started, then review every aspect of their finances: debt, budget, assistance, savings. Get others involved: You probably want to call a meeting with siblings, Care.com reports. This way, everyone is on the same page. It might help to talk to a third-party financial advisor

You probably want to call a meeting with siblings, Care.com reports. This way, everyone is on the same page. It might help to Get wills and trusts in order : Make sure these exist and are up-to-date. Consider enlisting the help of a lawyer. You may also want to pick a power of attorney.

: Make sure these exist and are up-to-date. Consider enlisting the help of a lawyer. You may also want to pick a power of attorney. See if they’re overpaying: Check their budget and see if there are any unnecessary expenses they may not be aware of. Credit.com suggests checking to see if their life insurance policy is bigger than necessary.

Check their budget and see if there are any unnecessary expenses they may not be aware of. Credit.com suggests checking to see if their life insurance policy is bigger than necessary. Check out their portfolio: Are they invested appropriately




Your parents might not be ready for you to completely take over their finances. In that case, just suggest this as a plan of action.

But maybe you’re past the point of encouraging them to save. Maybe you’re supporting them in some way already, or planning to support them in the future. In that case, you should know how to protect your own finances.


Know How Taxes Work

For example, let’s say you want to outrightly fund their retirement by giving them money. As of 2015, you can give up to $14,000 without having to worry about the federal gift tax. Anything more than that, and you’ll have to report it. Or maybe you want to buy them a house. If you don’t charge minimal rent, the IRS might consider that house a gift, Kiplinger explains.


If you’re taking care of your parents in some way, you may be able to claim them as dependents, although the technical term is Qualifying Relative. There are obviously some guidelines you’ll have to meet. For example, you have to cover at least 51% of their support costs, including living expenses, medical bills and food. Their gross income can’t be more than $3,950, either. The IRS has more detail here.

All in all, if you’re supporting your parents in any way, you want to talk to a financial advisor to fully understand how this will impact your taxes.


Don’t Be Quick to Co-Sign

In most cases, you won’t be on the hook for your parent’s debt, unless you co-signed on it as a “responsible party” or “guarantor.” Caring.com explains how this can cause trouble:

...if they later get into financial trouble, that guaranty may come back to haunt you. One of the most common — and difficult to solve — of these situations is when parents enter into a new living arrangement. Senior housing, assisted-living communities, and nursing homes often ask a family member to become a financially “responsible party,” guaranteeing payment of its ongoing fees, before allowing a family member to become a resident. If your parents run out of funds, you might not want to jeopardize their living arrangements by refusing to pay. But if you do accept the responsibility, it could last for a long time and cost you a lot.


To protect your own finances, don’t be so quick to co-sign anything or sign on as a guarantor.

You may simply want to have a conversation with your parents about their finances and help them come up with a plan to get out of debt.


Lend Money Carefully

When a loved one needs financial help, it’s hard to let them down. And if that loved one is your parent, you might feel downright obligated to lend them money (after all, they raised you!). But sometimes, you have to say no. One financial writer explains how she let her dad down gently:



I was upset being asked again. I was upset that he bought something under the assumption I would give him money to cover it. I was frustrated that this was happening again. I thought about this long and hard... After gearing up some courage, I told him over the phone “I’m sorry, I love you, I am not giving you this money.” He said some hurtful things. Threw a tantrum and was mad. Then he got over it. And I felt a lot better.


Of course, the other option is saying yes. Here are some tips and factors to keep in mind if you’re going to loan a parent money:

Consider just giving them the money. Don’t expect it back. Again, if it’s more than $14,000, you’ll have to report it as a gift on your taxes.

Set up an agreement: When will they repay you? Come up with a schedule, and keep track of any payments they make.

It might become an ongoing thing: If your parents are struggling, they might have trouble paying medical bills or other expenses as they age. You may want to prepare yourself to help with these expenses.

Ask siblings for help: You may not be able to afford financial responsibility of your parents. It may come at the price of your own needs. Depending on your situation, consider asking siblings or other loved ones for assistance.


Lending money to your parents is one thing. But as they get older, or their financial situation gets more severe, you might find it necessary to help manage their finances altogether.

Your Parents Hijacked Your Credit

It’s one thing when a parent’s finances are out of control and you feel responsible to help. But what if they take you down along with them? Unfortunately, it happens, and it’s called child identity theft. The most common type of child identity theft happens when a family member, often a parent, uses their child’s data to open accounts, apply for lines of credit, or apply for benefits, the Identity Theft Resource Center explains.


Usually, this goes undetected for years, and might not pop up until you’re trying to buy a home or apply for some other loan, only to find that your credit is shot. Creditcards.com points to a few warning signs:

Credit card offers come in the child’s name or nickname, even though the child doesn’t have a bank account.

The parent or relative struggles financially, then suddenly appears to have money.

The parent already has a history of misusing others’ identities.

The parent and child live apart, yet the child’s name appears on the parent’s caller ID system.


If you suspect this has happened to you, the first thing you should do is confirm it. Get a copy of your credit report and review it thoroughly to verify there are debts you didn’t take on. From there, you have two general options of how to handle it: report it to the authorities, or deal with it outside of the system.


Report the Fraud to the Authorities

Let’s say your parent has destroyed your credit, and you don’t want to deal with the debt or worry about having to repair your credit for the next several years. It’s a reasonable expectation, but you won’t be able to do it without contacting the authorities, Credit.com explains. Eva Velasquez, president of the Identity Theft Resource Center, told the site:

Without (a) police report, a company has no legal obligation to believe that fraud has taken place. The protections under the law, such as the Fair Credit Reporting Act, will not be triggered until a police report is filed. Organizations are under no obligation to investigate your claims or remove the offending charge unless you take the steps to demonstrate your innocence.


The ITRC has a checklist for getting started when dealing with financial fraud. Unfortunately, yep, it involves filing a police report, which means identifying your parent as the fraud. You’ll want to dispute the fraudulent charges on your report, and the bureaus will need a police report to do this.

You should also put a fraud alert on your credit report. We’ve written about what to do in more detail here.


Of course, there are consequences for the parent. They’ll be fined, they can face jail time, or they’ll have to contend with both, LegalMatch explains. They explain the consequences in more detail here.


Settle Things Outside of the System

Your other option is to work things out with your parent. This means you’ll have to sit down with them, discuss the issue, and come to an arrangement for repayment. Beyond that, financial expert Erica Sandberg recommends a few additional steps:

Contact the credit card companies: Explain the issue. Ask if you can work out a repayment plan. You may be able to convince them to lower your interest rate. Make sure the accounts are closed if they aren’t already.

Explain the issue. Ask if you can work out a repayment plan. You may be able to convince them to lower your interest rate. Make sure the accounts are closed if they aren’t already. Add a statement to your credit reports : She suggests adding a statement that your parent used your identity and credit without your permission. It’s not going to help boost your score, but it might make a difference if someone is reviewing your credit to approve you for something.

: She suggests adding a statement that your parent used your identity and credit without your permission. It’s not going to help boost your score, but it might make a difference if someone is reviewing your credit to approve you for something. Rebuild your credit: This might mean opening a card yourself and making small payments in full each month. We have more detail on how to improve your credit


Of course, you should also take measures to protect yourself after this happens. You’ll want to check your report annually to make sure any new debts actually belong to you. This option requires trusting your parent to repay these debts and, of course, to not keep destroying your credit.

You’re on the Hook for Their Debt

Again, unless you co-sign, your parents debts are their own. But when they pass, their debt can affect you, especially if you inherit their estate. Here are a few types of debt a parent may have and how it can impact you later on.


Credit cards : Even if you’re not a cosigner, debt collectors may try to convince you that you need to pay your parents’ debts, according to CNN

: Even if you’re not a cosigner, debt collectors may try to convince you that you need to pay your parents’ debts, Medical debt : Let’s say your parent had unpaid hospital or doctor bills. Their estate is responsible for paying these bills, if the money’s there. But some states have “filial responsibility statutes, legal site Nolo explains

: Let’s say your parent had unpaid hospital or doctor bills. Their estate is responsible for paying these bills, if the money’s there. But Mortgages: If you inherit your parents’ home and they still have a mortgage, you’ll have to make payments going forward. If you can’t afford this, you have a few options. You can disclaim the inheritance, or opt for a short sale or a foreclosure, according to Interest.com


Of course, it’s best to consult a professional in any of these scenarios, because inheritance and estate laws can be complex. But it helps to know your options and what to expect.

And if you simply feel responsible for taking over their debt at any point, AgingCare.com makes a few suggestions:




See if payments can be lowered to accommodate a parent’s low income.

Consider a reverse mortgage if your parent is a homeowner with no mortgage debt.

Consider writing a letter to the creditor explaining that there are no assets and requesting “debt forgiveness.”


If you co-signed a loan, of course, the debt is yours if it goes unpaid.

Money can be a touchy topic with anyone. But your parents may be especially resistant to opening up about it. If their habits are affecting your own financial life, it’s probably time to get involved.


And if the situation is beyond your help, you may want to call on a professional. Either way, tread the conversation carefully, know what to expect, and take measures to protect yourself.

Illustration by Sam Woolley.