Remember when Mom and Dad bailed you out on that overdue bill?
Now, it may be your turn.
More than half of U.S. states have so-called “filial responsibility” laws that require adult children to support their parents if they become indigent.
For example, under Pennsylvania’s 2005 statute, spouses, parents, and children are obligated to care for or financially assist destitute family members.
That means you could be held financially responsible for a parent’s nursing-home care, says Marc Jaffe, estate-planning lawyer and partner at Fromhold Jaffe & Adams in Villanova, Pa.
“A nursing home will sue an adult child to recover monies the parent didn’t pay,” Jaffe says.
“It’s not used very often. And you are not necessarily responsible for all of that person’s debts. However, you might be held responsible for that person’s food, shelter, clothing, medical care, and other similar necessities if the person did not have the funds to pay,” he notes.
Such lawsuits “may become more common, as the government in general is looking to be less generous with benefits, and if a medical provider doesn’t get paid, they may look more toward the family,” Jaffe adds.
A 2012 Pennsylvania Superior Court case, Health Care & Retirement Corp. of America v. Pittas, made it clear that under state law, if a creditor chooses, one child alone may be found completely responsible. The court upheld the nursing home’s judgment against one son for $92,000 for his mother’s care after she left the facility and moved to Greece.
The Superior Court also determined what is meant by indigent. It includes not only those who are completely destitute and helpless but also those people who have limited, but not sufficient, means to support themselves financially.
Pennsylvania, New Jersey and Delaware all have similar “filial responsibility” laws on the books – although, again, they are rarely enforced, says Trisha Hall, partner with Connolly Gallagher in Wilmington.
In recent years, the Pennsylvania Bar Association supported a repeal of that state’s law, but it was blocked by the Department of Human Services and nursing-home lobbies, says Katherine Pearson, a professor of law at Pennsylvania State University’s Dickinson School of Law in Carlisle, Pa.
In January 2015, House Bill 242 was proposed by State Rep. Anthony DeLuca (D., Allegheny), who wrote that “current law gives the Department of Human Services authority to go after adult children to collect money for indigent parents’ care. This law is not only outdated and impractical, but it also has vast potential for abuse and to unfairly cause serious harm.”
Most of these laws are seldom enforced because federal law prevents the states from considering the financial responsibility of any individual other than a spouse in determining the eligibility of an applicant or recipient of Medicaid or other poverty programs, Pearson says.
But Pennsylvania also has little incentive to change the law.
“The state wants the statute to stand as a way to offset state liability” for indigent elderly, she adds.
What is unique about Pennsylvania is that the law has been interpreted as permitting third parties, such as nursing homes, to sue the children directly, Pearson explains.
She has been watching cases in which nursing homes are suing adult children for bills as low as $5,000 or as high as $60,000.
“Sometimes, these bills have accumulated, and then they sue the adult children retroactively – as a debt-collection tool.”
To protect themselves, Jaffe advises that adult children put their assets in protective trusts or retirement accounts, which cannot be claimed by creditors, and that they put property in joint ownership, under more than one name.
In some cases, families could solve financial and other problems ahead of time simply by having conversations about what their elderly parents want.
“Four in 10 families don’t agree on the roles adult kids will play” as caregivers, says Suzanne Schmitt, vice president of family engagement at Fidelity Investments, based in Boston, Mass.
Start small, Schmitt advises, asking your parents where their important documents are, such as their health-care proxies and HIPAA release forms, among others. “Keep it tactical and don’t tackle the whole conversation at once.”
Don’t ask, “How much have you saved?” Instead, ask general questions, such as, “Where are your bank and savings accounts held? Do you have a trusted adviser such as an estate-planning attorney or CPA?”
Schmitt herself has had the conversation with her parents. And many elderly parents will appreciate bringing up the subject – and are encouraged to do so when families get together for holidays and other occasions.
“It’s tough,” she says, “but I started with saying I wanted to honor their wishes and not guess about what they wanted.”