How CPAs Can Help Clients Consolidate Households During The Pandemic


The coronavirus pandemic has changed many aspects of life, including where people live.

Record numbers of young adults have returned to live with their parents, and some families have decided to consolidate their households or remove elderly seniors from nursing homes to protect them from the virus and help them avoid isolation.

CPAs can help their clients navigate these life changes in a number of ways, from adding dependents when filing income tax to finding the best way to fund a larger living space. .

Below, two CPAs share their thoughts on how to help clients navigate the changes in their homes.

Finance larger living spaces: Some multigenerational family units that work and learn together at home have chosen larger living spaces. Oscar Vives Ortiz, CPA / PFS, of PNC Wealth Management, said real estate in his hometown of Tampa, Florida has picked up during the pandemic.

“Families being together and spending more time together during the pandemic can be a silver lining,” he said.

There are several factors that customers need to consider when purchasing a larger home, said Vives Ortiz. CPAs can help clients determine the most tax-efficient way to purchase a new home, by weighing factors such as down payment amount, mortgage options, future tax obligations, and desirability. to buy it outright.

CPAs can also discuss with clients where to withdraw the money – including whether to involve savings, retirement or investment accounts, he said.

The children come home: More than half (52%) of adults under 30 now live with their parents, according to a summer analysis Census Bureau data from the Pew Research Center. The Pew authors noted that the last time so many young people lived at home was during the Great Depression.

“Young adults have been particularly hard hit by the pandemic and the economic downturn this year, and have been more likely to relocate than other age groups,” the authors wrote, noting another Pew Inquiry which found that about one in 10 young adults had moved because of COVID-19.

Twenty-three percent of those surveyed cited closure of college campuses as the main reason for their move, and 18% said their move was the result of job loss or other financial reasons.

It is important for CPAs to remember that every family situation is different. And children who return home as adults for a period of time shouldn’t be viewed as a negative event, said Paula McMillan, CPA / PFS, CGMA, of the Stearns Financial Group in Greensboro, North Carolina. ” she said.

She encourages CPAs to promote to their clients the possible financial advantages for a young person who returns home for a period of time. Providing a temporary financial safety net could allow young adults to pay off student loans faster or save for a down payment on a house.

“Throwing away the stigma that staying home until marriage – or some other predetermined time – is a failure to get started,” McMillan said. “What young adults and their parents decide to do today, in this uncertain world requiring more leeway than ever, is up to them.

She warns parents to create boundaries from the start. Some young adults left the crowded apartments they shared with roommates, and McMillan said it may be appropriate to enforce some rules. Maybe establish some form of rent payment or determine their share of utility and grocery costs, she said.

Revisit Healthcare Proxies: Vives Ortiz said it was also a good time to remind clients to make sure their planning documents are in place, such as health care power of attorney and medical power of attorney.

Parents are used to making these decisions for their children, Vives Ortiz said, but once children reach adulthood, they need to establish a medical power of attorney.

Under certain COVID-19 travel restrictions, it may be time to review these documents. CPAs can direct clients to the right professionals to help them tidy up the paperwork. For example, if a client appointed a family member who now lives in another state as their proxy, it might be useful to shift that responsibility to a more local relative, he said.

Grandparents moving in: As significant numbers of adult children return home, the pandemic has also caused many to move their aging parents and parents outside collective living spaces and in their homes.

COVID-19 has taken a heavy toll on older Americans. In early March, there were 1.4 million cases and 175,059 deaths in long-term care facilities across the country due to the virus. Some Americans have taken time off to care for loved ones who moved in with them during the pandemic, which can be a significant financial burden for some families.

McMillan said this highlights the importance of financial scenario planning, including bad scenario planning. Although financial planners ignore a pandemic, in itself, they take into account the loss of work due to a catastrophic health event, she said.

“What we’re talking about is a ‘safety margin’, whether it’s a pandemic or some other health event,” McMillan said.

Some people put money aside over time to anticipate elder care or take significant time off to care for an aging parent, she said. Other people may be exploring these options now or considering home retrofit costs.

If a client pays more than half of a family member’s living expenses, that family member could be considered a dependent for tax purposes. Vives Ortiz said CPAs can help clients navigate the rules and conditions around claiming adult dependents and whether that might be an option for them when parents move in.

Vives Ortiz said he has also encountered situations in which an elderly client would adjust their estate to leave more to a child who has taken on most of their care. He has even helped clients formalize caregiving agreements.

“Some people have made adjustments to their estate plan,” said Vives Ortiz. “And that’s something that needs to be communicated. Communication is key. A lot of times people prefer to talk about medical issues rather than finances. It seems so personal.”

But having those difficult conversations now can prevent conflict down the line.

“Every dynamic and family situation will be a little different,” he said. “But better communication between family members should alleviate any kind of ill will once mom or dad has passed away.”

CPAs can help open the channels of communication on this issue and help their clients think through what needs to happen next.

For more information and reports on the coronavirus and how CPAs can handle the challenges of the outbreak, visit the JofAof coronavirus resource page.

Taylor knopf is a freelance writer based in North Carolina. To comment on this article or suggest an idea for another article, contact Chris Baysden, a JofA associate director at [email protected].

Leave A Reply

Your email address will not be published.