How can I save money for my parents?

Question

I give my parents money on a monthly basis so they can save for their retirement, but they end up spending it on other things. I want to open an account for them where I can deposit the money and not let them know about it, butI want them to have access to it in case of emergency, what kind of account does this need to be?

Answer 1

a savings account

Answer 2

There are two ways to resolve this, the first is cheaper and easier than the second.

First method: SImply buy your parents a long term CD for their anniversary or some such thing. Be mindful that you have an annual gift maximum that you can make tax-free, but since it's early in the year you should be ok. Let them know that you've made the purchase and give them all the information. Make a note to yourself to remind them to roll it over when it matures.
Do this over and over until they get the point. If you've given them enough over time they can learn to withdraw the interest as the CD's mature.

For emergencies, from personal experience I have found that banks will make very quick loans on their own CD's. Within an hour they can walk out of the bank with loaned money up to the maximum they have in CD's. It takes paperwork and some patience, but it's not impossible. Just enough PITA to make sure they don't do it every day.

Small loans of this nature can also be used to improve their credit scores over time, creating yet another 'emergency' fund if they need it via credit. This needs some pretty close supervision if you feel they can't be trusted though.

Keep in mind that having them declared incompetant will be more of a pain than just dealing with them as they are. (also unfortunate personal experience)

The second method would require you to create a revocable trust with an attorney. I don't claim to be a legal expert, but the trust is a legal entity like a corporations, and can have very specific rules for disbursements. You can have your attorney stand in as trustee if you are unavailable. Consult with a trust attorney on this subject. While you're at it take some time to check on your parents' wills and insurance to make sure they are up-to-date in case the inevitable comes earlier than expected.

Good luck! Spendthrifty or not, it's a great thing to have your parents around.

Answer 3

If you truly want them to have access to it only when they retire, go set up a money market or CD fund (in your name only, with them listed as the beneficiaries) that matures when they retire. If you also want them to have access to the money before they retire (for emergencies), you may need extra help.

This will be kind of expensive and time consuming, but you could set up a bank account with a lawyer or a paralegal as the co-guardian (with you) of the account. If your parents had an emergency, they would have to come to you or to the lawyer to get access to that account.

On the other hand, if you don't see a problem with them being able to reach you when there's an emergency, you could bypass the lawyer completely.

On the third hand, you want some way to let them know that the money is there without them "creating" emergencies in order to get the money. Which means you (or your lawyer) have to be very specific about what constitutes an emergency--and your parents should be made aware of that.

If your parents are spending the money you give them on, like, food or medicine or some other basic necessity because they just don't have enough to live on right now, I say, let 'em do it, and more power to you for helping them. A retirement fund isn't going to do them any good if they starve to death before they retire.

Speaking from personal experience, you can't always protect your parents. Assuming they're sane--if they want to go blow money they don't have at the casino or spend $500 on a bike they'll never use, you know, that's their perogative, and you aren't responsible for that. If you can't always cover their bad decisions, you are doing both them and yourself a disservice by covering some of them now, because they'll come to count on you for paying the bookie, and you'll end up feeling ridiculously and inappropriately guilty if you can't do it. If you absolutely think this is a responsibility issue--i.e., they're not being responsible about their finances and future--offer to pay for financial counseling for them, but that's it. Tough love, baby--that street runs both ways.

Answer 4

If you don't want them to know, then it has to be in your name; otherwise your parents have to be there or sign some paperwork when you open the account. You can buy t-bill, bonds as gifts for them, they range from weeks to years. Your parents can't cash them until it matured.

you can also name your parents as beneficiaries to your savings. you can also open a safe deposit box with joint ownership but you keep the keys, it won't earn interest, but they can get to it if you give them the key.

Answer 5

Try puting it in a normal savings account but do not apply for the ATM card. This will make it inconvenient to withdraw money from the account. I recommend savings account as it is cheaper to maintain because its minimum deposit amount is the least as compared to other types of account. I'm from Singapore and hope that my recommendation is appropriate for you in your country.

Answer 6

what you need to do is go to your bank and tell them the situation, i'm not for sure what its called but you can put some money into this account and not be able to get it out for a few years unless you pay a penilty.

Answer 7

open a savings account in your name with them added as joint owners...........don't provide them with the information. So should an emergency arise they can access the monies..........