Suze Orman Money Matters

The empty-nest years are anything but empty these days.

More 50-something adults are finding their homes full of grown children who have moved back in and their heads full of worry about caring for their own aging parents.

What makes this new reality so tricky to navigate is the emotional component; your kids and your parents are the center of your universe. There's nothing you wouldn't do for them, right? That's where the problems can start. Your blind devotion to those you love can often cause you to make some financial and familial missteps.

Mid-lifers whose kids have boomeranged back into their home and whose elderly parents may need assistance need to create a family plan for negotiating these new demands.

The Full Empty Nest

Let's start with how to handle the kids.

Given the high cost of housing, low starting salaries, and the reality of leaving college saddled with thousands of dollars in student debt (the average is about $20,000 for a bachelor's degree), it's no surprise that there's been a sharp rise in the number of young adults choosing to move back in with their parents.

For some, it's just a temporary stop until they snag their first post-college job. For others, it's a lifestyle choice: Why share a cramped and expensive rental with three roommates when your own room is waiting for you at Mom and Dad's -- often rent-free and with full laundry service provided? For still others, it's a safe place to land after a busted relationship.

Regardless of why the kids are back, the absolute worst move you can make is to welcome them without any financial expectations. Quite honestly, if your kid has expects free room and board, I have to hold you accountable for not raising him or her to be more financially self-reliant and responsible.

That's the most powerful gift any parent can bestow on their kids, yet all too often I see parents who think it's their role to always take care of their kids rather than teach them how to take care of themselves. Indulging a 22-year-old like he or she is 12 years old is a disservice to your kid.

Exactly when do you expect them to grow up? And exactly when do you expect to finally do your job by showing them how it's done?

No Time Like the Present

There should be no free ride, period. This isn't punishment -- it's great parenting. If your kid is moving back in because he or she can't afford a place just yet, your goal is to help them save up enough money to eventually move out.

Charge rent. Insist that your child set up an automatic payment from their own checking account into a special savings account you set up. That savings account becomes their housing account. You aren't pocketing the money for yourself -- you're helping (OK, forcing) your child to save for a goal: being able to buy their first home, or more likely, at least have enough of a housing fund to cover some of their rental costs.

As for how much to charge, it should be a percentage of their take-home pay -- at least 25 percent. What drives me crazy is when kids move back in after college, live rent-free, and blow all their money on clubbing, mall splurges, or nice weekend getaways.

I'm not suggesting they fork over every penny to you, but until you demand that they act like adults with their money, they're just going to continue to be your financially dependent kids. Don't you want more for them?

You should also set a timeline for when they'll move out. Don't wait until you're at the breaking point; you don't want to have this conversation under the cloud of frayed nerves.

If part of the plan is for you to subsidize some of their housing costs, that also needs to be talked through ahead of time. Keep reminding yourself that you're helping them navigate the transition to self-sufficiency, not setting yourself up to be their permanent financial fallback.

Parental Guidance Suggested

Mid-lifers must also be strong for their aging parents. All too often, grown children with concerns about their parents are unable to get their parents to talk through the issues that weigh so heavily on each of them.

The child wants to make sure the parent has the documents in place that will allow the parents' wishes to be carried out without question or hassle, but the parents hear the questions as a threat. Or, worse, a reminder of their mortality.

What's crucial for every adult child to keep in mind is how to shape the conversation. Don't treat your parents like children. Ask questions. Listen -- but don't lecture! It's all about showing respect.

One of the best ways to approach the subject is to personalize it. Try something like this:

"Mom and Dad, I've been working on making sure I have the right documents in place to ensure my family is OK if anything were to happen to me. I'm wondering if you have everything in place, so that when the time comes I can carry out your wishes exactly the way you intend. That's so important to me. I want to make sure I can take care of you, and take care of your estate when the time comes, exactly as you want everything to be handled. And for that to happen, I need to make sure you have the right documents set up in the right way."

Do the Paperwork

Here are the documents you need to make sure they have (you should have these documents for yourself, too):

• Advance directive
  

  This spells out to medical care providers (and your family) what type of health care you want in the event that you become incapacitated and can't speak for yourself.
  

• Durable power of attorney for health care
  

  This appoints someone to act as your "agent" in the event that you're incapacitated. Your agent has the job of speaking for you to make sure the wishes laid out in your advance directive are followed. The agent can be anyone -- spouse, friend, or child. The key is that it's someone you trust.
  

• Durable power of attorney for finance
  

  This appoints someone to act on your financial behalf in the event you become incapacitated. It works best if it's part of a revocable living trust (see below) that includes an incapacity clause.
  

• Revocable living trust and will
  

  I strongly urge everyone to have a trust, not just a will. With a trust, all assets can easily pass to beneficiaries upon the death of the trustee (that's you) without having to go through the costly and time-consuming probate court process.
  

  A trust that includes an incapacity clause will enable whomever you choose to handle your financial affairs if you become too ill to make those decisions for yourself. That's one key reason you need a trust: It helps you while you're still living. A will only kicks in once you've died.

A lawyer specializing in estate planning can draw up all these documents; the costs might run from a few hundred dollars to upward of $2,000 or more, depending on the complexity of your family's finances.

Or you can use an online or software program to draw up the papers and then hire an attorney to simply review the documents.