ok so if I was born to a really psychotic parent then are we living out karma? What if I cut him out of my life for a long time because I can't deal with his disturbance will I have to deal with him again in my next life?
Great question. Everything related to karma in Buddhism depends on the motivation.
If you cut your father off because he is psychotic, and you cannot help him, and it only disturbs you and your children then there is no harm in severing the connection. Why? Because there is no benefit to him to stay in touch with you, and no benefit to you to have contact with him.
Sometimes pulling back from relatives is the best thing--especially if it allows your heart to open to the suffering of people with mental illness. Maybe you are unable to stay healthy yourself and help your father. Then if you pull back far enough, you may find you think of him and people like him more kindly. Maybe there are other people, not relatives that you are already helpful to. It seems I remember you being very kind to a troubled friend. That may be the best you can do for this lifetime.
Now, that said, it doesn't mean you will meet your father again. It's possible the consciousness that is in your father will reincarnate in a lifetime that you also are in, but he may come back be your treasured pet next lifetime. Rebirth does not occur predictably unless you are a highly realized enlightened being. Then, there is choice.
At least, according to teachings I have recieved.
All of these mutterings and musings are, in a way, merely conventional teachings. If is useful to you to think of your situation in this way, then this may help.
It still comes back to you. What works for you, how you work with your mind and heart, and what will be the greatest benefit to all.
My father, and mother were mentally ill. Both are deceased now.