Caregivers are almost inevitably called upon to participate in the planning and management of a loved one’s financial future. While no single process can help everyone work through this delicate and complicated task, there are some steps caregivers can take to reduce uncertainty and lessen the effects of a crisis.
Open the Lines of Communication
Few topics are as sensitive — or as important — as personal finances. Any conversation on money matters needs to be handled with respect for your loved one’s autonomy and feelings.
Focus on the benefits of planning. Stress that a good financial blueprint can only happen if discussions are straightforward and honest.
Share information or decisions about your own finances and insurance. This will help both of you get comfortable with the idea of mutual responsibility.
If there is an immediate concern that needs to be addressed, use “I” statements, such as “I am worried that…” or “I think a living will is a good idea.” Avoid “you should,” which sounds demanding and demeaning.
Point to examples of others who may have found themselves in similar situations.
Remember that a person’s ability to conduct their own financial affairs is quite often tied to a sense of their self-worth and independence. If you don’t agree with your loved one’s decisions, ask questions that will help them decide if the decision is best, such as “If your plan doesn’t work out the way you’d like, what else might you do?” Look for and present other options to breed trust.
Assess the Current Financial Situation
Caregivers tend to approach this step in one of two ways: either they are overprotective or they are too relaxed. As in most aspects of caregiving, what’s most important is to help your loved one to assert as much independence and control as he or she reasonably can.
Any realistic financial assessment has to begin with an examination of important documents and records. Determine what legal documents (will, trusts, powers of attorney) have already been drafted, and do some number-crunching.
Move onto an exploration of your loved one’s health insurance. What types of care are paid for? What kinds are not?
But this is where a health insurance broker can be a lifesaver when it comes to stress and finances. Trying to decode policies, coverage limits, and out-of-pocket costs on your own can feel overwhelming, especially when juggling other caregiving responsibilities. But a broker can break everything down, help compare options, and make sure your loved one is on a plan that actually covers what they need, without unnecessary expenses. So, just taking this step can help avoid financial surprises down the road and ensure they get the care they deserve.
Conduct an overview of the types of insurance coverage, as well as information about Medicare, Medigap and Medicaid.
Keep your own record of each insurance company’s name, the agent’s address and phone number, and policy number for each of the policies your loved one holds.
Get Solid Legal and Financial Advice
Contact attorneys, accountants, daily money managers, insurance agents or financial planners that you or your loved one have dealt with in the past. Ask for their advice, and find out how they can assist you. Consider working with professionals who specialize in helping the ill or elderly.
Additionally, the following government agencies should be able to furnish you with information and guidance:
- The Social Security Administration can provide an estimate of your loved one’s benefits.
- The Internal Revenue Service offers information and free tax assistance to the elderly, disabled and disadvantaged through the VITA (Volunteer Income Tax Assistance) and Tax Counseling for the Elderly programs. Contact the IRS at 800-829-1040 for information about these programs or visit irs.treasury.gov/freetaxprep to find location.
- The Veterans Administration offers benefits and medical care to veterans and their spouses.
Investigate Time- and Money-Saving Measures
Automatic payment and deposit makes bill paying easier and prevents hassles and interruptions in service. You also may be able to arrange to be notified if your loved one misses a payment.
You can arrange for water, electric, health insurance, mortgage and other regular commitments to be paid electronically out of your loved one’s checking account.
Many federal wage and retirement payments can now only be sent electronically, so before ruling out direct deposit, talk to the Social Security Administration, bankers and others involved in the process to try to clear up problems or misconceptions.
Share Financial Duties and Decisions
No matter what level of responsibility you assume for a loved one’s finances, you should share information with other family members. This will help you avoid the possibility of later recriminations or even legal difficulties.
Keep notes about significant discussions you have with family members and the actions taken as a result.
It’s probably best for one person to handle the main
financial duties, but some family members may be able to handle occasional banking matters and other basic errands.
Step back and make sure everyone involved respects your loved one’s autonomy. He or she may be depending on your help to manage finances, but it is still crucial that your loved one have the last word.
You or someone else your loved one trusts should consider becoming a joint owner of a bank account in order to write checks or withdraw funds. Because of the possible pitfalls or complications of giving someone else access to an account, however, you and your loved one should first seek advice from a banker, attorney or other qualified professional.
To ensure access to a safe deposit box in a crisis, your loved one can appoint a deputy or agent. Check with the bank for their procedures.
Your loved one might want to consider giving financial power of attorney to a close friend or family member.
Be Aware of Your Potential Liability
If you are considering becoming a joint owner of a checking or savings account, serving as a legal representative (through a power of attorney), or becoming your loved one’s trustee or guardian, you should be aware of the potential risks.
Have an attorney read over any documents and explain potential drawbacks before you sign anything.
Your loved one might need extra help to pay for medical or other expenses. Before agreeing to any loan, make sure the debt is manageable.
Determine if adding your name to another account where you also have funds will top the federal insurance limit. Your share in all accounts, whether individual or joint, at a particular financial institution would not be insured for more than the federal limit.
Remember that under the Equal Credit Opportunity Act, a creditor cannot deny or terminate a loan because of someone’s age or disability.
Some banks offer special loans for those people with disabilities to buy specially equipped vans or to make homes and businesses more accessible.
Prepare for Unforeseen Expenses
Family caregivers don’t get paid for long-distance phone calls, travel, groceries, medications, personal care items or other purchases. There are hidden costs to consider as well, including unpaid leave from work.
Some caregivers are able to organize and manage their loved ones’ finances quite well, but neglect their own affairs in the meantime. Try to get your own finances in order before taking on additional responsibility.
Source: CaregiversLibrary.org. The National Caregivers Library is an extensive online library focused on the needs of caregivers, their families and the organizations that serve or employ them. Article reprinted with permission from MetaMD, LLC., Richmond, Va
