Millions of daughters, daughters-in-law, spouses, sons, and significant others – most of them Boomers still recovering from the Great Recession – have begun the caregiver journey. And growing numbers of them are caught in a financial bind. They need to use a parent’s money to provide care.
In an ideal world, the Who-do-you-want-managing-your-finances-when-you-can’t? conversation would have taken place while those needing care were still capable of making that decision, says Marshall B. Kapp, Director of Florida State University’s Center for Innovative Collaboration in Medicine and Law. However, he laments, “That rarely happens, so families are left – often in a crisis situation – to infer who they want to manage their finances.”
Understanding and Managing Your Options
The most obvious way to “manage their finances” is to get access to their checking, savings, and retirement accounts. While most people assume that requires creation of joint accounts or a financial power of attorney (POA), Naomi Karp, Senior Policy Analyst with the Consumer Financial Protection Bureau’s Office for Older Americans, suggests setting up convenience accounts.
“These types of accounts,” Karp explains, “allow a ‘helper’ to make transactions, but they only have access to but they only have access to [the account] for the benefit of the account owner and according to their wishes. If the owner dies, the helper doesn’t automatically get the assets remaining in the accounts.”
However, when there are other income sources– stocks, investment dividends, income from properties, disbursements from annuities, etc., have a lawyer set up either a durable financial power of attorney (or a living trust is a better option) for both the care recipient and the caregiver.
With both, explains Kapp, “there are a lot fewer [familial] disagreements about how and where assets should be spent or used…because the person who is named as the financial manager has the legal authority to make all the financial decisions.”
According to the Consumer Financial Protection Bureau’s recently published “Managing Someone Else’s Money” guides, whether you are just helping out or are a legally designated POA “agent” or “trustee,” managing a loved one’s finances means not just using them carefully and responsibly to pay for care; it also means finding other means and opportunities to get additional services and assistance.
Stretching What’s There
That means tapping into the benefits and reimbursed programs that an older or disabled person – and often their caregiver – is eligible for, says Donna Schempp, LCSW, a consultant with the San Francisco-based Family Caregiver Alliance and a geriatric care manager with Eldercare Specialists.
“That,” she adds, “enables you to ‘stretch’ the effect of the money and assets that are there.”
One of the best places to find ways to “stretch” financial resources is at Benefits Check-Up. After you’ve filled out the easy-to-use questionnaire, you’ll get a list of programs a parent qualifies for. And, more to the point, you’ll get the information you need to contact local providers for help with and/or reimbursement of expenses related to medications, food, utilities, legal issues, health care, housing, in-home services, taxes, and transportation.
In addition, if you are looking for ways to “stretch” resources for someone with a specific medical condition, join an on-line support group where you can share concerns (and frustrations) and get tips on programs, services and solutions from people who are walking in the same shoes you are.
If you are employed, visit your company’s Human Resource or Employee Assistance Program director, who can often point you in the direction of resource “stretchers,” such as:
- Financial planners, who can help you understand your loved one’s finances and financial state.
- Eldercare specialists who can help you understand a loved one’s physical care needs and plan for the future.
- Local agencies — such as your region’s Area Agency on Aging, your community’s Office on Aging, your community’s Mental Health Board.
- Local organizations – such as the Alzheimer’s Association, the Cancer Society, Catholic Charities.
- Local programs – such as adult day programs, senior companion programs, volunteer bill paying or tax preparation programs, etc.
There’s a slew of resources,” notes Kapp, “but it takes time to find them.”
If all this seems overwhelming, consider hiring a geriatric care manager to help you figure out what you need, do the legwork to locate the right programs and services, and fill out the paperwork to get your parent scheduled and signed up for programs and services. They aren’t cheap – charging flat-rate or hourly fees that average between $100 and $150 an hour (and higher in cities) – but they know who and what the best resources are (and usually have “ins” with them) and how to navigate the regulatory landscape so services are reimbursed. And once they get things rolling, they usually step out of the picture, so you won’t be paying on-going fees.
Getting Paid to Care
Many people who are providing care and managing a loved one’s finances are also juggling work, family and their own financial challenges – which often include lost income and lost work-related benefits down the road due to their caregiving.
Not surprisingly, many caregivers are looking for a way to get paid for caregiving so they don’t have to juggle work and caregiving. Personal care agreements, modeled on those used in the Center for Medicare and Medicaid’s highly successful Money Follows the Person Project, are helping them do just that.
The agreements are legally binding employment contracts — based on a third-party assessment of the care recipient’s needs. They are made between an employer (the care recipient or their representative) and an employee (the family caregiver), and they enable that employee to bill the care recipient for the care and services they are receiving. And, along with specifying the tasks to be done, where and on what schedule services will be provided, and the compensation to be paid, they also require payment of federal and state withholding taxes (thus fulfilling Social Security and other requirements).
And, says Sandra J. Buzney, J.D. LISW, a Cleveland-based lawyer whose practice is focused on elder law and estate planning, “They make it possible for family caregivers to do what they desperately want to do— devote their time to the care of a loved one.”
When combined with legally drawn up room and board agreements, these documents, explains Buzney, “contribute to the necessary spend-down documentation that will be required when a Medicaid program or nursing home placement is needed.”
And, she adds, both protect the caregiver’s inheritance rights by preventing any misunderstanding later that the money was payment for services, and should not be counted as part of the caregiver’s inheritance.”