If you think you will be taking on the role of a caregiver for your parent (or if you already have), you will face a number of challenges. Foremost among these may well be the financial impact on both your life and that of your parent.
As a caregiver, you could be looking at the loss of wages, out-of-pocket costs, etc. If fact, you’ll be more than three times more likely to have financial difficulties than someone who isn’t providing care. However, without proper financial planning, there could be even greater risks to your parent’s care, finances and eventually to their estate.
As a result, it’s important to sit down with your parent to make a realistic plan as soon as possible. Just understand that because they may have gray hair, arthritis or a heart condition that doesn’t necessarily mean that they are cognitively impaired.
Unless a diagnosis of dementia has proven otherwise, their opinions and wishes need to be respected and taken into consideration. Share your feelings, as well. Emphasize that you’re they’re to help them. And listen to their concerns.
However, if there is such a diagnosis as dementia or other diminished mental capacity and you discover that much of what follows has not been completed, you’ll want to consult an elder law attorney as soon as possible. That’s because your parent is not legally capable of executing any financial or healthcare documents.
When it’s time for “the talk”
If your parents have been active and independent for many years, it’s quite possible that they may have put a financial plan in place for just this time many years ago and your work will be much easier.
However, it’s just as likely that, despite their best intentions, your parents never got around to a plan before illness or injury intervened.
Either way, it’s time for you to have “the talk.” And sooner is better than later. All it takes is a fall to change everything.
If there are siblings involved, you might ask them to be present for the conversation. After all, any decisions that are made will impact their lives, as well.
No matter how uncomfortable the idea makes you feel, there are a few simple ways to begin your discussion that can make your conversation with them easier.
Turn on the TV
While you might think it easier to turn off the TV if you want to have a constructive talk, it might be easier to say, “Let’s see what’s on the news.” It’s often full of reports on health care, the stock market and investing—any one of which can be an easy conversation starter. And the conversation doesn’t necessarily have to focus on your parent.
Express your concerns for your own future finances and care. Then ask for their advice based on what they’ve planned.
Talk about family history
“Boy, grandpa sure must have had it hard, didn’t he?” We’ve all heard stories about how grandma or grandpa struggled through difficult times. Ask how they got through it. How did they pay the bills when things got rough?
Then ask your parent what they learned from it—and what they chose to do differently.
Ask for help with your own struggles
“Thinking about the kids, I sure want to make it easy for them once I retire.” If you have children, you’ll want to plan out your future finances and care to relieve any burden for them.
Outline your challenges, express your concerns and ask your parent what they would do.
Take the next step
“Who’s your financial advisor or accountant? Do you have an attorney? Could you introduce me?” If your parent has been open to discussing their finances, that’s great. Press forward. If they’re a little more vague, ask who their financial advisor is so that they can assist you. If they have one, ask for a personal introduction.
By sitting down together, you can do much more than just ensure that everything is in order for your parent. You can make sure that it’s also in place when your children step forward to have “the talk” with you.
First things first
Once you begin your discussion, you’ll want to determine if your parent has important documents in place. These are the ones that will govern all decisions going forward and include:
Financial power of attorney
This document allows your parent to appoint an “agent” (whether it is you, a sibling or someone else) to make financial decisions on their behalf with their money when they’re no longer able to do so themselves.
Depending upon what powers are granted in the document, that agent may have the power to:
- Pay bills
- Sell assets
- Hire additional help in the way of home health aides.
Depending upon your circumstances, a gifting clause in this document may be important. This is because an agent is not permitted to gift or transfer any money, personal property or real estate to himself or herself unless the POA document contains specific authority to do so.
To communicate with the IRS on your parent’s behalf, you may need to file Form 2848 (Power of Attorney and Declaration of Representative). As it is sometimes challenging to work with the IRS regarding a POA document you also may want to enlist an experienced tax professional.
Medical power of attorney
Similar to the Financial Power of Attorney, this document allows your parent to determine who will make health care decisions on their behalf. It could be the same person as the Financial Power of Attorney, it could be another sibling or it could be someone else.
Splitting the duties and responsibilities (ensuring neither has complete control over both finances and health) could occur because one or the other of the children are just naturally the best choice for the task. Say, one sibling is an accountant but lives out of state and the other is a stay-at-home mom who lives down the street.
The Medical Power of Attorney may make decisions regarding:
- Doctors and other health care providers
- Types of treatment (or whether to withhold it)
- Care facilities
- End-of-life decisions
Ideally, both POAs would (and sometimes would need to) work together in making decisions. This could occur when the Medical Power of Attorney determines that a move to assisting living is required and the Financial Power of Attorney needs to sign the checks.
Without these two documents in place, you’ll have to go to court to establish guardianship of your parent in order to make decisions on their behalf. This will take the advice of an eldercare attorney and time.
Advance directives and/or living will
An Advance Directive or Living Will is your parent’s opportunity to specify their wishes for medical care at the end of their life. These documents may include such desires as whether to allow:
- Cardiopulmonary resuscitation
- Mechanical ventilation
In addition to Advance Directives or a Living Will, your parent may also want a Do-Not-Resuscitate (DNR) orders. Depending upon the state in which you live, there may be both out-of-hospital and in-hospital DNR’s. Be aware that these may be mutually exclusive.
If your parent is in the hospital but there is no in-hospital DNR signed, the hospital personnel will attempt to resuscitate. If your parent is at home when emergency responders arrive to only find an in-hospital DNR available, they will ignore it.
As with any discussion determining who will have Power of Attorney, this would be one best held with any other siblings present to prevent any ill feelings or disputes in the future. This discussion may or may not have anything to do with who gets what, when or how. It may consist of a reassurance that you are concerned about your parent and want to ensure that everything is in place to honor their wishes.
On the other hand, if you are going to be taking on caregiving duties, you may be giving up a job, you may have added expenses and you may be taking time away from your own family. Should there be any compensation for this? If so, how much and when are certain topics that should be discussed openly, thoroughly and put into writing.
Any of these legal documents would need to be prepared with the assistance of an elder law attorney. If may also be possible that your parent’s physician would need to be a co-signer on medical directives to ensure that any decisions being made by your parent are done with full understanding of the medical consequences.
Then, the details
Once your parents have the most important documents in place, a level of partnership in their care has been established and they are reassured that they are still in control, you (or the financial power of attorney) can then establish the details by which all future financial and healthcare decisions may be made. Important questions to ask include:
- What is your social security number?
- Where do you keep your financial records?
- What are the names of your financial/investment institutions and what are your account numbers?
- What is your monthly income and where does it come from?
- What portion of that is received from Medicare, Medicaid, Social Security or the Veteran’s Administration?
- What are your monthly expenses and how do you pay your bills?
- Which of these expenses is automatically being deducted from your checking or savings accounts?
- If access to financial accounts is online, what are your usernames and passwords?
- Who currently prepares your taxes and where are your tax records located?
- What medical health insurance do you have in addition to Medicare and what are your policy numbers?
- Do you have any life insurance policies (which may include group policies from previous employment, credit unions, and the VA, in addition to commercial insurers)?
- Do you have a safe deposit box at the bank or safe in the house which requires a key or combination? If so, where is that key kept and/or what is the combination?
- Do you have long-term care insurance? If so, which company is it with and who is the agent? Under certain conditions, the cost of premiums can be tax-deductible.
- Have you done any pre-planning for funeral arrangements?
If your parent is a veteran, you will want to know the location of their military records, including their discharge papers. This will be extremely important if you consider applying for the Aid & Attendance benefit from the U.S. Department of Veterans Affairs. Much the same as a long-term-care policy, it can pay a monthly pension to assist with their healthcare needs.
Finally, realize that financial planning laws, insurance policies, local regulations, and legal requirements can vary widely from state-to-state. Don’t assume anything. What may be the standard operating procedure where you live may not be recognized where they live. Always seek advice from experts before making significant financial decisions.
As a caregiver for a parent, you may encounter a number of financial challenges as you journey along the gray mile. By addressing them early, you can better prepare for their future and your own, as well.