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Family and Finances

The challenges of financial caregiving

It’s inevitable. At some point family caregivers and their older loved ones will have to have some challenging conversations about finances. Topics regarding end-of-life planning require a delicate approach, and even more mundane financial matters, like protecting mom from a phishing scam, must be treated with sensitivity. AARP’s Bob Stephen explains how to broach difficult but necessary conversations in a way that is both productive and empathetic.

Stephen is Vice President of Caregiving for AARP. He understands the importance of starting any conversation you’re going to have about financial matters slowly but with an eventual resolution in mind.

For instance, older adults may need more help sorting out their legal and financial decisions, such as wills and powers of attorney, but it may not be a subject they’re ready to address. When it comes down to a family caregiver, to start the conversation, says Stephen, “don’t come in with a heavy hand. Start with things that are going to get the conversation going.” Stephen suggests asking questions like, “Where do you see yourself ten years from now?” “Is this the house you want to live in?” “What kind of financial resources do you have?”

It’s important for all immediate family members to be involved in the conversation from the beginning, for several reasons. One being that things can become more complicated when a caregiver has a financial interest in a loved one’s finances. “As a family, you can keep each other somewhat honest,” says Stephen. “And being transparent is really important, making sure that it's all out in the open so that there aren’t any questions about plans, roles or next steps.”

Stephen says that clear legal documents and transparency between family members are essential. This step can ensure all parties have a full understanding of what is going on and can reach resolutions in a timely manner.

Toward that end, make sure all relevant family members are present when important legal and financial decisions are being made. It’s also important to get the help of a qualified attorney who can parse through the details, especially given that complicated legal questions aren’t limited to the creation of a will or disposing of assets, but can arise in day-to-day matters long before it’s time for end-of-life care.

If a person is no longer capable of managing their own assets, they may appoint a financial power-of-attorney who will manage everything from investments to taxes to daily budgets on their behalf. While this role of caregiver may be less physically intimate than providing daily hands-on-care, the job of caregivers helping with financial issues may be just as emotionally fraught.

Six Steps to Help a Loved One Arrange Legal Affairs

1

Make a family plan. Discuss caregiving matters with all involved members of your family. Put in writing who will be responsible for which caregiving roles, and have all parties sign.

2

Organize important papers. Most people don't realize how many legal documents they already have or will need in the future. Key documents include birth, marriage, and death certificates, insurance policies, pension benefits, house deeds, and powers of attorney.

3

Get estate planning agreements signed and notarized. In addition to a will, make sure your loved one has a durable power of attorney for both healthcare and financial affairs.

4

Explore financial support. If necessary, investigate public benefits such as SSDI, Supplemental Security Income, Supplemental Nutrition Assistance Program (known as SNAP, formerly food stamps), veteran benefits, Medicare, and Medicaid.

5

Review life insurance and taxes. Your family member may be able to claim federal tax deductions for many healthcare costs, so save receipts for all medical expenses. A hospital bed or wheelchair, renovations to make the home more accessible, hiring a short-term or part-time home health aide, and other out-of-pocket expenses may all be tax deductible.

6

Think beyond your loved one. If a parent passes away or becomes unable to take care of people who depended on them, you may need to take on additional caregiving roles. This could include caring for a spouse, grandchildren, or pets.

Caregivers helping with finances also include those who are helping support a loved one themselves, perhaps by paying the mortgage or helping with bills. When managing a loved one’s expenses, it’s important to get a sense of all of their financial obligations, from recurring bills to housing and transportation costs to credit cards.

“It's really important for family caregivers that they also have a sense of their own budget,” Stephen says. “Most folks don’t really consider ahead of time the fact that if they're going to be contributing money, it's probably going to be in the range of some seven thousand dollars or more per year to help cover things like medication, food, housing and medical expenses.” If your budget allows for it and you do need to help a loved one financially, remember to document everything, this will help you keep track of things like bills and medication costs.

Finally, even if an older person is capable of handling their own financial affairs, they may still be particularly vulnerable to scams. Stephen commonly sees scammers who coerce sensitive information out of people by calling and posing as the IRS or as Medicare agents. Thieves sometimes pull on the heartstrings, posing as grandchildren asking grandparents for money to help them out of a bind.

Protecting a loved one from scams of this kind may take a sympathetic ear and more explanatory reasoning. “You shouldn't do any type of victim shaming,” Stephen warns. “These are very sophisticated enterprises, and the last thing you want to do is make someone feel bad and defensive.” Stephen also recommends AARP’s Fraud Watch Network, an online resource for scam-prevention tools including a tip line, a scam tracker, and advice on how to identify a scammer.

Stephen advises using empathy and understanding rather than criticism. For instance, help them see how they’re being taken advantage of by explaining how the scam actually works. However difficult, or even painful, it may be, protecting an older loved one financially always begins with a gentle and straightforward discussion.