|Financial Caregiving: a Survival
When loved ones are ill, your first thought is to take care of
them and that often includes assisting with their finances. Here's advice on how to
prevent and deal with potential money problems, even from a distance.
Caregivers are among America's unsung heroes. They're the millions of people assisting an
ill or elderly spouse, parent, child or other loved one with everything from medications
and bathing to money management and banking. And that's in addition to juggling their own
How many people are caregivers? Probably more than you may think. A survey released in
June by the National Alliance for Caregiving and the American Association of Retired
Persons (AARP) found that one in four American families-- about 22 million households--
care for someone else aged 50 or older. That doesn't include the millions of other
families caring for younger adults who, because of a serious injury or illness, cannot
completely take care of themselves. And the numbers are growing each year, due in part to
medical advancements that enable people to live longer than in the past.
When it comes to finances, the typical caregiver helps with or arranges bill paying,
deposits, insurance and benefit claims, savings and investment decisions, housing and
adult day-care, tax preparation and countless other financial duties.
The job is especially tough if a caregiver lives far away or has the usual demands on his
or her time. And the stakes can be high. Among the potential financial pitfalls: bad
investment decisions that can reduce a relative's assets or standard of living. These, in
turn, can lead to disputes with family members or other people, which can result in
estrangement or even lawsuits.
We know that caregiving can be costly and physically and emotionally exhausting. That's
why we want to help. FDIC Consumer News has put together this
roundup of financial tips, information and resources that can help if you are called upon
to care for a needy relative or friend.
Consider taking these steps before an older relative becomes ill or disabled. (Many of
these suggestions also make sense for young and healthy people, to get their own finances
- Make sure the family knows where to find personal and financial documents in an
emergency. These include bank and brokerage statements, wills, insurance policies
and pension records. Explain to an older relative that you don't want to handle his or her
finances or pry into personal financial information. Your main concern is that you know
what documents to look for, and where to find them, in an emergency.
By having this knowledge, you can help protect this person's assets, including dividends,
interest, insurance, pensions, Social Security payments, rental income and the contents of
safe deposit boxes.
- Obtain access to bank and brokerage accounts in an emergency. To write
checks or withdraw funds, you or someone else your relative trusts should become a joint
owner of a bank account or simply make arrangements through the bank to be authorized to
conduct transactions. Also, to have access to a safe deposit box in a crisis, the owner of
the box can have a joint renter or appoint a "deputy" or "agent."
Because of the possible pitfalls or complications of giving someone else access to an
account, advice should be obtained from a banker, attorney or other qualified
- Consider automatic payment of important, recurring bills. You can
arrange for water, electric and other utility bills, along with health insurance, mortgage
and other regular commitments, to be paid electronically out of your loved one's checking
account. This makes bill paying easier and prevents hassles and interruptions in service
if required payments aren't made. You also may be able to arrange to be notified if your
relative misses a payment.
- Consider the direct deposit of pay and benefit checks into bank and brokerage
accounts. Many consumers are leery of direct deposit and other forms of
electronic banking. Among their reasons: paper checks and pay stubs are easy to verify and
photocopy. But most experts believe direct deposit is safer and more convenient than paper
checks. There are no delays in getting funds deposited, no checks are lost in the mail or
forgotten at home, and notices about each payment and deposit can be obtained.
Also be aware that a 1996 law, with certain exceptions, requires that federal wage and
retirement payments be sent electronically starting in 1999. (Final rules clarifying those
exceptions are expected soon from the U.S. Treasury Department.) So, before ruling out
direct deposit, consider talking to the Social Security Administration, bankers and others
involved in the process to try to clear up problems or misconceptions.
One in four American families--about 22 million households--care
for someone aged 50 or older
- Try to make sure your relatives are properly insured. Some people have
too little life, health disability (loss of income), long-term care (for nursing home and
home health care) or other insurance to be protected in a catastrophe. Others, especially
some elderly people, are so concerned about potential medical expenses that they buy too
much insurance or the wrong kind (such as cancer insurance that probably is adequately
covered under traditional medical insurance).
If you have doubts about someone's insurance coverage or ability to pay for long-term
care, try to get a second opinion from a financial planner or an insurance agent you
- Encourage saving, investing and prudent spending. If your loved ones
don't already have financial goals and working relationships with professionals they trust
(bankers, accountants, financial planners and so on), urge them to start. These
relationships may prove especially beneficial in a crisis. The spring 1997 issue of FDIC
Consumer News featured tips on retirement planning and saving that cover
some basics. (If you need a copy, contact our Public Information Center at http://www.fdic.gov/news/publications/PIChardcopies.html.)
- Discuss the importance of wills and estate planning. The goal of estate
planning is to distribute a person's assets and minimize taxes at death. For most of us,
that means making and periodically updating a will. Also, various types of
"trusts" or "gifts" can be arranged to help preserve assets for heirs.
In general, trusts should be set up with the help of an attorney experienced in estate tax
issues and estate planning.
- Consider a "durable power of attorney." This is a legal
document giving one or more people the authority to handle finances, property or other
personal matters if the individual granting the authority becomes mentally or physically
The durable power of attorney is considered a better tool for caregivers than a basic
power of attorney because it remains in effect even if the person granting the power
becomes incompetent. "Of all the documents anybody signs, a durable power of attorney
could be the most important, especially for someone 55 or older," says Thomas D.
Begley, Jr., an elder law attorney in Moorestown, New Jersey. "It means that if you
become incompetent you will have a person of your choosing ready to make decisions on your
behalf, and it costs $100 instead of the $3,000 it takes to have a guardian appointed by a
Mark Mellon, an FDIC attorney in Washington, notes that a durable power of attorney may
not neatly address all cases, so check with your lawyer about what's suitable for your
- Suggest a "living will" or other instructions about future medical
care. If permitted by state law, most people should have a living will specifying
the type of medical care they want or don't want if they become hopelessly ill and are
unable to communicate their wishes. Experts also recommend a "health care power of
attorney" or "health care proxy" designating a family member to make
decisions about medical
Among the reasons for living wills and health care proxies: they can prevent unwanted,
unnecessary, and costly medical procedures.
The durable power of attorney is considered a better tool for
caregivers than basic power of attorney
- Try to get an accurate assessment of your loved one's financial situation.
That's especially true if your relative is secretive about his or her finances. Claire
Berman, in her 1996 book "Caring for Yourself While Caring for Your Aging
Parents," tells of a man who was led to believe his 87 year-old father, living a
distance away, was managing OK money-wise. Then a neighbor called to say his dad's
electricity had been turned off. "There was, in fact, no money to speak of," the
man said. "Dad simply had been too proud to tell me that, and I'd been too respectful
of his privacy to press him on the money issue." The two then spoke frankly about
finances and how the son could help. "It's the kind of father-son talk," he
said, "that should have taken place years earlier."
After a Crisis
The following should be on any family's checklist if a relative becomes ill or disabled.
Get solid financial and legal advice from
professionals you know and trust. Contact bankers, lawyers, accountants,
insurance agents or financial planners your family has dealt with in the past. Let them
know of your situation and your problems. Ask how they'd recommend you deal with matters,
and find out how they can assist.
Consider working with lawyers and financial
advisors who specialize in helping the ill or elderly. Examples: "Elder law
attorneys" regularly handle estate planning, Medicare and Medicaid issues, insurance
disputes, fraud cases and other legal affairs affecting the elderly. "Daily money
managers" are professionals who pay bills, balance checkbooks, monitor insurance
claims and handle other daily financial responsibilities for other people. And
"geriatric care managers" typically are nurses or social workers trained to
help, or find help, with various tasks, including money management and evaluating housing
Work only with professionals you believe are reputable and ethical. If friends or
relatives can't give you a referral, talk to your doctor or your doctor's bookkeeper, or a
social worker at a hospital or nursing home. See More Help and Information for Financial
Take advantage of free or low-cost assistance
programs. Many lawyers, financial advisors and other professionals offer free
initial consultations. But for ongoing assistance at little or no cost, consider the
services available from private organizations and government agencies in your city or
Examples: financial counseling that employers make available to workers and their
families; "social service agencies" sponsored by state or county government
agencies and private organizations, including those affiliated with certain religious
groups but available to people of any faith; the local or national offices of
disease-specific organizations (such as the American Cancer Society or the Alzheimer's
Association); and other membership groups (such as the AARP). One way to track down these
programs is through the Eldercare Locator (see More Help and Information for Financial
Caregivers), a service of the U.S. Administration on Aging.
One former caregiver told
us that the bookkeeper at the doctor's office helped his family get thousands of dollars
in unexpected insurance payments
Closely review your relative's insurance coverage
and government benefits. You may be surprised, for example, to find a disability
insurance policy covers more than just wages; it also could pay for physical therapy or
other services. Similarly, a life insurance policy might have cash value or, in dire
situations, an option to receive an advance payment of some of the policy's death benefit.
You or someone knowledgeable should check out your relative's rights and benefits under
Social Security, Medicare, Medicaid, private insurance and employee benefits.
One former caregiver told us that the bookkeeper at the doctor's office helped his family
get thousands of dollars in unexpected insurance payments "because she knew the
insurance companies, she knew the rules, and she knew the mistakes we were making."
Respect your relative's opinions and desire for
autonomy. "Caregivers mean well but often, out of their own anxiety and
guilt, become overly protective and begin making decisions that the relative is fully
capable of," says Gail Hunt, executive director of the National Alliance for
Caregiving, a Washington-based organization for families caring for older Americans.
"The care recipient, even if physically frail, should always be making his or her own
financial decisions," Hunt says, adding that important decisions should be in
consultation with other family members, if appropriate. "The caregiver may have to
step in if confusion, dementia or mental illness becomes an issue."
well but often begin making decisions that their relative is fully capable of"
Share financial decisions with the family.
A 1995 guide to elder care finances published by North Carolina State University
recommends that family members discuss pending matters "to be sure that legitimate
concerns are raised and considered before action is taken." The person you're caring
for always should be given as much control and involvement in financial decisions as
possible. And if you must assume full responsibility for a relative's finances, the guide
recommends that you continue to share information with other family members. "Open,
honest revelation of specific financial decisions as they are made may reduce the
possibility of later recriminations," it says.
You might even want to consider family meetings to discuss finances, just to keep everyone
current on spending and income. It's generally also wise to keep good notes about
significant discussions you have with family members and the actions taken as a result.
Think about sharing duties with family and friends.
Some regular responsibilities, such as bill paying or deposit making, might be done most
efficiently by one person. But don't be shy about asking family, neighbors and old friends
to help out where appropriate, from occasional banking matters to basic errands, phone
calls and letters. Those with legal, health-care or financial training can be particularly
helpful with certain tasks. If help is available on a regular basis, that's even better.
You'll need a break periodically.
Be aware of your potential liability. A
caregiver may become a joint owner of a checking or savings account, serve as a legal
representative (through a power of attorney) or become someone's trustee or guardian. Any
time you agree to share responsibility with or for someone else you may be taking on
unexpected risks and liabilities. James N. Mulvaney, an attorney for a Chicago bank,
recommends that before a caregiver signs a document (such as a power of attorney) that is
"prepared by or for someone else, it's good to get a second opinion from a lawyer who
is loyal only to you, the caregiver."
Here's another pitfall worth considering: If a relative adds your name to a joint account
at a bank where you already have deposits, this unintentionally could put some of your
money over the $100,000 federal insurance limit. This is because, for example, under the
FDIC's insurance rules your share in all joint accounts at that institution would not be
insured for more than $100,000. If you have a question about your insurance coverage,
contact our insurance specialists as noted in the section For More Help.
Be prepared for out-of-pocket expenses.
Caregivers don't get paid, often don't get thanked, and frequently don't get reimbursed
for long-distance phone calls, travel, groceries, medications, personal care items or
Of course, as a caregiver your main concerns are to help someone who's helped you in the
past, and to know that this person is being well cared for. Even so, the costs of
caregiving can be substantial. The recent survey by the National Alliance for Caregiving
and the AARP found that families caring for an elderly relative spend an average of $171
of their own money each month. This doesn't include "hidden" costs, such as
unpaid leave from work.
Take advantage of the many housing options
available. It's likely that your ill or elderly relative would prefer to live at
home than move in with you or others. That's more possible than ever, thanks to an
increasing number of housing options and services available in most communities.
Someone wanting to stay at home can benefit from in-home nursing care and housekeeping
services, as well as adult day-care centers where ill or elderly people can spend a large
part of their day. There also are retirement communities and apartment buildings where
some form of health care or assistance with daily tasks is available. Costs of housing
assistance can be considerable, but many services may be covered by Medicare, Medicaid or
Make frequent visits to your relative... and to the
workers around them. You'll want to know that your loved one is getting good care
from a hospital, nursing home, retirement community, day-care facility or any other
institution or service you use.
Caregivers say that one of the best ways to ensure quality service and to prevent neglect
or abuse (including charging for services that aren't provided) is to make frequent,
unscheduled visits, at different times of the day or night. You can see for yourself
what's going on and, as one
caregiver told us, send a message to workers that "someone on the outside is
If you suspect that your
relative has fallen for a scam, don't be critical. Don't embarrass or humiliate the
victim. Instead, calmly explain that the friendly peson supposedly offering great deals
may indeed be a crook.
Be on guard against financial scams targeting the sick or
the elderly. Fraud artists know that ill or
elderly people tend to be lonely and willing to listen to and trust strangers who call on
candidates for telemarketing fraud, bogus home repairs, get-rich-quick schemes and other
cons. See Clues at the Crime Scene for a list of steps you can take to find out if an ill
or elderly relative has been victimized by a fraud scheme.
If you discover a problem, the National Fraud Information Center (NFIC), part of the
National Consumers League in Washington, says: "Don't be critical. Don't embarrass or
humiliate the victim. Don't get angry." Instead, calmly explain that the friendly
person supposedly offering great deals may indeed be a crook. If you think a crime has
been committed, contact the NFIC toll-free at 800-876-7060 or through its Internet site
(www.fraud.org) and it will provide the information to the appropriate law enforcement
Be smart about borrowing money. Your
relative might need extra help to pay for medical or other expenses. In some cases, it
might make sense to use a credit card or go to a financial institution for a loan. Seniors
who own a home may be able to borrow against the built-up equity, using a second mortgage,
home equity loan or reverse mortgage. Some banks also have loan programs just for the
disabled, such as loans to buy specially equipped vans, or to make homes and businesses
more accessible to the handicapped.
Before agreeing to any loan, make sure the debt would be manageable, and thoroughly
research and discuss the pros and cons. Also remember that under the Equal Credit
Opportunity Act, a creditor cannot deny or terminate a loan because of someone's age or a
As a caregiver, it's easy to feel overwhelmed
and to forget to take time for yourself. That can lead to burnout, which isn't good for
you or for the relatives who depend on you. But with the many resources available
nowadays, a caregiver doesn't have to be alone when making or carrying out decisions.
Get help and guidance from family, friends and professional advisors. Take advantage of
the many government agencies and religious and private organizations that provide services
to the caregivers as well as the ill and the elderly. Some of these organizations are
noted on the next page. Support like this could be just what the doctor ordered...for you
and your family.
When a Child Has a Disability
Financial Caregiving: Advice from Our Readers