There have been several recent articles (including our own) that have dealt with family caregivers having to take care of the finances for an older relative. In fact, according to Harris Interactive, 42% of adults have taken over some or all aspects of the financial decision-making for their aging parent or spouse. I'm one of them.
If we see this as a learning experience, our children won't need to deal with tangled family finances. It can be easier if we talk about it sooner and take action to protect ourselves and our estate at the same time we are doing so for mom and dad.
Understand How Long-Term Care is Financed
In her Chicago Tribune article, "Caring for elderly parents: Readers' advice," Anya Kamenetz, noted how readers enlightened her on the true costs of long-term care. Even the smartest among us, however, have questions about how long-term care is paid for today. (Hint: It's not Medicare.) Here is the sad truth: unless you carry a long-term care insurance policy (only "8.1 Million Americans" do according to the American Association for Long-Term Care Insurance), you should plan to be paying for this type of care yourself.
Independent Living - out of pocket. Assisted Living - out of pocket (unless you find a place with Medicaid waivers.) Nursing Homes - out of pocket until you qualify for Medicaid. Social security does not cover long-term care. Government run programs do not cover long-term care. It is up to us to figure out what we'll need and how we will pay for it ourselves and that means advance planning.
Obtain a Lawyer Who Specializes in Elder Care Issues
When I became full-time caregiver for mom, it became clear quickly that there was a time-limit on her money. I knew to the month when it would run out. And even though I work in the field, I knew I needed an expert to help us maximize her money. As you read Kamenetz's article, you will see common themes.
"Plan to maximize Medicaid." "Get a power of attorney and a medical power of attorney."
Lawyers specializing in elder care are a rare breed. Even in the Charlotte area where I live there are only a handful. We found one. In one fell swoop, we were able to:
- apply (and receive four months later) Veterans Aid and Attendance Benefits for mom (Dad was a WWII veteran.)
- set up a trust to protect mom's assets and start the clock on the Medicaid lookback
- set up financial power of attorney and medical power of attorney
- complete an advanced directive.
I have all of this in a nice binder. Or, if you're more digitally minded, download a scanning app like Tiny Scanner to your smartphone, and organize your paperwork on your computer. And oh, by the way, while my wife and I were planning for mom, we began this entire process for ourselves.
Talk About This Stuff Sooner
In his Wall Street Journal article, "The Difficult, Delicate Untangling of Our Parents' Financial Lives," William Power discusses his wife's task of having to sort out her parents' finances. The article says a lot about the little things, the minutiae that you have to plow through but also about the culture in which her parents grew up. Here is a telling quote.
"What's clear is how much the Depression scarred our parents' generation. That is the only explanation for why Julie's parents deposited small amounts of money in so many different banks, in the form of savings accounts and CDs."
As with all things aging, I tell my readers, friends, colleagues and clients: start talking sooner. For example, one hard discussion facing family caregivers is the discussion around driving
. If you ease into the conversation sooner, before a parent is exhibiting any dangerous behavior, you can help them understand the importance of modifying their driving habits. With mom, she stopped driving at night and stopped using interstates. And as silly as it sounds, she started figuring out routes to places using only right turns! The point is that, when ultimately she had to stop driving, it was a little less painful because we talked about it earlier and did something about it sooner.
Talking to your kids now about your finances is smart. It doesn't mean you have to share specific details but you can generally let your wishes be known and also make it easy for your kids by gathering and documenting all of your finances and other pertinent information. As Power notes:
"More practically, we learned that while people don't want to deal with the tough issues with their parents when they are well, it is less traumatizing than when they are in a hospital bed."
Just remember when thinking through and acting on the wishes of your parents, consider what you want for yourself in the future - and start planning now.