Financial Planning for Caregivers: Making Your Senior’s Money Last

Will the money last? If you’re a caregiver, that question probably haunts you. Whether your loved lives with you or at a distance, having a strong financial plan helps you stretch her assets.

The Caregiver Action Network and Allsup, a Social Security disability representation firm, have prepared a webinar to help enable a smooth transition as you take responsibility for your senior’s financial affairs. We’ll hit the high points and point you to resources, but it’s worth your time to watch the entire webinar.

“Financial planning is about establishing control over your senior’s finances,” says Paul Gada, attorney and financial planning director for Allsup, “and [about] effectively managing resources to achieve desired goals.”

First Step to Establishing Control

Start with a discussion to establish goals, contingencies, and limitations. Include your loved one — by listening as well as talking to him — in developing a strategy to ease the transition and align your objectives.

Methods for Establishing Control

• Joint bank account: A joint bank account is the simplest, cheapest route to accessing funds for daily expenses, but you can’t access other assets.
• Power of attorney (POA): A healthcare POA doesn’t provide access to funds to pay for medical care; you need a property (durable, springing, or nondurable) POA to delve into the assets. You might need to seek legal counsel to determine which POA is best for your situation.
• Revocable living trust: This more costly option allows the estate to bypass probate in addition to giving the trustee reins over the assets while the senior is living.
• Representative payee: Establish yourself as a representative payee to spend funds received from Social Security and other government funds (even with a POA, joint bank account, etc.).
• Conservatorship: This court-appointed option is the least desirable option. In addition to the cost, the court must pre-approve all expenditures.

Handling Finances

Gather all financial documents and establish a budget based on income sources and expenses. Ideally, you’ll pay all expenses with Social Security and monthly pension benefits while leaving investments intact for major expenses.

Look into additional sources of benefits your loved one may qualify for. Here are a few examples:

• Veteran benefits: Veterans who served between 1940 and 2001 might qualify for extra earnings. In addition, some wartime veterans who receive care at home or through assisted living or nursing homes can receive additional monthly income.
• Social Security Disability Insurance (SSDI) benefits: SSDI benefits can apply to younger individuals with disabilities.
• Government and private financial programs: Low-income seniors can receive financial assistance. Start by checking the AARP’s Guide to Public Benefits.

Maximizing Income While Minimizing Expenses

In addition to spending money wisely and saving money where you can, there are two areas where you can significantly stretch dollars and control costs:

• Selling assets: Consult a financial planner or tax expert to determine which assets to sell, and when, to minimize the tax burden.
• Medicare selection: With all the medical and drug plans available, you need to study and compare programs carefully. The combinations of programs you select can influence your senior’s bottom line greatly.

If your head is spinning, take a deep breath and remember: Rome wasn’t built in a day, and you can’t expect your senior’s financial planning to be built overnight. For step-by-step guidance, review the entire webinar, follow all the links, and check out this financial planning toolkit. Understanding, thoroughness, and a solid foundation are the building blocks to managing your loved one’s assets.