Basic Financial Caregiving

Posted on September 9, 2021

Financial caregiving involves managing finances for your loved ones to ensure they are able to pay for living more comfortably and required care. This typically involves bill paying, deposits, insurance and benefits claims, savings and investment decisions, tax preparation, and other financial duties. These duties are especially tough if the caregiver lives far away or has other demands on their time. Bad investment decisions can decrease a loved one's standard of living or assets, leading to disputes with other family members or even lawsuits.

Financial planning before a Crisis:

These are some steps to take before a loved one becomes disabled or ill. 

Invest, spend and save:

A balance between spending and saving with some invested safely can ensure financial health. Caregiving can put a burden on finances, and managing wisely can be crucial in the long term. It is important to have a healthy working relationship with financial planners, bankers, and accountants to meet long-term financial goals, as this may prove beneficial in a crisis. 

Make sure you know where the important documents are:

Bank and brokerage statements, insurance policies, wills, and pension records; are some documents of personal financial information that can protect your loved one’s assets. As a financial caregiver, make sure you know where these documents are placed so that you can find them in an emergency. This can help you collect dividends, rental income, interest, pensions, social security payments, and the contents of safe deposit boxes.

Access to banks and brokerage accounts:

Giving access to writing checks or withdrawing funds, or becoming a joint owner of a bank account, authorization to conduct transactions are some arrangements to be handled by a financial caregiver in an emergency. To avoid any complications or pitfalls, seek advice from an attorney, banker, or other qualified professional before giving access to any details.

Automatic payment of essential recurring bills and direct deposit of pay and benefit checks:

Arrange for electronic payments of your electric, water, mortgage, health insurance, credit card payments out of your loved one’s account so that it prevents hassles and interruptions in service. Some people believe direct deposit is safer and more convenient than paper checks. But, federal wage and retirement payments may need to be sent electronically. 

Accurate evalaution of your loved one’s financial situation:

Older and disabled people are often the target of fraud as ill, or elderly people are lonely and willing to trust strangers- ideal candidates for telemarketing bogus, get-rich-quick schemes, bogus home repairs, and phony stock or property deals. Your role as a financial caregiver is to find and filter out these people from draining your loved one’s bank account.

Financial Planning after a Crisis:   

Get solid financial and legal advice and take advantage of free or low-cost assistance programs.

 Respect your loved one’s opinions and share financial decisions with the family: 

The care receiver should be given as much control and involvement in financial decisions as possible. Being a financial caregiver, if you are responsible for finances, you should keep family members informed on current income and spending. It is better to write everything down, especially if your care recipient is suffering from memory issues or Alzheimer's. 

Be prepared for out-of-pocket expenses and smart about borrowing money:

The caregiving costs can be substantial, as caregivers don't get paid for leaves from work, travel, groceries, medications, personal care items, and other purchases. If a financial caregiver is a family member, you may need extra help to pay for medical and other expenses. You can borrow against a reverse mortgage, home equity loan, , or a second mortgage. Some banks and institutions have special loan programs for the disabled to buy equipped vans and assistive technology around the house. 

Financial caregivers need to keep detailed records of their loved one’s financial accounts, get power of attorney, gather and keep all financial documents handy. Also, financial caregiving can put a strain on your finances, and you may need to ask friends and relatives to chip in to help cover the costs.