For this episode of Motley Fool Answers, Robert Brokamp and Alison Southwick bring in an outside expert to discuss one of the more fraught and complex challenges that many of us will face as adults: becoming a primary caregiver for an aging loved one. It's a position that can sap your time, your energy, your emotions and your finances -- and that's when things are going normally. In addition to being a pro on the subject, their guest, the AARP's Amy Goyer, has traveled this path with multiple family members, and she has plenty of straightforward, actionable advice to share.
In this segment, she delves into an area that many families find tough to talk about even under happy circumstances: money. How much will you spend of your own to meet their needs? What's the best way for a caregiver to access their relative's assets, and how can that be done in a way that doesn't lead to arguments with other family members? And what should you be doing to keep your relative's finances secure?
A full transcript follows the video.
This video was recorded on Sept. 4, 2018.
Amy Goyer: One of the things about caregivers -- you shared some statistics. There's an average of $7,000 a year caregivers spend out of pocket on caregiving. Most of it goes to household expenses. Paying for your loved one's rent, or utilities, or just stuff in the house. But also, things like medical expenses. That's the second most-common thing. And you're going to spend this money on food. On clothing. I bought all my dad's clothing. Medical equipment. All of that. If you're long distance, the average is $12,000.
And if you're caring for someone with dementia, it all doubles. And I can tell you I spent far more than that every year. It really varies, and so it's something to think about; not "I can't do this because I don't have the money," but "how are we going to do this?" There are ways to work around that.
Robert Brokamp: Part of it, I assume, is what you spend out of pocket, but also being able to access the financial resources of the person you're caring for. What's the best way to do that, particularly as there can be some legal issues. You mentioned power of attorney earlier. There could be issues of when you're spending money from your dad's account the siblings may question those expenses. What's the best way to do that process so that's not all on you?
Goyer: That's a really tricky question. And most of the time there's one person in the family who they want to do that. And if your loved ones haven't done this planning and they need to do the planning, designate who's going to be the power of attorney and who's also going to manage the estate when they're gone.
But generally there is one person who it points to in terms of managing things. It should never be one person's complete financial burden to carry. Let's say we have a situation where there are parents and you've got four siblings. Find ways that everybody can contribute.
But first, as you say, you have to maximize your parents' income and that sort of thing, so you want to be aware of and have a handle on their income, whether it's pensions or retirement funds. Any benefits they may receive. My dad was a veteran, and so he got Veteran Aid and Attendance benefits which made a huge difference for us; but I had to go through the process of applying for them. He didn't know anything about those benefits. Most people don't.
And so finding all those different types of income to make sure that you're maximizing what they can pay for before the family starts pitching in. And that might include long-term care insurance. I can't tell you how many times people have told me this. They had long-term care insurance and the kids had no idea they had it. And if they forgot about it -- if it's paid automatically or whatever -- it's a huge waste of money. So finding out about that. Getting all the legal things in place.
And then there's practical aspects of managing that money. The bank accounts. How do you access everything? Your retirement or your investment accounts. What are the legal aspects of it? I ran into some things where I thought my power of attorney would do everything, and the bank wanted their power of attorney. We had sold a property that belonged to my parents and the house was in a living trust; so the payment for the property went in a [checking account] living trust. We didn't have a living trust checking account, so we had to open a new account to deposit that check. I couldn't deposit it just in my parents' account.
And my mom had had a stroke. It was very hard for her to write her name. My dad could do it. He was OK. His writing was starting to get hard to read. So we got the lawyers involved and, in the end, it was, "Well, they shouldn't do this, but they can. They can require it." So they came to the house. It took my mom probably an hour to sign all those documents. That shouldn't happen, but those are the surprises.
So really try to talk with your lawyers about any scenarios. One of the things that my dad and mom did was before my dad wasn't able to do those kinds of things, my mom had aphasia, so she couldn't speak very well. Thankfully he was still living. We could do the things where we would call up all the people he was paying money to and he would say, "My daughter has authorization to deal with my account." Sometimes they would do that just as a phone call. Sometimes there are forms you have to fill out. Sometimes both. It can get very complicated. And then sometimes you can just set things up online, but then you have to know the passwords, and the pin numbers, and all of those things, as well.
Brokamp: Right. This emphasizes some key points. First of all, ideally before you need the care, you've already laid this out somewhere in some documents where you can find all the insurance. Where your bank accounts are. Even maybe the passwords for things like that -- to write it up beforehand. And to get professional legal help for doing all this.
And I assume it was complicated partially, in your situation, by being in different states, because different states have different laws about handling this stuff.
Goyer: Yes, absolutely. And sometimes people get in a situation where their parents are even living in different states. They're not divorced, but they're living in different states, so you have to be careful about that, as well. So if you're living in Virginia and your parents are in Arizona, you need a lawyer in Arizona managing their things and telling you what to do there.