How to manage financial caregiving for an aging parent
Steering end-of-life financial decisions for an aging parent is not a job many of us would choose. But we do — and feel our way through the messy emotions as best we can.
“I hit a financial wall four days into my caregiving experience with my mom,” says Beth Pinsker, a certified financial planner, MarketWatch columnist, and financial expert — and author of the new book My Mother’s Money: A Guide to Financial Caregiving. “That’s how long it took for things to fly south. I had her checkbook. I had the power of attorney documents in my hand, but I hadn’t put them into the bank yet. She couldn’t sign a check because she had just had surgery, and her caregivers needed to be paid. I wasn’t ready.”
Pinsker takes us along, here and in her book, on a year-and-a-half journey as her mother’s financial caregiver, ending with her mom’s death at age 76. And all the frustrations, heartbreak, and tears she encountered.
Here are edited excerpts of our recent conversation:
Kerry Hannon: Beth, what does it mean to be a financial caregiver?
Pinsker: The financial part of it is all the bills, keeping the household running, managing the nest egg so that it doesn’t deplete, and allowing it to grow. It’s also handling all the affairs after death.
What paperwork do people need to have in place for medical emergencies for their parents or aging relatives?
You need for them to have the healthcare proxy, which allows somebody to make medical decisions for you. You need the HIPAA authorization, which is a paragraph that says you have access to the medical records. And you need a durable power of attorney, which gives another person the ability to make financial decisions for you.
Your mom’s bank gave you a hard time with that. What happened?
Banks are really hard on power of attorney. My mother’s bank just said no to me. I walked up with the documents to her local branch, and I said, ‘Here’s my power of attorney documents.’ And they said no. I had to fight back. I knew my rights and that my document was correct.
Tell me about the pros and cons of joint signatures on accounts. I know that was an issue.
Everybody’s afraid of fraud. In the olden days, people got away with logging in as their parents and doing whatever they needed to do, but you can’t really do that anymore. You need legal access. One way to do that is to be a joint signer on the account. Another way is to be a power of attorney. Joint signing is convenient for a lot of people but also has drawbacks.
Author Beth Pinsker with her mom, Ann. (Photo courtesy of Pinsker)
I didn’t want to be a joint signer on my mom’s accounts because my kids are college age, and I’m filling out financial aid forms for the next eight years, and that counts as an asset.
All of anything you’re a joint signer on is your asset.
The other thing to worry about is siblings. Joint ownership comes with full access, and you don’t really have to account for it. With power of attorney, you could be held to account for whatever you do in the account, but with joint accounts, you can just go in and take money. In a lot of families, that’s a recipe for financial fraud.
And family splits too, right?
Yes. It is a recipe for sibling fights. If one sibling thinks the other is just taking money from the account, it causes bad feelings. It can derail inheritance tracks that someone has in their will. Say your mom wants a brother and sister to split whatever is left in her bank accounts, but if she makes the sister the joint signer on the account, the sister just gets the account. She’s a joint owner. And she can give half to her brother as her mother wished, or she can not.
Let’s talk for a minute about the cost of long-term care. What do people need to be aware of?
There are different levels of care that you can go through, and they all cost a different amount. Caring for somebody at home might be great and affordable at first, but might not be sustainable for the family. There’s assisted living. There are continuing care retirement communities. There are nursing homes and memory care facilities. Everything comes with a different pricing structure. At the top end of care, you’re looking at like $20,000 a month.
We were paying about $3,000 a week when I took over. That was for 24/7 care at home. First, we had three people splitting it, then we had four people splitting it. Then the care situation carried on for several months, and they were starting to get burned out. Everybody was stressed. So we had to add some paid vacation weeks and offer people raises. By the end, we were paying more than $4,200 a week.
What are your thoughts, or what do people know, about Medicare and Medicare Advantage in this situation?
I have a list in the book of answers you don’t want to hear about Medicare. The No. 1 thing is, does Medicare cover nursing care? And the answer is no. Everybody thinks when they go into a nursing care facility that Medicare is just going to pay for it.
Medicare is only for your current healthcare needs, and there are limits on the number of days that it covers if you’re sick. And in the hospital, that’s about 90 days. In a rehab facility, it’s a hundred. And they don’t even give you all of those days. And they’re always trying to kick you out.
We had to file appeals and make personal pleas. Medicare helped with her surgery, but it didn’t help after the fact.
She even was rejected for hospice care, which is covered by Medicare. Can you elaborate on that?
That was just such a slap in the face because it’s a hard decision to go to hospice. You second-guess that decision a lot. My mom made that decision for herself, but my brother, the doctors, and me had to be on board with it in order for her to do it.
The only reason they rejected her is because they thought she would be too costly. They do a cost-benefit analysis of how long that person is going to last— how much [in] resources is she going to consume? They decided that her diagnosis was too murky to justify putting her on hospice at that point. I finally found another hospice company to accept her. And she died in two weeks.
The bottom line is you’re going to do this. This is going to come to you at some point. How do you want to play it? Smart? Or do you want to leave everybody fumbling around in the dark? This is hard, scary stuff, and nobody likes to talk about it. Which is why I told it as a story. It’s easier to do all this stuff ahead of time than after. And if you can wake yourself up enough to realize how much easier some of this stuff is than you think it is and get it done, you will thank your future self.
Now I want to save my kids from going through the hard things that I had to do with my mom.
