Millions of Americans provide care to older adults. According to a report from the AARP and the National Alliance for Caregiving, 1 in 5 Americans (21.3 percent) have cared for an adult or a child with special needs in the last 12 months. An estimated 41.9 million (16.8 percent) adults care for people age 50 or older. Among these individuals, 13.4 million (32 percent) people care for persons with Alzheimer’s disease or some other form of dementia.

Family members and friends often find themselves in the role of an informal financial caregiver, especially for older family members or friends. This demanding role involves managing the financial affairs of a loved one who may no longer be able to do them alone. It entails many responsibilities that can be stressful for both the care recipient and the financial caregiver. The following tips and suggestions will help make each role less demanding and stressful for both the care recipient and the caregiver.

Role of Financial Caregivers

Caregivers provide care needed to help individuals maintain their independence as much as possible and for as long as possible. This care is permanent or temporary. These caregivers not only provide medical care, but they also provide personal home assistance and financial care.

Financial caregivers, like other caregivers, perform various roles and are responsible for managing a person’s finances. This entails paying bills, preparing taxes, making banking decisions, navigating medical health insurance expenses, and other financial responsibilities. Although many informal (unpaid) financial caregivers are family members or friends, their role is still demanding and stressful. The following are some things caregivers can do to make matters easier for everyone involved.

Respect the Wishes of the Care Recipient

A person may be older and physically incapable of maintaining total independence. However, it does not mean they are incapable of making financial decisions. Treat the care recipient with respect. Seek and follow their wishes before making any financial decisions that impact their well-being.    

Make it Legitimate

If a loved one asks you to manage their financial affairs, ask the person to make it legal by establishing a power of attorney that names you as the agent. This document gives you the legal right to make money and property decisions on his or her behalf. As an agent, you are bound by law to manage financial affairs strictly for the care recipient and not for yourself. As outlined in Managing Someone Else’s Money in Alabama: Help for Agents Under a Power of Attorney, financial caregivers are expected to

• act as the person would want and only in their best interest
• manage their money and property carefully
• keep their money and property separate
• keep good records of all financial transactions

Get a Clear Picture of the Financial Situation

Try to get an understanding of the care recipient’s financial situation. This entails collecting and reviewing financial documents. Gather documents pertaining to assets owned, debts owed, financial accounts, tax statements, policies, and sources of income. Organize financial documents if necessary. Create an inventory of documents, such as bank statements, insurance policies, wills or trusts, vehicle titles, credit card statements, mortgage or rental statements, medical bills, utility bills, and government benefits. This will make it easier to make smart financial decisions. Many agencies offer free resources to use for organizing important papers.  In Alabama, you can also contact your county Extension office for free resources.

Establish a Spending Plan

Create a spending plan (budget) with the recipient once you have a clear picture of the amount of income (money coming in) and expenses (money going out) over a period of time. A spending plan will help to align household money coming in with money going out. It will also allow you and the care recipient to control spending and saving. Financial decisions, such as how to cut spending or where to allocate funds, will become easier when using a spending plan.

Automate Bills

For recurring bills, discuss paying bills electronically to assure that bills are paid on time. Set up the account to be notified by email or text when bills are paid. Similarly, consider having recurring income payments made through direct deposit. Automatic deposits will minimize trips to the bank and prevent checks from being lost or stolen. If your loved ones are not in agreement, together you should establish a written payment schedule for paying bills each month.

Utilize Public and Private Resources

There are public and private resources available to help financial caregivers. The National Family Caregiver Support Program (United States Department of Health and Human Services), the Caregiver Action Network, National Respite Coalition, and the National Alliance for Caregiving can help financial caregivers. Information and resources can also be found at the state and local levels. As a financial caregiver, don’t forget to seek advice from the care recipient’s lawyer, banker, insurance agent, and other financial advisors. These professionals will have financial knowledge regarding the care recipient’s financial situation.

Establish an Estate Plan

Estate planning is a process that allows care recipients, in advance, to name how their assets and property are to be distributed after their death. It also includes medical and guardianship instructions if needed for disabled or minor children, and minimizing taxes. Documents such as a will, living trust, and a health care directive (living will and health care proxy) should be developed. Legal assistance should be obtained during this process. Estate planning also involves working with the care recipient to organize their important papers in a manner in which family members can easily identify and access them when needed.

In closing, caregivers provide care needed to help individuals maintain their independence as much as possible. This role may also involve handling finances. Remember to try and work with the care recipient as much as possible. Also, make sure you take the necessary steps to make life easier for yourself and for the care recipient.

Visit www.aces.edu to find more information on caregiving.