Financial Intel Monthly

Financial Responsibilities of a Caregiver

Sep 12, 2013 2:04:32 PM / by The Retirement Group (800) 900-5867

Key questions for you & your family to

A labor of love
may come to involve money issues.

eldercare to a parent, grandparent or relative is one of the noblest things you
can do. It is a great responsibility, and over time it may also lead you and
your family to reflect on some financial responsibilities. Here are some
questions to consider.

Q: How will
caregiving affect your own financial picture?

Try to estimate a
budget, either before you begin or after a representative interval of
caregiving. How much of the elder’s finances will be devoted to care costs
compared with your finances? If you are thinking about quitting a job to focus
on eldercare, think about the resulting loss of income, the probable loss of
your own health care coverage, and your prospects for reentering the workforce
in the future.

Q: How much will
“aging in place” cost?

Growing old at
home (rather than in a nursing home) has many advantages. Unfortunately, over
time, the cost of care provided in the home can greatly exceed nursing home
services. So you must weigh how long you can manage with home health aide
services versus adult day care or nursing home care.

Q: How much do you
know about your loved one’s financial life? 

Caring for a
parent, grandparent or sibling may eventually mean making financial decisions
on their behalf. So you may have a learning curve ahead of you. Specifically,
you may have to learn, if you don’t already know:

- Where your loved
one’s income comes from (SSI, pensions, investments, etc.)

- Where wills,
deeds and trust documents are located

- Who the
beneficiaries are on various policies and accounts

- Who has advised
your loved one about financial matters in the past (financial consultants,
CPAs, insurance agents, etc.)

- Assorted PIN
numbers for accounts and of course Social Security numbers

Q: Is it time for
a power of attorney?

If a loved one has
been diagnosed with Alzheimer’s or any form of disease which will eventually
impair judgment, a power of attorney will likely be needed in the future. In
fact, if you try to handle money matters for another person without a valid
power of attorney, the financial institution involved could reject your

When a power of
attorney is in effect, it authorizes an “agent” or “attorney-in-fact” to handle
financial transactions for another person. A durable power of attorney lets
you handle the financial matters of another person immediately. A springing
power of attorney
 only lets you do this after a medical diagnosis
confirms a person’s mental incompetence. (As no doctor wants a lawsuit, such
diagnoses are harder to obtain than you might think.)1

You want to obtain
a power of attorney before your loved one is unable to make
financial decisions. Many investment firms will only permit a second party
access to an account owner’s invested assets if the original account owner
signs a form allowing it. Copies of the durable power of attorney should be
sent to any financial institution at which your parents have accounts or
policies. Whoever becomes the agent should be given a certified copy of the
power of attorney and be told where the original document is located.2

Q: Is it time for
a conservatorship?

conservatorship gives a guardian the control to manage the assets and financial
affairs of a “protected” person. If a loved one becomes incapacitated, a
conservator can assume control of some or all of the protected party’s income
and assets if a probate court allows.3

To create a
conservatorship, you must either request or petition a probate court,
preferably with assistance from a family law attorney. A probate court will
only grant conservatorship after interviews and background check on the
proposed conservator and only after documentation is provided to the court
showing financial and mental incompetence on the part of the individual to be

A conservatorship
implies more vigilance than a power of attorney. With a power of attorney,
there is no ongoing accountability to a court of law. (The same goes for a
living trust.) There is little to prevent an attorney-in-fact from abusing or
neglecting the protected person. On the other hand, a conservator must report
an ongoing accounting to the probate court.4

Q: If a trust is
created, who will serve as trustee?

 As some carereceivers acknowledge their
physical and mental decline, they decide to transfer ownership of certain
assets from themselves to a revocable or irrevocable trust. A settlor (or
grantor) creates a trust, a trustee manages it and the assets go to one or more
beneficiaries. (The trustee can be a relative; it can also be a bank or an
attorney, for that matter.) At the settlor’s death, the trustee distributes the
settlor's assets according to the instructions written in the trust document.
Probate of the trust assets is avoided – so long as the assets have been
transferred into the trust during the settlor’s lifetime.4

A trustee has a
fiduciary responsibility to watch over the financial legacy of the settlor.
Practically speaking, a trustee needs to have sufficient financial literacy to
understand tax law, the managing of investments and the long-range goals noted
in the trust document. Some families consider all this and opt to manage trusts
themselves; others seek the services of financial professionals.

If the
carereceiver has a living trust or another form of trust already, you may still
need a power of attorney as percentages of his or her assets or income may not
end up in the trust. (There is nothing from preventing a trustee from also
being the agent in a power of attorney.) Additionally, while a living trust is
essentially a will substitute, you will still need a pour-over will to
supplement it. That is because in all probability, some of the settlor’s assets
won’t be transferred into the trust during his or her lifetime. A pour-over
will is the legal mechanism that “pours” those stray assets into the trust when
the settlor passes away. If 100% of the settlor's assets are transferred into
the trust during the settlor's lifetime, a pour-over will becomes superfluous.4

Q: Finally, do you
understand the potential for liability? 

As a caregiver,
you have a physical, psychological and legal duty to the carereceiver. If you
neglect that duty, you could be held liable as many states have laws demanding
that caregiving meets certain standards.

These laws are
basically similar: a caregiver must not abuse the carereceiver in any conceivable
way, and any incidents of such abuse must be reported (there are often state
and local “hotlines” set up for this). The elder must have adequate nutrition,
clothing and bedding, and the environment must be clean and not pose health

If you have
obtained a power of attorney for finances, then appropriate amounts of the
elder’s money must be spent on necessary health services and other services on
behalf of his/her well-being. Failure to do so could be interpreted in court as
a form of abuse or neglect.

When abuse and
neglect occur, they may have roots in caregiver burnout – the caregiver is
constantly cross and irritable with the carereceiver, or stress defines the
experience, or an overwhelming sense of duty or anxiety prevents the caregiver
from having a life of his/her own. If you ever feel you are approaching this
point, it is time to call for assistance or to assign caregiving to

Useful URLs. 

Some good websites
can help you connect to great resources: try the U.S. Administration on Aging’s
Eldercare Locator (, the National Council on Aging’s online
benefits checklist service ( and the National Association
of Area Agencies on Aging (

This material was prepared by Broadridge
Investor Communication Solutions, Inc., and does not necessarily represent the
views of  The Retirement Group or FSC Financial Corp. This information
should not be construed as investment advice. Neither the named Representatives
nor Broker/Dealer gives tax or legal advice. All information is believed to be
from reliable sources; however, we make no representation as to its
completeness or accuracy. The publisher is not engaged in rendering legal,
accounting or other professional services. If other expert assistance is
needed, the reader is advised to engage the services of a competent
professional. Please consult your Financial Advisor for further information or
call 800-900-5867.

The Retirement Group is not affiliated
with nor endorsed by,,,,, ING Retirement, AT&T, Qwest, Chevron,
Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer,
Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an
independent financial advisory group that specializes in transition planning
and lump sum distribution. Please call our office at 800-900-5867 if you have
additional questions or need help in the retirement planning process.

The Retirement Group is a Registered
Investment Advisor not affiliated with  FSC Securities and may be reached

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