Becoming a financial caregiver

Being a financial caregiver brings satisfaction and fulfillment to many people, but the role requires planning and forethought.

Learn more about becoming a financial caregiver, so that you and your loved ones are better prepared for the responsibilities ahead.

What are the first steps to becoming a financial caregiver?

The first steps to becoming a financial caregiver all support creating a plan for long-term care.

• Communicate with the whole support system. Speak with the caregiver, the person receiving care (or the person who has the legal authority to assign care), and any other stakeholders involved in the arrangement (such as family members or close friends). Depending on the situation, the caregiver may also want to consult with attorneys, money managers, financial advisors, and any other caregivers.
• Organize and collect important legal and financial documentation. Identify what will be needed for the financial caregiver to perform their duties, such as financial records, ownership records, benefit information, healthcare information and other legal documents such as birth certificates, trusts, wills, advanced directives, and durable power of attorney.
• Establish clear expectations for the caregiving relationship. Establish the scope of services that will be provided, including legal terms and the expectations for communication with other parties in the support system. Be sure to write out legal, compensation, and communication information clearly so that it can be given to all stakeholders, undergo legal review, and be updated and revised as needed.

What’s a fiduciary, and do financial caregivers need to become one?

A fiduciary is a legally binding financial caregiving arrangement in which an individual is appointed to act on behalf of someone else in their financial matters.

A financial caregiver is not required to be a fiduciary, but in many instances, having a legal document in place is important for protecting both the person who needs care and the caregiver themselves.

Fiduciaries must …

• Act in the best interest of the person being cared for.
• Manage their charge’s assets with care and consideration.
• Keep their charge’s money separate from their own.
• Maintain records of financial transactions.
• Enter into a legally binding agreement with the person they are caring for.

If you don’t wish to enter into a fiduciary arrangement, you may consider becoming a joint account owner, which is when the financial caregiver is named as a co-owner of an account and has equal access to funds.

What are the most common types of fiduciaries?

There are four main types of fiduciaries that are relevant to a financial caregiving situation.

• Court-appointed guardian: A court-appointed guardian, or conservator, is given the duty and power to make financial decisions on someone’s behalf. This role is assigned by the courts when the recipient is found to no longer be able to make decisions on their own.
• Revocable Living Trustee: A trustee manages the money and property that have been transferred to a trust for the benefit of the intended recipients and their beneficiaries. The trustee has the power to make decisions regarding the assets in the trust. The trustee may be appointed immediately, or the transfer may take place upon certain conditions (such as incapacitation or death).
• Government Fiduciary: Government fiduciaries are appointed by a government agency to manage government income benefits (such as veteran benefits) for someone when they are no longer able to do so. In this instance, the fiduciary responsibilities are usually limited to cashing the checks and managing the accounts related only to that government agency.
• Durable power of attorney: Durable power of attorney is a legal document that gives someone (the fiduciary) the authority to make decisions on behalf of someone else in the event they become incapacitated. The document can be established in advance of incapacitation, only taking effect if incapacitation occurs, and can be revoked.

What should a financial caregiver know about managing sources of income?

Having a solid understanding of the financial situation of the person they are caring for will enable the caregiver to provide the best possible daily and long-term financial support.

Banking and Lending

Financial caregivers should have a clear understanding of the monthly flow of money from each account. These types of accounts include:

• Checking accounts: What are the open checking accounts? Are there any recurring charges, and/or direct deposits being made to the account each month? Do any charges seem suspicious? Can any expenses be cut to reduce monthly outflow?
• Savings accounts: What savings accounts are open and what is the purpose of each? Would it be advantageous to move these funds to an investment account?
• Credit cards and loans: Are there any debts? If so, how are they being paid, and what are the loan terms? What can be done to minimize these debts and reduce interest payments?

Investments and Services

A financial caregiver should ensure that income is being received from all qualifying investments and social services. These may include:

• Social Security: A federal program that provides retirees a regular income based on work history or benefits to workers with disabilities. Partial responsibility could include helping the incapacitated person with making filing decisions.
• Pensions: Long-term workers may have a retirement compensation plan called a pension. Pensions are fully managed by the employer.
• Supplemental Security Income (SSI): Low-income individuals with disabilities or age 65 and older may also be eligible for monthly cash benefits through SSI.

What should a financial caregiver know about managing medical care expenses?

Unfortunately, medical insurance doesn’t always cover all medical needs. It’s important for a financial caregiver to know what insurance does and does not cover before medical care is needed, so that additional coverage may be obtained and future costs are planned for.

• Medicare: Medicare is a federal health insurance program that helps pay medical expenses for older Americans and younger people with disabilities. Most adults over age 65 are covered.
• Medigap: Medigap is a Medicare Supplement Insurance that may be needed to cover healthcare costs not included in Medicare, such as the cost of a nursing home.
• Medicaid: Medicaid is a federal and state insurance program that helps pay the health care costs of low-income individuals of any age.
• Long-term care insurance: Long-term care insurance may be purchased through the private market to assist with covering the cost of long-term care services such as home health and nursing home care.

Be aware that titling assets in the name of the person requesting coverage may disqualify them from receiving state or federal government assistance.

Can a financial caregiver be paid for their services?

A financial caregiver may qualify to receive payment for their services, but usually only when they are also providing other caregiving services (such as those services related to daily-living activities).

If you want to see whether your specific situation qualifies for payment for services, you should review the contracts and policies of the following resources.

• Long-term care insurance (https://acl.gov/ltc)
• Medicare (https://www.medicare.gov/)
• Medicaid (https://www.medicaid.gov/)
• Veterans Health Administration (https://www.va.gov/health/)

Whether or not the caregiver is being paid for services, it’s important that the finances of caregivers and their charge are always kept separate. A caregiver cannot use their loved one’s money for personal gain. Such action could constitute elder abuse.

The information in this article was obtained from various sources not associated with Adirondack Bank. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. Adirondack Bank is not responsible for, and does not endorse or approve, either implicitly or explicitly, the information provided or the content of any third-party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. Adirondack Bank makes no guarantees of results from use of this information.

Article written by EVERFI