Taking care of an ailing family member can be incredibly rewarding. It can also come with very real financial costs. Here is what you need to consider before you make your decision.
According to a survey by www.caregiver.com, there are more than 34 million Americans providing unpaid care for adults aged 50 or older. Taking care of an aging parent is emotionally and physically tough. It can also be a financial challenge. Whether you are in a caregiver role now or expect to find yourself there in a few years, there are 5 financial issues you should consider sooner rather than later.
Talk about “the plan”
Talking about long illness, disability and death is difficult. And yet, families would be far better prepared. The reality is that we do not know exactly what will happen, but age brings by broken bones, failing memory, susceptibility to infection and a thousand other risks. Make the time to talk about the family plan. What assets do your loved ones have that could be sold to help pay for care? Is there a long-term care insurance policy? Is the health insurance policy adequate given the current health risks? What would their preferences for where care should be delivered?
In a perfect world, personal preferences align with resources and health conditions, so that your loved ones get exactly what they want. Other times, families have to make compromises. In either scenario, early conversations help ensure that plans are realistic and that the communication channels are open.
Know where the paperwork is
Some parents maintain a meticulous home office, with every folder labeled and every insurance policy in its right place. Others live in an artful mess with receipts, legal documents and an occasional postcard in unlabeled shoe boxes. Knowing what you know about the way your family organizes its life, would you be able to find important policies if someone’s care depended on it?
This topic may be uncomfortable to bring up (after all, telling your parents how to organize their paperwork can be a touchy subject). Consider enlisting the help of a professional, such as an attorney or a financial planner, to keep a duplicate copy of key estate, insurance and contact documents in his or her office.
Work with an attorney
Choose a local professional who understands elder law in your state. Some of the situations where legal advice is invaluable include formalizing a will and a living will, creating a trust, putting in place a Power of Attorney, a health care proxy and much more.
Work with a financial planner on long-term strategies
An experienced financial planner brings a wealth of technical knowledge and the ability to ask the right questions. From double-checking titles on accounts and beneficiaries on insurance policies, to creating the optimal order for liquidating assets to pay for care, a financial planner can make sure you don’t accidentally make a mistake that will compromise the family’s financial well-being.
Consider the impact on your own finances
This final point is critically important. Caregiving is a job. While every situation is different, and while
care duties range from “light” to high-burden, there is a very real cost associated with your decision to take care of an ailing family member. Think about the number of hours you will have to spend every week, as well as the types of tasks you would be comfortable performing. What are the odds that the personal and medical care duties will interfere with your ability to work outside the home? With average duration of a caregiver’s role currently at 4 years, how long would you be able to sustain your efforts? Do you have the physical and emotional wellness to take this on, and how can the rest of the family support you in the caregiver role?
Money ideas for adult caregivers
In closing, it is important to remember that avoiding the difficult conversation about money, long-term illness and death is not going to protect you and your family. Questions about insurance policies, assets and care facilities tend to carry less burden when broached in a theoretical conversation, not in the back of an ambulance. If you are uncomfortable asking certain questions, enlist the help of an experienced professional. A financial planner and an attorney can help guide the conversation, create a family care plan, and ensure you make good financial decisions.
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