The caregiver role is always a difficult one.  For most people, given today’s busy lifestyles, managing one’s own finances adequately is a major chore fraught with confusion about investments, budget issues and tax consequences.  Now, with an ill family member, we tack on the burden of needing to step into someone else’s shoes and manage their affairs as well if not better than our own.  It is no wonder the average caregiver becomes completely overwhelmed especially when the person being cared for hadn’t done their own homework when they were well.  The caregiver also becomes accountable not only to their ill relative but to other siblings and heirs as well.

Let’s look at what a caregiver is responsible for. First, emotionally there is usually a great deal of stress.  Their loved one is ill, many times critically.  There are visits to doctors, hospitals, assisted living facilities or nursing homes.  Sometimes, the caregiver is a child who lives in the area or a spouse and sometimes the caregiver lives in a totally different state only to come into town from time to time to handle matters.  The bottom line is that this caregiver must step into the shoes of their loved one, pay their bills, file their taxes and manage their money with their loved one’s wishes in mind.  If there are multiple siblings or heirs, then the caregiver must bring the other relatives’ concerns to the table. To try to prevent family squabbles, the caregiver needs to keep the other relatives informed as to how the funds are spent and why. The caregiver might also need to consult with the ill person’s lawyer to get copies of powers of attorney that hopefully have been set up.  If none were set up in advance and the ill person is not competent enough to sign a new document, the caregiver might have to go to court to obtain guardianship of their ill relative.  This is expensive, time consuming and emotionally devastating to all concerned.

Once the caregiver has a useful power of attorney, they will probably need to notify the ill person’s accounts so that transactions can be made speedily.  The caregiver will need to gather together all the bills and checking accounts.  They will need to be sure that all income checks are either auto-deposited or have a system to gather checks for deposit as they arrive.  Usually, it makes sense to convert to on line billing and payment so that all bills and notices are received in a timely fashion.  The caregiver must keep accurate track of all income and expenses.  The caregiver is now a fiduciary and must be accurate and responsible in their bookkeeping.  Other heirs might want to see copies of transactions or lists of them at the very least.  The caregiver is now accountable.

A caregiver might need to sell assets to provide funds to cover expenses.  They might need to get a house ready for sale, list it and proceed to closing.  They will need to review investment portfolios and perhaps add to them with proceeds from property sales.  Therefore, it is in everyone’s best interest, for the caregiver to get an independent and objective advisor to assist with that process.

The caregiver will need to make medical insurance claims and perhaps make a claim with a long-term care insurer should there be coverage.  They will need to pay on gifting obligations set up by the ill relative.  In addition, the caregiver might also be the same person who needs to make the medical decisions necessary for the care and well being of their ill relative.

So, what can we all do to make this easier for someone who might have to take care of us someday?

We recommend that everyone maintain a system for their paperwork:

  1. A three-ring binder for all investment and bank accounts each with their own tabs. .
  2. A file draw with files for all investment and banking accounts, where they are held, the address of the place they are held and hopefully a name of a person that can be contacted about this account
  3. A file for the last three years tax returns and their backup
  4. A file with a list of all physicians that are consulted so the best possible medical care can be enlisted. Also include a list of all other advisors such as financial planners, stockbrokers, insurance agents and accountants along with their phone numbers.
  5. A file for important documents i.e., birth certificates, marriage licenses, divorce decrees, military discharge papers etc.
  6. A file containing a copy of latest wills, powers of attorney and other such documents along with your attorney’s name and phone number.
  7. A list of all vendors to whom checks are payable each month along with a list of

any loans and acct numbers.

  1. A file with a copy of all your insurance policies including health insurance, long term care insurance, life insurance as well as homeowners and auto insurance
  2. A file with locations of safe deposit boxes and contents
  3. An ownership file with copies of deeds, and notes

Wouldn’t it be nice if, at the very least, there was a letter of instruction guiding the decisions of the caregiver?  The more information you can provide your potential caregiver in advance, the easier and less stressful their lives will become.  After all, if you are choosing a specific person for this role because you trust their judgment and ability to carry out your wishes, then why not trust them with this information in advance.

Care for your caregiver!!

We prepare personal and fiduciary tax returns for adult children who are caregivers to their aging parents or other relatives.