Ask Liz Weston

Get smart with your money

Elder Care

Q&A: Financial institutions reject powers of attorney

By Leave a Comment

Dear Liz: I read your column about the parent who unexpectedly had to take over for their incapacitated son. You suggested every adult have a power of attorney and healthcare proxy. Excellent advice! However, as I discovered in dealing with my father’s illness and estate, these general documents are not always recognized by the very institutions they were designed for. His bank, mortgage company and health insurance company would only recognize their versions of these documents.

Fortunately, while he was still able to, I was able to procure each of these documents with his signatures on them but it was very stressful at a difficult time for all of us. I would suggest you amend your advice to people to check to see if their banks and so on also require their specific forms.

Answer: Financial institutions are supposed to accept properly drafted powers of attorney, but some of them insist on their own forms, agrees Burton Mitchell, an estate planning attorney in Los Angeles.

“Sometimes one can get around these rules by appealing to higher ups in the organization, but it is unnecessarily difficult, time-consuming and complicated,” Mitchell says.

Checking with your financial institutions now could avoid hassles later.

Q&A: An aging relative is spending her nest egg on round-the-clock care. What happens when the money runs out?

By

Dear Liz: A family member is 90 and lives by herself at home. She has around-the-clock caregivers paid for by her investment accounts. Her teacher pension pays for all everyday expenses. She is high maintenance and unwilling to accept she will one day run out of money for caregivers. What would you suggest?

Answer: That depends on how much money she has, and why you’re asking.

In-home, round-the-clock care can be mind-bogglingly expensive. The median cost nationally for 24/7 at-home caretaking was about $24,000 a month in 2023, according to Genworth’s latest “Cost of Care” survey. By contrast, the median cost for a private room in a nursing home was closer to $10,000 a month.

Not many people could pay for around-the-clock care for long, but your relative may be one of the exceptions. If she has enough savings to pay for care for a few years, then perhaps she’s making the calculated gamble that she’ll run out of breath before she runs out of cash. (And if she’s the suspicious type, she may be convinced your concern is more for your potential inheritance than her well-being.)

Once her resources are depleted, though, her situation could become pretty bleak. Her income may be too high to qualify for Medicaid, the government program that otherwise might pay for nursing home care. (In California, the program is known as Medi-Cal.) Perhaps her home could be sold to pay her care. If not, she might have to turn to relatives for financial help.

If you’re one of the relatives she would turn to, then you can certainly let her know how much help you could afford to give her, if any. But first, suggest a session with an elder law attorney who can review her situation, calculate how long her resources might last and offer suggestions for managing her care bills. She may be more willing to listen to a professional third party than to her family. You can get referrals from the National Academy of Elder Law Attorneys at www.naela.org.

An aging father chafes at a daughter’s request for financial safeguards

By

Dear Liz: I am 88. My wife who is 81 has Alzheimer’s but not so bad that we cannot do most things together as before. My younger daughter, an attorney, wants me to sign an agreement that will make it a little more problematic for me to access my substantial financial accounts. She thinks somehow I will get tricked into giving the money to some scam artist. I like the idea of being protected but do not care to have her being able to decide if I can spend my own money as I see fit. She says the document can be deleted by me at any time, but I still feel put upon.

Answer: Take this document to your estate planning attorney for a review. The attorney can help you assess whether this is the best approach or if there are other ways to keep you safe.

If you don’t have an attorney, get one. Estate planning is not a do-it-yourself endeavor when you’re both in your 80s and one of you has dementia.

You’re understandably in a “live for today” mode. You’re focusing, for example, on what you and your wife can still do, rather than on the cognition she’s lost or the losses yet to come. Your daughter’s focus on the future may feel like an imposition, but the reality is that you won’t become less vulnerable to fraud, scams and plain bad decisions as time passes.

Q&A: Care planning for ‘solo agers’

By

Dear Liz: My wife and I don’t have children or any relatives nearby. So far, we’re healthy and completely independent, but that won’t always be the case. Do you know of any fee-based agencies or organizations that might provide assistance with such things as arranging a caregiver if needed, or helping our executor clean out our home?

Answer: A geriatric care manager can help assess your needs as you age and come up with a plan to meet them, including arranging for caregivers or finding an assisted living facility. You can get referrals from the Aging Life Care Assn.

An estate liquidator or a professional organizer can help with clearing your home. You (or your executor) can get referrals from the American Society of Estate Liquidators and from the National Assn. of Productivity & Organizing Professionals.

Also consider building a community of friends and neighbors who can help you as you age, and vice versa. You might be able to get some help from the nonprofit Village to Village Network, which is a group of community-based membership organizations helping people to age in place. The books “Who Will Take Care of Me When I’m Old?” by Joy Loverde and “Essential Retirement Planning for Solo Agers” by Sara Zeff Geber would be helpful reading.

Q&A: This $1 house deal comes with elder care responsibility. It could get complicated

By

Dear Liz: My father-in-law died recently. My mother-in-law is not well enough to live alone. My husband has a brother and a sister who would like my husband and me to buy my in-laws’ big, old home for $1, take care of my mother-in-law 24/7, and make 60 years’ worth of updates and repairs to the house. I see plenty of downsides to this arrangement, but no upside. Is there a way this deal can work for us, and not just for the other siblings?

Answer: The upside is that you would own the house. Although the home may not be in great shape, it presumably is an asset with some value. Whether it has enough value to be worthwhile, and whether you want to acquire it this way, are open questions.

If you and your husband buy the home for $1, the IRS will assume that your mother-in-law gave the two of you her property, and that can be problematic. The difference between the sale price of the home and its fair market value would be treated as a gift for gift tax purposes, said Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. Your mother-in-law probably wouldn’t owe gift taxes, but she likely would have to file a gift tax return, and the gift would use up part of her lifetime gift and estate tax exemption.

If the home is a gift, you get her tax basis, as well. If instead she bequeathed the home to you and your husband in her will, the home would get a new, stepped-up value for tax purposes. How big a deal this might be depends on a lot of factors, including which state the home is in, so you’d need to consult a tax professional for details.

On the other hand, taking title to the home before your mother-in-law dies ensures that you and your husband actually get this asset. If it’s left in a will, your mother-in-law could change her mind and leave it in full or in part to someone else. If she doesn’t have a will, the house would be divided according to state law, which probably means your husband would have to share the asset with his siblings.

There are other aspects to consider. Taking care of another person can be costly: Caregivers spend nearly 20% of their personal income on out-of-pocket costs related to helping a loved one, according to an AARP study in 2019.

Also, more than half of family caregivers adjust their work hours by taking time off, reducing their hours or quitting altogether, AARP researchers found. In addition to losing income, they can lose promotions, job security and opportunities to save for retirement.

Caregiving also is associated with higher levels of stress, worse health and increased risk of death, according to the Centers for Disease Control.

Before you take on this task, consider hiring a geriatric care manager to help you assess your mother-in-law’s needs and discuss alternatives. You can get referrals from the Aging Life Care Assn.

Q&A: Dementia and financial accounts

By

Dear Liz: You recently discussed the importance of adding spouses to financial accounts before one of them dies to make it easier for the surviving spouse. I wholeheartedly agree. I would add that this needs to be done sooner rather than later. If one of the spouses is diagnosed with dementia, the bank will likely not make changes to accounts. People have to be able to understand what they are signing.

Answer: That’s an excellent point. Another important task is to create powers of attorney for healthcare and finances. These allow someone else to make decisions for you if you are incapacitated. Someone in the early stages of dementia could sign such a document if they understand what it is, but otherwise the family might have to go to court to get a conservatorship, which can be an expensive process.