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Loving Financial Considerations When Caring

pig behind large heart

Care is an act of love. We know this. Providing physical and emotional care for someone aren't the only ways we can express our love. There are incredible financial considerations that come with care, especially elder care/long-term care. Too many of us have entered caring situations unprepared to face the harsh financial realities of long-term care. So, let's talk about it!

Here are three key financial tips related to long-term care that give you huge opportunities to show love and respect to those you're caring for.

Financial Considerations of Care

The importance of Powers of Attorney (POAs)

Person signing a document

Powers of attorney play a vital role in managing the financial affairs of our loved ones. It grants someone the legal authority to make decisions on their behalf when they are unable to do so themselves. There is not a more powerful (pun intended) way to love and respect someone than to advocate for and carry out their wishes when they can't speak for themselves.

There are many stories of situations in which a needed document was not available, either because it had never been established or couldn’t be found. There are other stories of documents presented that were simply not accepted. We want to avoid both!

In short, what does a Power of Attorney (POA) do? It accomplishes the following in case of death or incapacity:

  1. With a Financial POA - Someone you select can access your financial information and do necessary business on your behalf.

  2. With a Medical POA - Someone you select will be actively involved in your care, being both fully authorized and informed.

  3. In either case, this someone will have the power and knowledge to decide all matters as you would if you were able; and

  4. All post-death matters will be handled as you had directed, including all receipts by beneficiaries.

Some POA facts:

  1. Your financial and medical POAs do not have to be the same person.

  2. These documents are not hard to put in place.

  3. You should have these documents created BEFORE someone has a medical emergency or experiences cognitive decline. Otherwise, they'll never have the chance to share their wishes with anyone!

  4. In addition to the documents existing, they need to be (1) kept in a place known by all involved parties and (2) kept up-to-date as assets and people in our lives change.

How can you create POA documents now?

Be careful when giving gifts.

gift with heart on it

It is so common to hear stories of aging parents gifting large assets to their adult children. Sometimes to show love and support. Other times to pass down a financial legacy. And at other times, in an attempt to qualify for Medicaid by lowering their financial assets.

The most loving thing you can do is DON'T TAKE THE GIFT. At least not right away. When it comes to gifting large items, careful consideration is necessary. While it may be tempting, it's important to understand the potential impact on their financial situation and future care needs.

Both Medicaid and the veteran pension have qualification rules that penalize applicants for gifting financial assets (currently within 5 years or 3 years of application, respectively). The penalty is a delay in eligibility. Making even a small mistake can prove very costly down the road. The rationale for both is that since the benefits are need-based, the applicant’s gifts made prior to application should be considered as countable assets as if never made. Since such gifts cannot always be returned intact, and both programs have special rules concerning how that can be done, with consequences not always what you’d expect, even the possibility of such gifts needs to be closely examined.

Some gifting facts:

  1. If you are not yet clear on whether you’ll be applying for one of these benefits, act as though you'll one day apply for Medicaid, since its lookback period is longer.

  2. While Medicaid is a federal program, it is administered by the states and each state maintains its own Medicaid Manual. The only guideline for controlling the inevitable distinctions between the federal and state administration rules is this: the state rule cannot be more restrictive than the federal rule.

  3. If gifts were made outside the appropriate window, it is considered as if the gift had never been made.

  4. Your greatest professional asset here is an attorney with expertise in either or both VA Benefits and Medicaid eligibility.

How can you learn whether to gift or not gift?

Supporting yourself with caregiving coaching and education.

two women in coaching session

Caring for aging loved ones can be emotionally, physically, and financially demanding. It's crucial for family members providing care to seek support and guidance throughout their caregiving journey.

This has a direct impact on finances. The care that can be provided and the endurance of the persons providing the care are create the key ingredients for how much care may cost a family. If you're caring for a loved one, you need to get up to speed quickly (education) on how to navigate the financial side of care. Also, seriously consider getting a care coach.

Caregiving is really not something you want to attempt on your own, or relying on the related experiences of others. A caregiver coach is specifically trained in coaching, listening, and questioning skills and is familiar with the needs of caregivers. They can provide you support regarding self-care and time management in your caregiving role. In some cases, they can also help you navigate resources and brainstorm caregiver challenges. 

At the very least, connect with others also navigating this stage of life. There are an estimated 52 million Americans caring for loved ones within their family unit, while juggling careers and other life responsibilities. Your tribe is waiting for you!

How can you tap into education and coaching today?


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