Navigating a dementia diagnosis is difficult enough, but the impact of a diagnosis on caregivers’ and patients’ wallets can be equally devastating. The Alzheimer’s Association found that in 2018, 16.1 million Americans gave 18.4 billion hours of unpaid care to someone with dementia, which was valued at more than $323 billion. To help dementia caregivers get answers to their financial questions, we spoke to Carolyn McClanahan, a physician and director of financial planning in Jacksonville, Florida, who focuses on the connection between health and finances. She discussed how financial planners can assist families, methods caregivers can use to generate income, whether there are any financial benefits for caregivers and what it means to become a power of attorney (POA).
Q: “I am the POA for my folks who both have dementia. They never really explained their finances to me. I have to do all the bill paying and try to figure all of this out. Has anyone ever hired a financial planner or someone to try and get things in order? What would the financial planner help us with?”
A: In my pursuit to help the aging population with their finances, I discovered what I call the big four challenges of aging. They are the following:
1). When are you going to turn over financial decision making, and is everything in place for that to happen?
2). When are you going to move, when it’s no longer safe for you to live where you are?
3). When are you going to quit driving?
4). When are you going to get help with healthcare decision making?
Those are the big four things that people get in trouble with, and it ends up causing a lot of pain and expenses. People wait too long because nobody wants to open the can of worms. It takes a long time from when people are starting to worry there’s a problem to when they address it. Hiring a good financial planner early—and I’m not talking about an investment manager, I’m talking about someone who does real financial planning—helps families have this conversation earlier. Once you’ve already got a problem, it’s hard to deal with.
A financial planner helps with pre-planning and making sure that everyone knows where all the assets are. They clarify how families are going to deal with various financial situations: Do you have enough money for long-term care? Who’s going to help take care of you? They help you plan those logistics in advance and simplify your assets. I’ve noticed that as people age, they accumulate all of these things: They may have four different 401K plans, five IRAs, savings bonds and stock certificates in a safe-deposit box. That creates a nightmare for the person who has to takeover because assets get lost. It’s so inefficient. A financial planner can ensure that as people age, they clean things up and simplify.
If you have significant assets, you probably want an ongoing financial advisor to help you with that. If not, there are more and more financial planners who will help you if you pay them hourly for their services. They charge anywhere from $100–$300 per hour, with $100 being on the lower end. However, it’s well worth it. You’re paying them for their expertise, depending on how complicated your situation is.
Our team developed a software tool to help families going through a dementia diagnosis navigate finances that will be available to the public at the end of the year—right now, it’s only available to advisors.
Q: “Does anyone have any ideas on how to legally generate income from home? Like many of you, I can’t leave the house without taking my mom with me.”
A: It depends on your skills. If you’re a writer or an editor, there are sites that allow you to become a contractor for certain remote positions. You can also work with your current employer to see if there’s work that you can do from home. More and more companies are giving people the ability to work remotely, which may help with life satisfaction as well.
Q: “My dad lives with my sister and her husband. My brother-in-law is 71 and retired. He cares for my dad, who’s 87 with dementia. Is there financial support that they can claim?”
A: Almost every decent-sized community has senior services that offer community support to seniors. They can let you know what resources are available in the community, including local resources or benefits that are available from local and federal sources. For example, a lot of people don’t realize they qualify for Medicaid, a state insurance plan that’s provided to those who are disabled and/or low-income. They can help you determine if you’re qualified. It may also be helpful to talk to an hourly financial planner to see if the person you’re taking care of is eligible for Medicaid or Veteran’s benefits. Also, you should talk to an accountant, because if you’re taking care of someone with dementia, you can essentially claim that person as a dependent and write off all of the medical bills you’re paying for.
Q: “Are there government benefits for caregivers [in the U.S.]?”
No, but if the person with dementia has money and resources, you can do a care-taking agreement with that person. The caregiver will be paid a reasonable amount by the person with dementia, which may help the person with dementia qualify for Medicaid more quickly. However, there should be strict rules around this process so that it’s effective. The person with dementia can’t just say, “I’m going to pay you $10 per hour.” This process is twofold: It’s giving some compensation to the person who’s giving up their life to care for that person, and it’s reducing the assets of the person with dementia so that eventually, their resources will be depleted enough for them to qualify for Medicaid. You have to work with a Medicaid planning attorney to get this process right. This way, when it’s no longer feasible to take care of the person with dementia at home and they qualify for a nursing home, hopefully, they will be on Medicaid by this time, and caregivers won’t have out-of-pocket expenses.
Q: “I get very frustrated—not so much with my mom who has dementia, but because I get no help from my siblings. My dad is getting older. My mom doesn’t know what’s going on. Is there help out there for caregivers—financially speaking?”
When somebody is diagnosed with dementia or when people are starting to age, before things [go wrong], the family should sit down and have honest conversations about who’s going to take care of what: the house stuff, the transportation—getting people to doctor’s appointments—and if one sibling is doing more than the others, how are they going to be paid for that? What’s going to be the consideration given to them for giving up their life to be a caregiver? Whether it’s changing wills to leave the caregivers more money, or whatever it is. And for families that don’t have money, and everybody has to pitch in, how much is every sibling going to pitch in? Oftentimes, one sibling has a lot of money and no time, while one sibling has time and no money. Well, that’s the trade-off: The person with more money gives that, while the other person gives their time.
Q: “Does anyone utilize the federal Family & Medical Leave Act (FMLA) to care for their loved ones? What is the benefit of using the FMLA and do you receive any benefits?”
A: FMLA basically gives you the right to take time off from your job without getting fired. It doesn’t really give you any money. So it protects your job while you’re out taking care of your loved one [for 12 weeks per year].
Q: “What’s the difference between POA and guardianship, and what are the financial differences between the two?”
A: A POA is when someone can act for you on all of your financial matters, though it depends on the state. Some states place limits on the types of financial matters the POA can deal with. The POA can act for you. Guardians basically become you. You’re no longer capable of doing anything for yourself, so they have to do everything for you. They manage all of your affairs and they make decisions as if they are you—not just financial. So if someone’s a guardian, they basically replace their loved one’s decisions. With a financial POA, you can still be completely capable, but if someone has your POA, they can do things for you.
Q: “I was told that becoming the financial POA makes that person financially responsible for their loved one’s bills, etc. Is that true?”
A: No, but they do become responsible for that person. So they would be acting as a legal fiduciary [someone who acts on behalf of another person in important situations] for that person. If you’re managing your mother’s checking, savings and investments accounts, you can’t use them for your benefit. You have to do the right thing for your mother in that you’re a protector and not abusing that power of attorney to take advantage of her.
Q: “Can anyone recommend a specific lawyer they’ve worked with on elder law/dementia for taking control of finances, businesses, properties and accounts? People are taking advantage of my father. He’s lost two businesses and an office building in the last year. We need help and he’s unwilling to recognize there’s any problem.”
A: They should contact Adult Protective Services because he’s not acquiescing to this. There are rules that protect people over 65 and Adult Protective Services can help stop the abuse. Meanwhile, they need to get an elder care attorney to help them put the pieces in place to further protect him. Adult Protective Services would help them figure out if he can get his money back. It’s a long process and may not help recover the funds, but it may put the people in jail that did this.
Q: “My grandma’s doctor recently diagnosed her with dementia. The doctor said she is financially incapable. Does that also mean she is legally incapable and can no longer make legal decisions? This is a whole different ball game than I’m used to. What should I do for her financially?”
A: This gets a little tough because with dementia, your ability to make decisions for yourself waxes and wanes, and that comes with financial and medical decisions. If the doctor says they should no longer be making financial decisions, that is not a legal stance. Basically, the doctor is encouraging the dementia patient to voluntarily turn over their decision making to their designated financial caretaker. Sometimes, people with dementia don’t want to do this, despite a doctor’s recommendations, because they don’t realize that they are a danger to themselves. You might have to go to court to get the judge to say, “You can’t take care of yourself anymore, and this person is going to take over for you.” You would then become a POA or guardian. That’s why we tell families that they need to talk about these things well in advance, before people become ill, to set the stage for what’s going to happen if you or someone you love has capacity issues. It makes it more likely they’ll follow through when it comes time to make that decision.