Financial Caregivers, Make Sure You Know Your Rights

On this episode of The Long View, Beth Pinsker, a certified financial planner, veteran financial journalist, and author, breaks down how families can make plans for financial management as we age, the benefits of long-term-care insurance, and lessons from her own experience on how caregivers can approach financial and healthcare challenges in her new book My Mother’s Money: A Guide to Financial Caregiving.

Listen to the full episode of The Long View. Beth Pinsker: Lessons From ‘My Mother’s Money’

Here are a few highlights from Pinsker’s conversation with Morningstar’s Christine Benz and Amy Arnott.

How to Navigate Taking Over Financial Management of a Loved One

Amy Arnott: Beth, I wanted to ask, it seems like anyone in your situation is trying to strike a balance where you want to help your parent or other loved one maintain their independence for as long as possible, and also recognizing that some of these financial management tasks are a good exercise for your brain. And at the same time, you want to make sure that they don’t run into big, scary problems. Do you have any advice on how people strike the right balance there?

Beth Pinsker: It can be hard. It’s sort of like the old dilemma of when to take the car keys away. It’s a hard, emotional thing. And with the bills, the first thing with something like life insurance or long-term-care insurance, you can be what’s called a trusted contact. And when you put a trusted contact on those accounts, if you get past-due notices, they send a duplicate past-due notice to whoever it is that you’ve identified. When my mom got those past-due notices, my brother also got one. And he’s like, “Hey, don’t we have to get on top of this?” And I’m like, “Yeah, I’m on it. Don’t worry.” I just got a notice from my long-term-care insurance that I need to update my trusted contact because my trusted contact is my mother. And that wouldn’t work out so well with me if something happened because she’s no longer there. So, you’ve got to keep on top of these things.

You can do that for a brokerage account. And then if your elderly mother calls up her broker at Schwab or Fidelity or Vanguard and says, “I want to take out $5,000 and put it in gift cards.” They can say, “Maybe we should call your trusted contact before we put through that transaction and alert them that you’re making a large withdrawal, and trying to put it in a denomination that’s very familiar in scams.” And they’re trained on their end at the brokerage firms to look for that sort of cognitive decline or potential elder abuse. And they can flag the trusted contact if they see something that’s amiss. When you’re talking about bills and other things, this is where the power of attorney comes in really handy. You can be the power of attorney on somebody’s account and just get it set up that way, even if you don’t need it right away. We’re trying to do this now with other relatives.

Just get it in place so that when the time comes, you have access, and you don’t have to worry about it. The person who is the power of attorney doesn’t really have to do anything. It just means they’re able to do something if it’s needed. And so it’s a helpful thing to have on file. And if you go ahead and do that, then it’s in place for when you need it. It works for my purposes. In my estimation, it works better than having somebody to be joint on the account, which most people default to. It’s like, “Oh, mom’s getting old. Somebody should be joint on her account.” That causes some problems that a lot of people don’t think about. One is that those assets in your parents’ accounts count toward your assets. So, I’m in the middle of college for my kids, and I have to fill out financial aid forms all the time. And if I was joint on a parent’s account, I would have to count those as my assets. And I was never really sure what my mom was going to have in those accounts. So, I didn’t really want to do that step. If you’re getting divorced and you’re splitting up assets, if you have creditors, all of those things can be complicated when you’re joint on somebody else’s account. And the other thing is, if you have siblings and only one of you is a joint signer on your parents’ account, there can be hard feelings with the other siblings.

With power of attorney, there’s a fiduciary duty. There’s oversight. And you can hold that power of attorney to account for what they’ve done. If you’re a joint signer, you have free access to the account. You can take money in and out at will. And if there are siblings involved and there are bad feelings, that can be a big family problem.

Should Caregivers Become Joint Signers or Get Power of Attorney?

Christine Benz: You want to be an authorized user, potentially on the everyday bills, so you can pay bills for your loved one. A trusted person for financial accounts. It’s debatable whether you want to be a joint signer. I was a joint signer for my parents, and it worked out fine, but it does seem like the family dynamics are important there. Let’s talk about power of attorney. Your mom had gone ahead and drafted that documentation, but when push came to shove, it sounds like it was a little bit touch-and-go in terms of your ability to actually use that power of attorney. Can you talk about that?

Pinsker: Power of attorney sounds great. You really need it. I think it’s the most important document that you need in your arsenal as an adult human being, but it’s really hard to use at a bank. I found it easier to use power of attorney in any relationship where my mom was the one who owed the money to the other person. The credit card companies, anything she was paying a bill to was happy to accept money from anybody. They didn’t really care. But the banks and the brokerages and anywhere where they were holding money, and they were worried about you taking it when you shouldn’t, they’re really sticklers for their own paperwork, for certified paper. They really want to be sure that you’re supposed to be on the account and that you have the person’s authorization. And they generally want to see that person come in and say affirmatively, in person, as a well human being, that yes, they authorized you to be on the account.

It was too late for us. My mom was already sick at that point. She was in the hospital. She couldn’t walk. So, I went to the hospital with these forms that I knew were legal and good. And I went to the bank with these forms, and they said, No. They just shook their heads at me. And it was this whole long saga of me standing there saying, “You have to take these forms,” and them shaking their heads. We just went back and forth. And I think a lot of people give up. And what I was trying to do with that part of the book was to tell people that you have to know your rights, so you know when to stand your ground. And if you know your rights and you know that this is legal and this is how you need to proceed, then you will find your way to the answer. I was able to get power of attorney at the bank for my mother. It was just crushingly hard. It took a lot of sitting there making appointments, sitting through hours of appointments. But I think in total it was like six hours of sitting opposite this woman at this desk over the course of two or three times.

And we finally got it done. But that’s still less than it would be if I didn’t have the documents, which I would have had to go to court; $18,000 is the going rate now to go to probate court to get power of attorney enforced at a bank without power of attorney. To be legally named as the guardian for my mother would have taken $18,000 in legal fees and probably six months to a year of time. My mom didn’t have that much time. She would have been gone by that point. So, we’re lucky that she had that document.

How to Handle Your Loved One’s Finances With Care

Benz: One thing I really liked about the book, Beth, was that you delve into aspects of being a financial caregiver that weren’t your family’s experience. You delved into the specifics of conservatorship and guardianship. You didn’t just stick with your own situation. I wanted to ask a process question. The book is so detailed about your specific experiences as you were trying to help with various healthcare and financial matters. Were you taking notes or journaling or something to keep track of everything that was going on?

Pinsker: I keep a journal. I was writing about this stuff; my day job is as a retirement columnist at MarketWatch. And so I was writing about some of this stuff while it was happening. And so I had the notes from those times, but really, I’ve just been trained as a reporter my whole life. I just remember stuff, but you have to keep notes while you’re doing this stuff anyway. All of it has to be documented. All of the financial stuff, you have to keep really good records, and I have folders and folders and folders of this stuff. But really, it came down to just being really engaged in it. I just threw myself into the management of this because I was trying to do what my mother would have done for herself. And I took that very seriously, out of respect for her, out of respect for the way that she lived her life and was very careful and thoughtful about things. And I wanted to step into her shoes, not just to get the job done, but to do it the way that she would have done it for herself.