There are many aspects of caring for a person with a disability, and one that can be easily overlooked is handling finances. When being a caregiver is suddenly thrust upon you, you may feel unprepared to take on the many responsibilities that come along with the role. While the immediate focus is generally placed on your loved one’s physical and mental health, their financial health will ultimately be just as important. Here is a guide to some of the most common financial concerns caregivers encounter when stepping in to assist in the management of a disabled loved one’s finances.
Knowledge, Access, and Control Issues
While it isn’t always necessary to take over the finances of a disabled loved one, there are some instances in which a caregiver will be required to step in and either assist with management of the person’s finances or take over entirely. A person who is very ill or learning to live with their disability may not have the time or the mental faculties required to pay bills, insurance premiums, or to make deposits into bank accounts.
To make matters more complicated, you may not be aware of all bills, insurance policies, or bank accounts that belong to your disabled loved one. So the first step is to get everything organized and know what you’re dealing with. The next step is to determine what kind of access or control you need to help with or manage the financial matters. While you may be their primary caregiver, your loved one’s disability is not enough to grant you access or control over their financial matters.
A lawyer may be required if you need to take over the finances of an adult who is no longer able to care for their own finances. If your loved one does not already have a Durable Power of Attorney or living will that grants you the access and control over their finances in case of disability, you may need to take legal action to ensure that you have the authority you need.
Managing Income, Bills, and Bank Accounts
One of the easiest ways to manage income for your loved one is to set up direct deposits to his or her bank accounts. Direct deposits are available for most disability insurance benefits like SSDI payments. Setting up direct deposit for all sources of income will limit the number of times you or your loved one will have to make a trip to the bank.
In addition to direct deposit, there are other banking tools that can make managing bank accounts and even bills easier. Tools like online bill pay and online banking can offer the ability to make bank account transfers and pay bills online rather than going to the bank or handwriting checks. Recurring bills can even be set up to be paid automatically on the same day every month, ensuring on-time payments with no trips to the bank or post office required.
Managing Brokerage and Investment Accounts
If a disabled person has investments like stocks and bonds in a separate brokerage account, you will need to be aware of those accounts and assets as well. If the disabled person is able, they can add you as a joint account owner so that you can make decisions regarding buying or selling of stocks. Like other financial accounts, a Durable Power of Attorney or living trust can also grant the authority needed. Or you and your loved one may decide to leave the management with or without the decision-making power with a financial advisor.
As for individual securities like savings bonds, most can be reissued with additional names on them as long as they aren’t within one month of maturing. Forms for reissuing a bond can be downloaded from the U.S. Treasury website, or they can be obtained at a local bank. If there is more than one name on the bond and the word “and” is between the two names, both persons must sign the bond in order to cash it. If the word “or” is between the two names, either party can cash the bond on their own. Additionally, beneficiaries can be named on savings bonds.
It is very important when managing another person’s finances to be aware of all insurance policies and their premiums and/or benefits. For instance, while many Medicare recipients have their policy premiums taken directly out of their Social Security Disability payments, others do not. Premiums have to be paid on time to ensure that your loved one’s healthcare bills are covered. You will also want to be aware of any short-term or long-term disability or long-term care insurance policies your loved one may have.
If you are new to taking care of another person’s insurance, it may be a good idea to talk with a local insurance agent to make sure that he or she has the right amount of coverage. Considerations include short and long-term care coverage as well as supplemental and pharmaceutical coverage.
How to Plan Ahead for Financial Considerations
It isn’t always possible to plan ahead for a loved one’s disability, but a little bit of organization can ensure that in the event of a sudden illness or disability, being in the dark about important information isn’t a caregiver’s primary concern
Keeping important papers in one place, such as bank account numbers, insurance policies, and copies of legal papers, can make it easier to take over another person’s finances should the need arise. Alternatively, loved ones can plan ahead by signing a Durable Power of Attorney naming you as the individual who can act on their behalf should they not be able to do so themselves. A living will can also be drawn up to name a caregiver to make decisions regarding their health care should they become incapacitated.
The best thing you can do for your loved ones is to discuss finances with family members and appointed caregivers before there is a crisis. It will give everyone peace of mind knowing that there is a financial plan in place for the care of a loved one.