I was reading an article about a woman who was sentenced to prison for bilking an elderly man with Alzheimer’s out of $2M. ($2M case highlights growing problem of financial fraud against the elderly.)

As I read I was shaking my head. What a horrible woman.

Then I got to the end.

“Unlike the Saenger case, however,” the author writes, “most financial fraud of the elderly involves family, with national statistics suggesting that nine out of 10 cases involve relatives.”

Did I read that right? 90% of elder fraud involves family members?

That’s very sobering.

According to a 2010 report by the Associated Press, there are an estimated 38 million Americans caring for an elderly relative. And while the President included in his proposed 2011 budget an additional $103 million for programs designed to assist the aging population, these Americans still need assistance to cover their bills to maintain a high quality of life.

Here are some steps that you can take if you have personally taken on the care for your aging parents. These financial decisions will help you to ensure your parents are able to continue to enjoy their retirement.

Discover your parents’ wishes

If you haven’t already done so, discuss with your parents their wishes. This will help you get an understanding of their current assets and accounts that you may need to access.

As suggested by Senior Citizen Journal, you will also want them to grant you authorization to access these accounts if needed for medical or continuing care needs.

You will also want to take to your parents about their outstanding debts including all open credit cards. This will help ensure that payments are being made on all accounts to decrease interest paid and prevent penalty fees from being tacked onto the accounts.

Meet with a financial advisor

A trusted financial advisor will help you understand the options available with your parents’ investment accounts. Forbes.com recommends working with a financial advisor who specifically specialized in multigenerational planning, as they will understand your needs. They will help you devise a plan that will help ensure you can take care of your parents’ needs while also working with you on your own needs, like retirement and college funds for your kids.

When you meet with the financial planner, they will evaluate your parents’ current income (social security, IRA distributions, etc) to see if there is a more optimized approach that could be taken.

Discuss insurance polices

When parents age, they often stop paying their life insurance premiums. This is because they assume they have enough in savings to cover their final expenses.

If your parents want to discontinue their life insurance, you may want to consider paying the premiums for them. Do the math to see what the difference will be between you making the payments for the next 10 – 20 years versus the insurance payout.

Uncover hidden tax benefits

If you have assumed the full care of your parents, you can claim them as a dependent. This will help you offset some of the costs that you have taken on.

Claiming your parents as dependents is possible if you are paying for more than half of their expenses such as housing, medical, food and clothing; when doing this, you must include Social Security benefits in the equation.

Take advantage of government programs

There are numerous programs available to assist the aging American population. This includes Social Security, Medicare, Supplemental Nutrition Assistance Program and prescription drug plans. Be sure to enroll your parents in these programs as soon as they are eligible for the benefits. This will help to ensure your parents’ carefully planned and saved assets will last as long as possible.

You can determine your parents’ eligibility for these programs through the aid of the National Coalition on Aging, which offers a benefits checkup.

About the author: Daniela Baker is a social media advocate at CreditDonkey. Daniela says, “make wise financial decisions on credit cards by comparing benefits and cost.” Read more of her financial tips at www.creditdonkey.com

Once you’ve created the first part of the living will – the medical care desires – it’s time to choose the person to administer these wishes. The name differs by state and you may see the designee called: power of attorney for health care; health care agent, proxy, or surrogate; attorney-in-fact; or medical power of attorney. This is different than a regular “power of attorney” that most people set up to handle financial or estate issues and the health care agent only deals with the medical side of things.

Whatever the name, this is the person who will have to make those very difficult end-of-life decisions so choose wisely. Select a person who can function well under pressure and will not be swayed emotionally. The person chosen must understand the patient’s wishes and be comfortable following their directive. Be sure, too, to select someone that is available and easily reached during an emergency – some families also choose an alternate for times when the primary agent cannot be reached.

What to do with the finished document

Once you’ve filled everything out and had it properly notarized, the living will is a legal document and will be followed to the letter in case of illness. This is not really a document to be filed in a safety deposit box but rather kept in a safe but easily-accessed place such as a home filing cabinet. Be sure to distribute copies to all involved parties – of course, the selected health care agents but also clergy members (if appropriate), personal attorneys, and health care facilities. Once filed with the physician, your parent’s charts will be flagged so all medical staff knows there is a directive in place.

Discuss plans with the physician

This is also a good time to talk with your parent’s health care team to be sure they are comfortable with the wishes spelled out in the directive. In rare cases, some doctors will not agree with every choice and you may need to change physicians or confirm that they will carry out your parent’s plans.

The health care directive may be changed or withdrawn at any time and it’s a good idea to review it periodically to make sure your parents are still happy with their choices. If any significant changes are needed, it’s probably best to just fill out a new form. Also make sure to replace any old forms on file with the new updated form.

Need more information?

This topic is complex and you may want to check with your local library or medical facility for any books or pamphlets they have discussing living wills. Also, the National Institute of Health website has some fabulous links and information about everything I’ve written up here. I personally love the Mayo Clinic site – I’m probably a bit biased because they’re close to home but their website is great at explaining things in understandable layman’s language.

I know this is something you and your parents can get through! I accomplished it with my very private, very independent Mom and Dad and you can too. And now that it’s over and on file, I have a little bit of peace of mind – especially because I know that when the time comes my sister and I can focus on our family without the added stress of medical decision-making.

Now that you’ve warmed up to the subject of advance health care directives, it’s time to start writing up the actual living will. Throughout this process you’ll have to discuss delicate issues and your parents may just want to do it all on their own. Be supportive but present and feel free to enlist the help of your parent’s clergy or doctor. Remind yourself that if your parents fall ill without a living will, everyone will be left guessing and may have to make decisions clouded by emotion. Consider, too, that the decision-making may fall to a person your parents may not want involved in their care.

Finding the proper forms.

The first step is to find the living will form sanctioned by your state – this should be posted on your state’s public health website or available through your medical facility. This is a bit of a “fill-in-the-blank” form covering all the important issues related to end-of-life medical treatment. Be sure to use only your state’s form because others may not be considered legally-binding.

Most states do offer reciprocity so living wills are portable when traveling. If your parents split residences between two states, it may be a good idea to fill out a living will form for each state and file it with each medical facility.

Legal issues.

In most cases you do not need a lawyer to fill out an Advance Health Care Directive. Because it is a legal document, however, it typically needs to be signed with a witness and notarized. Again, refer to your state’s specific requirements.

Once properly filed, the living will directive goes into effect whenever the patient can no longer make decisions (such as in the case of advanced dementia). The wishes spelled out must be honored by law! There are various laws in place through federal and state agencies that ensure patient protection – even if the family or doctor disagrees with the stated wishes in the living will.

Medical issues to include

The basic purpose of the living will is to guide the health care team and family during life-threatening medical situations in which the patient cannot speak or declare their wishes. These situations can range from catastrophic injuries caused by a car accident to loss of consciousness due to long-term illness. There is no way to know which situation you will be faced with but living wills usually cover the types of extreme treatment used for extending life such as: resuscitation, ventilation, artificial nutrition, or hydration. You may also include desires for organ donation or whole body donation for medical research.

Every person is different!

Choosing the type of end-of-life care wanted is really based on your parent’s personal value system and religious beliefs. This is an individual decision and your Mom may think differently than your Dad! The discussion here will center around what kind of measures they’re comfortable with even if they are irreversibly comatose. I think for our parent’s generation the most recognizable term is “being put on life support” which they view as being hooked up to machines. But in reality it’s not just one specific treatment and you will have to go through the list item-by-item. This is a great time for your parents to speak with their doctor about what to expect so they can make a well-informed decision.

Who’s in charge?

After you’ve covered all the medical issues, the next important element of a living will is to choose the “power of attorney for health care” and file the paperwork with the medical facilities where your parents doctor. I’ll write more on that in my next blog . . .

Editor’s note: Quicken Willmaker has a built-in feature to create living wills and advance health care directives. It’s what I’ve used for my own planning.

Photo credit puresolitude

How much to post on Facebook, Caring Bridge or email?

You’ve probably noticed, too, the propensity people have to share every intimate detail in online posts – especially if a spouse or parent is facing a medical crisis. And these updates do help the rest of us wondering about how things are going. But sometimes, I think this information gets a bit too personal and borders on violating the person’s privacy. I surely wouldn’t want everyone to know such things about me – and I’m pretty confident my parents don’t either!

Ask now so you’ll know later.

To be double-sure, though, I asked my parents how they would like me to keep our relatives informed in case of illness. I had the perfect opening because my uncle is going through treatment for cancer and the constant, detailed updates are driving my Mom crazy! So, I opened it up to them and asked “what would you like me to do if it was you?”. And guess what, they do not want me posting all that information online. Boy, am I glad I asked! This discussion also opened the door to the bigger issue of long-term medical care and got us talking about a “living will.”

Setting up an Advance Health Care Directive.

Nowadays a living will is usually called an Advance Health Care Directive and is considered a legally-binding document. It’s mostly intended to provide decision-making directions to family members or friends if the person becomes incapacitated and can no longer make medical decisions. Most directives include information regarding resuscitation or intubation, pain management, long-term care such as intravenous feeding, or even organ donation wishes.

Directives also usually designate someone as a “power of attorney for health care” which means that family member or trusted friend will be the person to make all health care decisions (based on the directive).
These directives typically apply to end-of-life issues but are also good to have in place in case of accidents or sudden illness. No matter what your age, it’s smart to have a directive on file so family members don’t have to make critical decisions during trying times. And by clearly spelling out care parameters, you can be sure your parent’s wishes are honored when they cannot speak for themselves.

An affordable way to write advance healthcare directives is to use Quicken WillMaker Plus from Nolo Press.

A difficult but well-worth it discussion.

Talking about this issue is never easy – after all this is a very delicate and emotionally-charged topic! But when approached with a respectful and caring attitude, everyone in your family will benefit. And once you’ve discussed all the issues, creating an Advance Health Care Directive is really quite simple and straightforward. Typically, you can just “fill in the blank” on a state-standard form, get it notarized, and file it with your medical facility.
Dealing with this issue is really one of the most caring things you can do for your parents. So, be brave . . . bite the bullet . . . and get the discussion going now. I’ll cover all the nitty-gritty details in my next post and help you get this job done quickly.

Photo credit: Alan Cleaver via Flickr

The cost of assisted living continues to rise in the United States. According to the Market Survey of Long-Term Care Costs released by MetLife.

Private nursing home rates are up 4.6% to an average of $229 per day. This adds up to $83,000 per year. Assisted living facilities are up 5.2% to an average of $39,000 per year.

Costs for home health aides and adult day services haven’t changed in the past year.

Sandra Timmerman, Ed.D, from the MetLife Mature Market Institute, notes that “The cost of care in nursing homes and assisted living has been and continues to be high, and, in the past year, the increases have even outpaced medical care inflation by about 3%.”

Timmerman suggests that although families provide most of the care for seniors, paid care is part of the equation for most people. As a result, people should be looking into savings plans, annuities and long term care insurance to hedge their bets.

Of course, MetLife is in the business of selling these kinds of financial products. But their research should still stand on its own.

An annuity is a hybrid between a life insurance policy and an investment product. Basically you pay in for a certain amount of time and then the company pays you until you die. Of course, it’s never that simple.

Long term care insurance is designed to cover the costs of home care, assisted living, adult daycare, respite care, hospice care, nursing homes and Alzheimer’s care facilities.

photo credit: simaje

Unfortunately, a lot of it requires the services of an attorney.

While there’s a definite cost to hiring a lawyer to advise you and your parents about legal issues, there can be an even bigger cost to not doing it. What’s the phrase? Penny wise, pound foolish?

You’ll find right away that there are two main kinds of lawyers who work with the elderly. The distinctions are important.

Elder law attorneys

Elder law attorneys help people plan for the kinds of issues that come up when people become incapacitated. The basic focus is on figuring out the person’s needs during their lifetime and deciding how to plan and pay for it. They help you maximize your income and assets so you can live the lifestyle you want to live. They know a lot about the benefits available to seniors in each state.

Estate planning attorneys

Estate planning attorneys help people pass on wealth from one generation to the next. Of course, part of this is making sure there’s enough money to support the person during their lifetime. Most of the time estate planning is used by families who are vulnerable to the estate tax (this means they have over $3.5M in assets), but they can also be helpful to families with less.

By the way, if your parents are in that lucky group with over $3.5M in assets, run — don’t walk — to a competent estate planning attorney or financial planner who specializes in using charitable contributions to avoid estate taxes. In many cases you can eliminate your entire estate tax liability with careful planning. What this means is that you can support charities you love with millions of dollars of donations and still give you children more than you would have been able to do if you hadn’t planned.

Read that sentence again. It’s true.