The fact that adult children typically step in when a crisis erupts means that all of the parties involved have made or will make mistakes.
Mistakes begin because so many adults fail to make basic estate plans — specifically a Durable Power of Attorney (DPOA) and health care power of attorney. Forbes reported in March, 2010 that only 48% of those 65 and older said they had a DPOA authorizing someone to make financial decisions for them if they were incapacitated and only 51% said they had a health care power of attorney authorizing someone to make medical decisions.
These documents are not for seniors only. Every one 18 years or older should have these documents in place because they allow someone to act on your behalf financially (DPOA) or advocate for your health should you be unable to do so yourself. Everyone needs these important documents in place because they impact you while you are living.
After caring five years for two parents who had dementia but had planned very well, we made significant mistakes in our efforts to help. Unfortunately, as a senior care consultant focused on helping adults manage bill payments and cash flow management, I see many families making the same errors we did. In most cases, though, it’s only because, as they say, you don’t know what you don’t know.
Here are the top three mistakes we made that I see others making as well:
#1 A Failure to Understand What the Power Means
Some of us have had our parents show up with copies of their estate planning documents, including the DPOA and health care power of attorney, but we bury them in a drawer. It’s uncomfortable to discuss, so we don’t talk about what the power means and how the person naming you might want you to help. According to the U.S. Department of Health & Human Services, someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years. So the odds that you will need to step up are very likely.
If you are named in the DPOA, there are certain things you need to know. Do you have a general understanding of their finances? Do they pay bills online or write checks? How would you manage the cash flow if they were incapacitated for more than a month? Would you need to liquidate assets to help cover the bills? Do you know their primary banking institution, and will they even accept your DPOA? You don’t want to find this out on the job … you want to have this knowledge and planning done before you need it.
For those named in the healthcare directive, do you know what their medical choice might be should they have a stroke, for instance? Where might they go for rehabilitation or skilled nursing care? The first mistake many families make is not having those difficult conversations ahead of time so that if something happens, the individuals named can be good advocates and have a sense of your personal wishes and preferences.
For guidance in how to avoid this mistake, a resource for those named in the Durable Power of Attorney is MemoryBanc: Your Workbook for Organizing Life, a workbook to help create a road map to the cash flow and assets to guide the person stepping in to manage your finances. [Full disclosure: I authored this publication.] A good resource for those named in the health care power of attorney is The Conversation Project. It’s easier to have the conversation when there is no health care issue and you are not in the midst of a crisis.
#2 Ambiguity about the Financial Resources
Money is one of the biggest reasons families fight. When it’s unclear how care will be paid for or if there is enough money or insurance in place to cover the costs, you may find cost alone creates family conflict. Many adult children have no idea about their parent’s retirement planning and insurance coverage.
One way to avoid family conflicts over money is to bring in a professional who can quickly inventory, and forecast projected expenses and care costs. Having a third party manage the money alleviates many sibling arguments, and ensures that you have someone to help navigate many of the issues you will face.
In many cases, the adult children who step in start closing bank accounts to “simplify” the finances. However, many seniors over 80 have a host of banking relationships. One account at institution A gets Social Security, while another at institution B is set up to receive a pension. I have one client who has a separate credit union account set up to just pay the mortgage and long term care premiums. Closing these accounts can create a host of problems, including foreclosure and the loss of valuable long-term care insurance. Before you make any changes, make sure you have a complete picture of the cash flow, a clear picture of income and pre-established automatic debit payments from each account.
Daily Money Managers (DMM) are independent professionals who are trained and insured to provide financial services for older adults, people with disabilities, as well as busy professionals. The DMMs dedicated to serving seniors can help you understand the cost of caring for a loved one, compare in-home care costs to community costs, and help you find needed resources to serve your loved one. A DMM usually works directly with your parents and keeps them involved and engaged, both a mental and a social benefit. They have experience with medical and long-term care insurance claims, navigating estate plans, and can help resolve tricky issues quickly and simply.
You can find a DMM in your area by visiting their website at AADMM.org.
#3 Doing Everything Yourself
To avoid this mistake, you need to develop a reliable support system. One of my biggest regrets is that I did not prioritize being a daughter. The key to doing this is to bring in an Aging Life Care manager on a regular basis. Formerly referred to as “Geriatric Care Managers,” these professionals — nurses or social workers by training — have the layers of additional education and practical experience needed to earn this designation which allows them to serve as a personal medical advocate.
I first hired one to help find the right memory care community for mom, and then again when she broke her hip and her doctor wanted me to lift her “Do Not Resuscitate” order so she could operate. These were critical decisions and choices that paralyzed me. I needed professional guidance.
Looking back, I wish I had set up monthly visits so the Aging Life Care Manager could have chased down the key issues for mom’s care. Then I could have spent my time on site enjoying mom’s company, instead of being the squeaking kid the staff nurses avoided. Too, instead of spending the day getting mom to and from various specialists, we could have enjoyed the day at a concert or museum.
Despite an average hourly rate of $135 – $195, you will find the money well spent. An Aging Life Care Manager can resolve issues much more quickly than you can. I saw one resolve an issue in minutes that a daughter had been struggling to have addressed over the course of months. These specialized managers are worth their weight in gold.
You can find one in your area by visiting AgingLifeCare.org .
I learned these lessons the hard way. As a sandwich generation caregiver, I had a full-time job, was raising two children, and, at the same time, trying to help my parents navigate their health issues. When managing my family, parents, and work became overwhelming, I opted to roll out of my full-time job. According to the AARP Public Policy Institute, family caregivers (age 50 and older) who leave the workforce to care for a parent lose, on average, nearly $304,000 in wages and benefits over their lifetime. As an executive in a Fortune 200 company, I walked away from a lot more when I left my job. We adapted, but had I known then what I know now, there were many resources that could have helped me better manage my life and help my parents navigate their situation.
It’s not that you are not able to do many of the tasks required; it’s simply that the cost might be greater than you imagined when you step in the help. I wanted to be there for my parents when they needed help, but looking back, I wish I had known about all the support services that were available to me. I now know I did not have to manage all of those tasks on my own.
In addition to finding that professionals can resolve issues quickly and simply, you will find that you are able to maintain your essential role of daughter or son. What I regret is that I spent so much time when I visited my mom more focused on being her health care advocate and daily money manager than I did being her daughter.
I hope that my sharing what I learned from my mistakes will help you and your family avoid those mistakes should the need arise.