My experience as an elder law attorney prepared me well for the day when the symptoms of my father's memory loss became debilitating. I knew what documents to prepare and what information to have on hand.
Essential legal documents for caregivers
To allow family members to make decisions on a senior's behalf, third parties like banks, insurance companies and the Department of Veterans Affairs all require a Power of Attorney (POA) document that contains specific language.
I worked with my father's attorney, who prepared and notarized the POA papers that allowed me to make deposits into my father's accounts, pay his bills and cancel his credit cards. My sister was designated as the alternate, in case anything happened to me.
The attorney also prepared a Health Care Proxy document, which designated my sister as my father's health care agent—enabling her to instruct his doctors at the local hospital and the Department of Veterans Affairs clinic.
Selecting senior housing and obtaining tax deductions
Working with seniors and their families also made me quite familiar with the levels of care provided by independent living, assisted living and nursing homes.
To help my family understand the choices that were available to my father, I made a chart that listed the costs and services provided by facilities located in his hometown. When it was time for him to move out of his apartment, the information on this chart indicated that the clear choice was the assisted living center near his apartment.
Because my father was chronically ill, his assisted living room and board could be considered a medical expense. So, I obtained a statement from the nurse practitioner at the VA clinic, who is considered a licensed health care practitioner under the federal tax laws, IRC Sec 7702B(c)(4). The statement she gave me certified that my father needed the services provided by the assisted living staff to manage his activities of daily living.
My father's accountant then used the nurse practitioner's statement to deduct the assisted living expenses from my father's income, so he did not have to pay income taxes during the years he was in assisted living.
Managing my father's finances
My father had many bank and investment accounts. Many of the banks had merged and changed their names, so it took some organizing to match the financial institution's current name with older account statements that were in my father's files.
The first step I took was to make a list of the accounts (including the old former names of the financial institutions), along with his Social Security Retirement Income and the Required Minimum Distributions from his IRA.
In a simple, three-column chart, I listed: the name of each account, the principal balance in each account and the monthly income it produced. I called this chart "Schedule A." Looking at Schedule A, I knew how much income my father would have each month.
I made another chart showing his expenses. This two-column chart, which I called "Schedule B," listed the name of each expense and the monthly amount.
I updated Schedule A and Schedule B every month, and sent copies to my brothers and sister, so they could see how my father's needs were being met. I subtracted the expenses paid in Schedule B from the principal balance of Schedule A, and listed the result as Schedule C. That way, everyone could always see the financial resources that remained available for our father's care.
I used this simple monthly account method to keep track of income and dividends that came in and the costs of care that went out. In the end, everyone in the family was able to see how the money had been used, which helped avoid disagreements.
The Probate courts in the state where I live (Massachusetts) use a similar format to account for funds of people who cannot manage their own money. Hopefully, your family will not be required to account for your loved one's expenses and income in court, but the Probate Account forms can provide a format to help you privately organize financial information.
The other organizing tool I used was for medications.
My father was taking 15 different medications and supplements when he moved into assisted living. I used a Medication Management Checklist to help my sister sort out and understand all of these medications. The purpose of the checklist is to help prevent polypharmacy in the elderly—which can happen when different doctors and specialists prescribe a variety of medications that may duplicate or even conflict with each other.
The chart also helped us find the right Medicare Part D plan and maximize benefits. We even found that the VA offered an alternative source for one of his medications.
The chart lists the name of the medication, the dosage/frequency, reason for the medication and the physician who prescribed it, along with the source of payment. Once you see all this information together on the same sheet of paper, you can ask better questions when you take your loved one to doctor's appointments and may save money on prescriptions.
In my father's case, the information on the chart changed every month. We would not have been able to keep track of all of the changes without using this written tool. The medication management checklist helped us work with the physicians when my father was falling so frequently in assisted living. They eventually figured out that he was experiencing sudden loss of blood pressure. After they implanted a pacemaker, the mystery was solved.
It is not easy to manage important information and decisions for another person, and it's essential to keep in mind that memory loss and dementia are symptoms of a mental condition, so things are likely going to be in disarray when you first look at your loved one's situation. But, taking the steps necessary to organize finances and health care can lead to more sanity as time progresses. It took many months to put these charts and accounts together for my father's care, but we could not have provided him with the type of support we did without them.