I'm caregiving for my Aunt who has declined in the last year. She has dementia/Alzheimer's. How do I handle her finances?

In addition to consulting with a CERTIFIED Eeldercare attorney, I endorse posting your questions at www.bogleheads.org.

We have investments and we pay taxes on them every year. So when we cash them in we will owe nothing. We have our IRAs, now we are over 71 1/2 or this year 72, we set them up to pay taxes on so they can remain getting interest. CDs, if cashed in there is a penalty, but with Mom the interest was so low that the penalty was nothing.

I would think a tax CPA could help you. Unless, you plan on placing Aunt and will need Medicaid in the future. If so, make sure the lawyer in well versed in Medicaid law.

Thank you Geaton777.
I will start looking for an elderly attorney.

For financial issues, I like the forum at bogleheads.org.

When you ask about taking investments out and paying taxes, you'll need to specify if you are selling a stock in a brokerage account and paying capital gains, or if you are moving funds out of a tax deferred account like an IRA or 401k

Sometimes your goal is to to reduce risk money you need to spend soon. Sometimes you are more focused on minimizing overall taxes by managing tax brackets and major medical deductions over several years.

If there is a lot of money involved, seek professional advice from someone who will focus on how best to arrange withdrawals, not just try to sell you investments.

As her POA, you have the authority and the responsibility to make any financial transactions on her behalf. A durable financial POA takes affect the day it is signed. A competency test isn't necessary, you could take over her finances at her mere request. You should present your POA documents to whomever you will be doing business with, especially her bank and financial institution. Personally, I would liquidate her investments and place the money in the institutions money market acct. You can withdraw it as needed. If you leave the investments in tact, they may diminish in value and not be what they're worth today. You can use the money to pay for her healthcare, any bills she would be responsible for, or any purchase that would provide for her needs and comfort. Read the document. It cites an extensive list of activities you can perform on her behalf. Always keep every receipt. An appointment with the attorney who drew up the POA document would be advisable.

Your profile doesn't mention how old your aunt is. Memory loss can be a sign of dementia or ALZ, or it can have other causes. She should have a full physical before assuming it is dementia/ALZ.

You will need to read your PoA document to see when your decision-making authority is activated. Some require doctor's diagnosis of incapacity. Some require 2 doctors, others don't require any.

I would strongly recommend you invest in a consult with an elder law attorney who is experienced in Medicaid qualification. You will need to be very meticulous in record-keeping and know what you can and should never do with her finances so that you don't inadvertently disqualify her from being able to have Medicaid, should she need it (and chances are she will). Her estate should pay for this appointment. Also, making sure you know what you're doing as her financial advocate will prevent any other relatives from "suspecting" that you are mishandling her affairs (a sadly common problem for PoAs). Forewarned is forearmed, and laws differ from state to state, so best to consult with an expert for your aunt's state of residence and not rely on anonymous responders on a global crowdsourcing forum with no accountability.