PREPARING TO CARE FOR ELDERLY PARENTS

A Dignitas Briefing Paper

DIGNITAS

A PRACTICAL GUIDE ON ASSISTING AGING PARENTS WITH FINANCIAL AND HEALTH CARE MATTERS

Share Dignitas’ Briefing Paper Preparing to Care for Elderly ParentsBy Nicholas Delgado

Caring for Elderly Parents: Welcome to the Sandwich Generation.Are you a part of the Sandwich Generation? According to the Pew Research Center nearly half (47%) of adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or financially supporting a grown child. And about 15% of middle-aged adults are providing financial support to both an aging parent and a child. Caring for an aging parent can lead to physical, physiological and financial stress. Dignitas’ Guide Preparing to Care for Elderly Parents provides caregivers with useful information and tools for managing the phases of care as their parents age.1

While every family faces unique circumstances, preparing for the care of elderly parents as they age can decrease the burden on families. At Dignitas we work with clients to prepare families for matters related to elder care. Our work includes helping clients budget the cost of health care, organizing a parents’ financial and health care records, identifying the right service providers, and ensuring families have the proper legal documents in place.

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1: Source: Pew Research: The Sandwich Generation, Rising Financial Burdens for Middle-Aged Americans http://www.pewsocialtrends.org/2013/01/30/the-sandwich-generation/; Kaiser Health News: The Parent Trap: Adult Children Care For Elderly Parents http://www.kaiserhealthnews.org/stories/2012/march/01/parent-trap.aspx

Share Dignitas’ Briefing Paper Preparing to Care for Elderly ParentsBy Nicholas Delgado

Preparing to Care for Elderly ParentsBy Nicholas Delgado

Nicholas Delgado founded Dignitas to provide clients with personalized, high quality and independent advice and solutions that allow them to simplify their lives. Nick’s commitment to elder care issues includes serving as Chairman of the Board at Little Brothers Friends of the Elderly Chicago Chapter, a non-profit that remains focused on alleviating loneliness among elders.

With 15+ years of experience in the financial services and wealth advisory industry, Nick has become a go-to advisor for start-up/high growth entrepreneurs, seasoned executives and individuals entering their second life.

Follow Nick on Twitter@DignitasCWO

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About the Author

Share Dignitas’ Briefing Paper Preparing to Care for Elderly ParentsBy Nicholas Delgado

Cost: Caregivers lose over $3 trillion in lost earnings, benefits and savings.

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Stages of Care Caregiver’s Role

Awareness

• Become your parents’ key advisor.

• Assess your parents’ health care needs.

• Monitor their financial assets.

• Help them with major financial decisions.

Assistance

• Engage your parents health care providers.

• Research and select service providers for health care, lifestyle, and financial matters.

• Assist parents with financial matters.

• Assist with basic activities for daily living.

Full-time Support

• Determine where your parents will live (i.e. smaller home, nursing or assisted living, in your residence).

• Oversee your parents’ health care needs.

• Manage their basic activities for daily living.

• Administer their finances and take on any financial liabilities.

There are approximately 9.7 million Americans over the age of 50 caring for their parents. The cost of caring for an elderly parent is significant. According to MetLife, total wage, social security, and private pension losses due to caregiving could range from $283,716 for men to $324,044 for women.2

Given the high costs associated with being a caregiver, families need to better prepare for and understand the financial and emotional costs associated with becoming a caregiver. Below is a chart that describes the stages of care giving. While the stages can be linear some adult children find themselves immediately thrust into providing full-time support due to unforeseen circumstances. 2: Source: The MetLife Study of Caregiving Costs to Working Caregivers https://www.metlife.com/assets/cao/mmi/publications/studies/2011/mmi-caregiving-costs-working-caregivers.pdf

Share Dignitas’ Briefing Paper Preparing to Care for Elderly ParentsBy Nicholas Delgado

Stage 1: Awareness Of your parents’ changing circumstances.

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The first stage of preparing for your role as a caregiver is by recognizing that your parents’ changing health is impacting their quality of life. This stage can be the easiest to delay or even ignore as it requires children to recognize that their parents will not be in their lives forever. In addition, it can be uncomfortable for parents and adult children to discuss matters such as health care or finances. Becoming Your Parents’ Key AdvisorAs a parent ages, adult children must learn how to serve as a key advisor to their parents. This includes listening to parents for information on how they are managing their personal and financial affairs and actively engaging them on their lifestyle choices. Establishing trust, two-way communication, and transparency is key to obtaining the information necessary to monitor and assist parents.

Providing value-add assistance such as researching health care issues on their behalf, attending meetings with key advisors such as doctors and financial advisors, and helping them organize their finances can further strengthen their trust and faith that you are a resource for them when they have a major issue in their life. A collaborative dialogue with your parent makes it easier to obtain information that can indicate changes in their mental and physical capacity over time.

Assess Your Parents’ Health Care NeedsBy engaging in an honest and respectful dialogue with your parents you can better prepare for managing their health care needs. One of the first signs that your parent is aging is a change in their health. If upon answering any of the following questions about your parent you have additional concerns it’s time to further assess their current and future health care needs.

• Are they taking care of themselves?• Are they experiencing memory loss?• Did they recently hurt themselves in the home?• Do they have difficulty driving?• Have they experienced significant weight loss?• Are they in good spirits?• Do they have difficulty walking or moving around?

Share Dignitas’ Briefing Paper Preparing to Care for Elderly ParentsBy Nicholas Delgado

Stage 2: AwarenessEstablishing yourself as your parents trusted advisor.

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Assessing Your Parents FinancesAsking your parents how much money they make or how much they have saved for retirement can be difficult. But as your parents’ age its important to have a basic understanding of their assets and liabilities. Here are some easy ways to uncover their financial information without offending them.

1. Offer to help them complete their annual tax return.

2. Coordinate with your financial advisor to provide them a “Second Opinion” of their investment portfolio.

3. Help your parents with their “Spring Cleaning” and offer to scan and organize their financial and legal documents.

4. Assist your parents with using their computer and offer to setup electronic bill pay during the process.

5. Offer to help your parents pull their annual free credit report.

6. Ask your parents for a referral to their core advisers (i.e. CPA, financial advisor, insurance broker) and use it as an opportunity to assess the advisor’s suitability.

Monitor Their Financial AssetsAccording to MetLife the annual financial loss by victims of elder financial abuse was estimated to be at least $2.9 billion dollars in 2011, a 12% increase from the $2.6 billion estimated in 2008.3

As your parents age it’s vital to understand their financial picture and to help protect them from making bad decisions that can impair their financial health. Begin to have regular discussions with them about their financial status and actively work to help them organize, consolidate, and better manage their personal finances. Finally, engage and monitor their financial advisors and confirm their references and licenses.

Help Them with Major Financial Decisions While parents might have displayed good financial judgement in the past, as their mental health deteriorates they are more prone to making bad decisions or being taken advantage of. Active communication can help increase your awareness when a parent is making a major financial decision such as a new investment or purchase of a home or car. If the purchase decision seems abnormal, actively engage them in their thought process.

If you have concerns about a service provider or purchase decision encourage your parents to get a second opinion before they move forward or offer to join them when they are ready to make the purchase. While you may not always agree with their lifestyle choices your role is not to approve each expense, but to ensure your parent is not compromising their financial security or being misled or exploited by a third party.

3) Source: The MetLife Study of Elder Financial Abuse https://www.metlife.com/assets/cao/mmi/publications/studies/2011/mmi-elder-financial-abuse.pdf

Share Dignitas’ Briefing Paper Preparing to Care for Elderly ParentsBy Nicholas Delgado

Stage 2: AssistanceAssisting your parents with their daily living needs.

Engage Your Parents’ Health Care ProvidersWhen an elderly parents’ physical and mental health has deteriorated ,one of a caregiver’s primary roles is to understand their parents’ health care needs and ensure they are receiving the proper type of treatment. This includes meeting with the various doctors treating your parent, having copies of their medical records on file, monitoring their changing health and behavior, and assisting them with making health care decisions.

Research and Select Service Providers for Health Care, Lifestyle, and Financial MattersCreating a support network is vital for caregivers. This includes coordinating paid service providers such as in-home care nurses and overseeing financial, legal and other advisors. It’s important to find advisors who specialize in elder issues and can provide a caregiver with additional resources and information.

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Why Your Parents Need a Power of AttorneyA durable power of attorney gives a child the legal authority to act on their parents behalf. The authority can go into effect immediately or under certain circumstances such as when a doctor certifies that the parent is incapacitated. A power of attorney is essential for actively managing your parents’ financial and health care matters.

1. A power of attorney gives a person, or people, authority to manage finances and other legal affairs if the person needing care is not capable of managing these. It can be long-term or short-term and allows the party that has power of attorney to manage someone’s finances, sign tax returns, handle investments and other important matters.

2. A health care power of attorney allows the person designated to make health care decisions if the person being cared for is unable to make a decision for themselves. For example, someone holding power of attorney may be able to decide against a dangerous surgery if he or she feels that it is in the patient’s best interest.

Adult children who are actively assisting with some of their parents’ daily living manage to do so in many different forms. Some children are able to coordinate care remotely by using outsourced paid assistance while others do so by living close to their parents. Regardless of their situation, at this point a caregiver is likely spending several hours a week and could even be contributing financial resources to aid in the care of their parents. At this stage it’s vital that a caregiver focuses on ensuring their parents’ financial and health matters are well organized in order to ease the burden of care.

Share Dignitas’ Briefing Paper Preparing to Care for Elderly ParentsBy Nicholas Delgado

Stage 2: Assistance Managing the implications of your parents’ changing health.

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Assist Parents with Financial MattersAs your parents’ mental and physical health changes, routine activities such as paying bills on time and monitoring investments can be overlooked. If you’ve actively engaged your parents on matters relating to their personal finances as they have gotten older you are better prepared to determine when it’s time to take a more active decision-making role. In order to take control over their financial decisions they will have to designate you as their agent under a durable power of attorney.

If you’ve shied away from these conversations in the past you might only learn that a parent has made a bad decision or neglected a financial commitment once it’s too late. If you are noticing significant unopened mail at your parents’ home, bill collectors calling your parents, or your parents discussing what appears to be risky or obscure investments it’s time to assess the situation and increase your engagement before it’s too late.

Assist with Aspects of Daily LivingDuring the Assistance Stage you will likely take on partial responsibility for managing routine daily activities such as grocery shopping, maintaining their residence, and coordinating medical needs and appointments. Caregivers approach these responsibilities in multiple ways including taking on the full burden, coordinating the work with other family members, and outsourcing the tasks to paid service providers.

As caregivers take on more of these tasks they often overlook the impact of their caregiver responsibilities on their professional careers Caregivers should monitor the time they are spending on caregiver issues to determine when to seek outside help. Some companies provide employer assistance programs to help employees manage complicated personal situations. A caregiver can also ask for assistance from siblings, spouses or other family members.

Share Dignitas’ Briefing Paper Preparing to Care for Elderly ParentsBy Nicholas Delgado

Stage 3: Full-time SupportUnderstanding the financial implications of being a caregiver. Determine Where Your Parents Will LiveAs a caregiver one of the most important and difficult decisions you might have to make is determining where your parent will live. This decision may upset your parent who might prefer to remain in their current home even if they are unable to physically or financially maintain it. Once you determine an ideal location and living situation for your parents you will be in charge of selling their current residence, organizing and moving their personal property, assisting your parents with the psychological elements of the transition, and ensuring that their new home is meeting your parents needs.

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Preparing for Your Parents Future Housing NeedsAt some point you might determine that your parents can no longer remain in their current home. While the transition to a smaller home, assisted living facility, or nursing home is likely a process that will take many months or years here are some things that can help better prepare your for the eventual move.

• Help your parents declutter their home by giving away old clothes and furniture to charity.

• Research your options in advance and determine the costs and other requirements associated with each option.

• When reviewing your options consider their location to health care service providers and proximity to friends or other social networks.

• If you plan on moving your parent into your home, be realistic. Test out short-term transition periods where they stay with you for a month or two and determine if its a long-term solution.

Administer Their Finances and Take on Any Financial LiabilitiesA new analysis of US Census Bureau data performed by Wider Opportunities for Women (WOW) finds that in 2011, 52% of elder-only households report incomes that do not cover basic, daily expenses.4 Even for seniors who have significant assets, caregivers must often oversee their financial decisions and manage their daily finances as they are no longer able to properly oversee their financial affairs. Below are some tips for better managing your parents

• Confirm that you have been designated your parents durable power of attorney.

• Ensure that you are registered as the power of attorney on your parents’ banking and personal accounts.

• Leverage technology that helps you monitor their banking and other financial accounts online as well as set-up payment reminders and bill pay.

• Monitor their eligibility for different sources of income including Social Security, pension benefits and income from retirement accounts and trusts.

• Register for government programs such as Medicare as well as senior citizen discounts available for public transit, vehicle licenses, real estate taxes, and utilities.

• Maintain records of your parents’ financial statements and legal documents such as wills, power of attorney, and trust documents.

• Complete their tax returns and monitor their credit report on an annual basis.

4) Source: Wider Opportunities For Women: Doing Without: Economic Insecurity and Older Americans http://www.wowonline.org/documents/OlderAmericansGenderbriefFINAL.pdf

Share Dignitas’ Briefing Paper Preparing to Care for Elderly ParentsBy Nicholas Delgado

Stage 3: Full-time SupportManaging your parents daily lives.

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Manage Their Activities of Daily LivingAt some point caregivers must manage parents daily tasks such as grocery shopping, preparing meals and ensuring that prescription medicines are properly administered. For some caregivers this responsibility becomes a full-time job, while others utilize paid service providers. Caregivers must determine whether they can realistically stop working or decrease the amount of hours they work and still meet their financial obligations. It is important for caregivers to have a financial plan in place that helps them to understand the implications of lost wage income, especially if they are over the age of 50.

Oversee Your Parents’ Health Care NeedsAt a certain point you may need to take over some or all of your parents’ health care decisions. The management of their health care can include some or all of the following:• Scheduling doctors visits and managing their

prescription drug regimen.• Determining the types of health insurance

available for your parents and managing claims and reimbursements.

• Making health care decisions such as determining specific treatment options, approving a surgical procedure, and selecting medical care providers.

• Arranging for daily care such as a home health aide, adult day care, or hospice care.

Managing a parents’ health care, especially one with a chronic medical condition, can be one of the most difficult and time consuming aspects of being a caregiver. Meeting the challenge requires active communication with your parents health care providers. Just as important is properly managing your physical and psychological health. Caregivers are advised to leverage their personal networks as well as seek assistance from their health care providers or caregiver support groups as a tool for maintaining their personal health.

Share Dignitas’ Briefing Paper Preparing to Care for Elderly ParentsBy Nicholas Delgado

Dignitas: We help families prepare for the challenges of elder care.

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The Dignitas Elder Care Planning Toolkit Dignitas provides clients concerned with the challenges of elder care with a wide range of financial advisory, planning and life management services to support their needs. Our holistic planning process helps families make better decisions through access to expert advice.

The Dignitas Elder Care Planning Toolkit Includes:• A caregiver responsibilities checklist.• Custom educational modules on elder care issues. • Access to a best-in-class advisory team on elder care matters (health, law, risk management)• Assistance with record keeping and financial management through our secure mobile technology

platform. • Customized financial strategies and solutions for managing the cost associated with elder care.• Financial and identity fraud prevention monitoring system.

To learn more on how Dignitas can help your family prepare for the challenges of elder care, please contact:

Nicholas DelgadoPrincipal | Chief Wealth Officernick@mydignitas.comTwitter: @dignitascwo312.651.6131

Dignitas111 E. Wacker DriveSuite 2606Chicago, IL 60601www.mydignitas.com

Dignitas provides the material in this briefing paper for informational purposes only. The material provided herein is not intended to be tax, health care or legal advice. Nothing herein should be relied upon or used without consulting a tax advisor or lawyer to consider your specific circumstances, possible changes to applicable laws, rules and regulations and other tax and legal issues.

Dignitas is an Investment Advisor Registered with the State of Illinois.

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Additional Resources: Expert information on managing elder care issues.

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Medicarewww.medicare.govMedicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).

AARPwww.aarp.orgAARP is a membership organization leading positive social change and delivering value to people age 50 and over through information, advocacy and service.

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www.mydignitas.comDignitas is a leading multi-family office, capital advisory, and asset management firm that provides a wide range of services to entrepreneurs, executives, and non-profits.

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