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Financial Caregiving

Financial Caregiving

June 12, 2024

We tend to only consider the physical aspect of caregiving: medication management, bathing, feeding, assistance with daily chores, etc. However, the financial aspect of caregiving, e.g., paying bills, handling banking, investment and insurance accounts, preparing and filing tax returns, is equally crucial.

Per the AARP, there are 18.5 million unpaid caregivers in America helping adults over age 50 manage their finances. The responsibilities associated with financial caregiving can be complicated, and almost half of these caregivers lack the legal authority necessary to manage their loved one’s finances.

A revocable trust can provide some much-needed relief to this complex situation. A trust is a legal entity designed to hold assets, including, but not limited to: cash in a checking or savings account, securities in an investment account, homes, and business interests. The creator of the revocable trust often names him/herself as initial trustee with authority to manage and distribute the assets in the trust. The creator will also name a successor trustee — the person or persons to take over management of the trust’s assets if the creator becomes incapacitated or dies.

Thus, a revocable trust consolidates assets and provides the financial caregiver with the legal authority to manage and distribute the trust’s assets. The financial caregiver oftentimes has the option to name a co-trustee to assist with the management of the assets if he or she needs assistance.

A grantor may set up a revocable trust only if he or she has capacity to do so; a financial caregiver cannot set up a trust on their loved one’s behalf. Thus, acting timely is of utmost importance.

Consider discussing financial caregiving with your loved ones. Allow your loved ones to educate you as to their wishes, their finances, and the documents they currently have in place. A little discussion and planning today has the potential to save a lot of future frustration.

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