Handling Your Aging Parents’ Financial Affairs Is Hard. This Book Can Help.

Beth Pinsker, author of My Mother’s Money: A Guide to Financial Caregiving.

Key Points

• Nearly 60 million Americans provide care for an adult with a complex medical condition or disability, often without adequate support.
• Key documents for financial caregiving include a healthcare proxy, HIPAA authorization, durable power of attorney, and estate planning documents like wills or trusts.
• A “death file” should contain essential documents such as birth and marriage certificates, divorce decrees, life insurance policies, and a list of financial accounts to prevent a scavenger hunt for information.

Caregiving in America is lonely work. Nearly 60 million Americans care for an adult with a complex medical condition or disability, according to AARP, and they often labor without much support.

MarketWatch financial-planning columnist Beth Pinsker wrote a book to help caregivers with the financial aspects of the job, gleaned from her professional expertise and personal experience handling her mother’s finances. (MarketWatch and Barron’s are both owned by News Corp.)

Published this month, My Mother’s Money: A Guide to Financial Caregiving gives readers a practical, step-by-step guide to managing their loved one’s financial life.

Barron’s recently sat down with Pinsker, who is also a certified financial planner, to learn some tips. This interview has been edited for length.

Barron’s: Caregiving responsibilities can come on suddenly, like after a fall, or gradually, like with an early Alzheimer’s diagnosis. How can future financial caregivers prepare?

Beth Pinsker: What I’m suggesting to people is, act when you realize you’re going to be the one called. Whether it’s your parents, your aunt or uncle, your neighbor, you make sure those people have made it possible for you to help them. Because otherwise, you have a much bigger problem. If they don’t have those things, you’re the one that has to go to court, to have a lawyer. It becomes expensive and time-consuming—and heartbreaking.

The key documents you need are healthcare proxy and HIPAA authorization and some kind of durable power of attorney. For financial caregiving, durable is the best because you can set it in motion ahead of time. It’s always best if you can bring your person to the bank to enact the power of attorney. Having a power of attorney on the account as a standby doesn’t mean the agent has immediate access. The document says clearly that the person has to be unable to do the task themselves.

Then you need something for the after-death period, whether it’s a will or trust or some combination thereof, and beneficiary designations on financial accounts.

Estate plans aren’t just for the wealthy. When you die, someone has got to turn out the lights and close the door behind you on the way out. Someone has to file your last tax return after you die.

You also mention the importance of a “death file” in the book. What should that hold?

The death file prevents the scavenger hunt that most families have to go on to find stuff. Where’s mom’s divorce decree? Where’s Uncle Joe’s VA discharge paper? Include a copy of the driver’s license, any birth certificate, marriage certificate, divorce decrees, life insurance policies, and a list of your financial accounts.

Passwords, too?

Yes, passwords if you have them, but just the caveat that a lot of things are two-factor authentication today. If you have a phone, and it has a passcode, and something happens to you, your caregiver simply can’t get into your phone. You need permission. You can name a legacy contact in your iPhone’s security settings to grant permission. I kept my mom’s phone open a year after she died. I didn’t know if anyone was going to text her and not know she died, or if I would have to two-factor anything.

You mention the concept of a “burn rate” when handling your loved one’s financial affairs. Can you explain what that is?

The burn rate is how much you’re spending per month. You need to know how much money is coming in and how much money is going out. You have to look at credit card statements and see what’s auto-billed. It’s not hard math—but it’s a little bit tedious.

When you’re trying to figure out how long the money will last, financial calculators come in handy. One example in the book is this savings distribution calculator.

When you’re spending money that’s not your own but that one day might be your inheritance, it sometimes feels like double-dealing, psychologically. Are you making decisions in your best interest or their best interest? It’s kind of an icky feeling. You have to learn where you are in that, and figure out your way through it.

I kept meticulous records, mostly because I thought my mom would come back around and be mad at me, because I messed up her very precise financial methodology.

Thank you, Beth.

Write to Elizabeth O’Brien at elizabeth.obrien@barrons.com