Items in Caring Currents tagged with Finances

Family Financial Feuds: When Mom or Dad Is Gambling Away Financial Security

Melanie Haiken — Fri, 30 Oct 2009 07:00:00 -0000

I've heard so many variations on this one I could fill a page just with the individual stories. Here on the West Coast, it often involves one of the many freestanding casinos on tribal land, which are all too easily accessible from nearby towns. Or bus trips to Las Vegas or Reno organized by senior groups. A friend in Shreveport tells me her mom couldn't stay away from the riverboat casinos; another friend's dad got in over his head playing Saturday night (and then Friday night, and then Wednesday afternoon) poker. And it isn't just our parents; I recently listened as a group of people shared stories of family members -- often brothers, nephews, cousins -- who got sucked into online gambling.

You've heard the rationale before: "I just play the penny slots. What's wrong with that?" "I've played poker for years; you want me to stop now?" And the kicker: "I have so few sources of enjoyment left. I go with my friends. We have a good time. Would you begrudge me a little fun?"

So what's wrong with a little gambling fun?
Nothing, if that's what it is - a little fun. (Unless it's illegal or you're morally opposed, and that's a question of personal values.)

But gambling can be addictive, and like any addiction, it can cause people to lose their better judgment. They end up making decisions in the moment that can have long-term consequences that hurt not only them but also family members and friends who then have to step in when they get into trouble.

Here's how the National Council on Problem Gambling defines a gambling addiction:
• gambling that causes disruptions in any major area of life: psychological, physical, social, or vocational.
• a progressive condition that can increase over time to compulsive gambling.
• an increasing preoccupation with gambling, a need to bet more money more frequently, an insistence on "chasing" losses -- as in, "I'll win it back next time."
• continuing to gamble despite negative consequences, such as not having the money to pay bills, or going into debt.

The thing is, just as with other addictive behaviors, gambling begins to bleed over into the lives of those close to the gambler. It can damage relationships and interfere with other areas of life that he or she used to find meaningful.

And there's a trickier gray area here -- inheritance. Maybe Mom or Dad's spending money that's his or hers to spend -- except the adult children in the family had hoped there'd be something left to inherit. This can cause enormous tension, yet the feelings are difficult to give voice to. What are you going to say: "Dad, please don't spend your savings gambling; there won't be anything left for me?"

So how do you talk about this touchy subject?
You might start by thinking about whether personal circumstances might be contributing to your family member's dependence on gambling. Many women, for example, begin gambling heavily after their husbands die; it can be a coping strategy for overwhelming grief and loneliness. Is she lonely, isolated, or lacking in ways to spend her time? If so, this is something you can talk about, and then try to segue naturally into the gambling. You might try asking her if she's happy with her living situation, or if she feels isolated. Does she have enough of a community, hobbies, a place to go? If gambling trips are her way of filling a void in her life, the two of you together might be able to come up with a better plan.

Is there anyone else who's also concerned?
Depending on how close you are to the person you're concerned about, you may or may not be the best person to tackle this difficult topic. If it's your mom, for example, she may not be able to hear this from you, but could accept help if it were offered by a friend, a pastor, or member of her church. Some experts suggest consulting a counselor, who can help you devise the best approach. If you have siblings and you're all concerned, getting together and discussing the situation is important. But watch out for taking a group approach that could make her feel like you're ganging up on her; sometimes electing one sibling to represent all of you is the best approach.

What's your ultimate responsibility?
The answer to this question varies with the circumstances. If, for example, you're your parent's executor, power of attorney, or both, and are charged with the responsibility of protecting and distributing whatever inheritance is left, you may have legal responsibilities depending on what state you live in. If you have a close relationship with your parents and would end up feeling responsible if get into debt or not have money to live on, that gives you a specific role too.

If, on the other hand, your parent's spending money but the situation's not likely to have long-term legal or personal consequences for you, then your role is less clear. Consulting a social worker, estate attorney, counselor, or other professional might be worthwhile in helping you sort out what's an emotional concern, and what's a legal or practical concern.

Family Financial Feuds: The Case of the "Borrowing" Sibling

Melanie Haiken — Mon, 26 Oct 2009 07:00:00 -0000

Watching those close to us age is stressful for everyone, but certain situations seem guaranteed to set family members against one another and start families unraveling at the seams.

And nothing causes more distrust and divisiveness among siblings than feeling they're not being treated equally or that one sibling is taking advantage of a parent at the others' expense. Case in point: Our message boards at Caring.com are filled with discussions about difficult family situations involving money, uneven sharing of caregiving responsibilities, dishonesty, or all three.

When One Sibling Repeatedly Borrows Money From a Parent and Other Siblings Resent It

This story plays out in all sorts of ways, but the central player is an adult child (or cousin, or nephew...) in difficult straits who frequently goes to aging parents asking for "loans," help with living arrangements, or out and out handouts.

Take Bill, a less-than-successful 36-year-old who always seems to be moving home while he "gets on his feet again." While there, he eats his parents' food, drives their car, and always seems to need $40 to "tide him over." He was mom's baby, and she can't say no. Meanwhile older sister Kate is driving dad to doctor's appointments, bringing hot meals, and coming over on Saturdays to clean the bathroom. (Somehow, in this story, it's almost always a sibling who's not doing much of the caregiving who's asking for help; meanwhile, other sibs who are bearing the brunt of helping out, feel unrewarded for their loyalty.) Sound familiar?

I asked several experts in family dynamics for some suggestions in dealing with this situation, and got a lot of ideas. I also asked people whose stories followed this plotline to tell me what worked for them, and what just made tensions flare even more. Here are their thoughts, suggestions, and admonitions.

• Recognize selfishness for what it is -- a focus on the self at the expense of others.
Let's face it, psychologists say, people are wired differently, and some naturally think carefully about how their actions affect others -- while others don't. If you reflect back over your childhood, you may realize there's a pattern here -- self-obsession to the point of narcissism is often at the root of this kind of behavior, psychologists and other experts say. Recognizing that your sib falls into this category doesn't solve your problem, but it gives you some context, so you're not continually caught by surprise. And it allows you to stop expecting something different from him, and getting hurt when it doesn't happen.

• Don't take selfishness personally.
One thing experts suggest in all these types of scenarios is to depersonalize it as much as you can. While you certainly have every right to feel hurt and angry -- and to have thoughts such as "how could she?" -- your sibling is probably not preoccupied with the emotional side of things. She probably doesn't even fully recognize her actions as hurtful. Remember, to these folks, it's all about them; you're a bit player in their ongoing drama.

• Desperation makes people do desperate things.
Remind yourself that when people back themselves into a corner, they tend to come out swinging. If the problem child in your family wasn't like this in the past, it may be that personal troubles have overridden her better judgment. That's not an excuse -- remember the old saying about hard times showing people's true colors. At the same time, it's a good strategy for managing your own feelings of betrayal to point out to yourself that it's not your sibling's best self you're dealing with.

• Recognize if there's alcohol, drugs, gambling, or another addiction involved
One useful strategy comes from family therapists who deal with addiction: Try to separate the addiction from the person. For example, counselors might tell you to picture the gambling addiction or acoholism as a monster riding on your family member's shoulder, controlling his or her actions. This is not to get your family member off the hook -- but it can be very comforting when dealing with feelings like, "My baby sister used to be so sweet; what happened?"

• Self justification is a powerful thing -- don't try to fight it. The adult child who begs, borrows, or even steals from a parent or other family member usually surrounds himself with an elaborate scheme of self-justification. Attempts to break through this bubble of victimization and get him to admit he's behaved badly, or to apologize, are likely to be met with complete failure. The reason? To take such an extreme step in the first place, your sibling had to talk himself into feeling his actions were justified. Most often, some old resentment, mistrust, or dissatisfaction that's festered for years is the foundation on which the self justification is built. Do any of these sound familiar?

--Mom and Dad paid for you to go to college, and I didn't get as good an education, so your earning power is much higher than mine -- hence I should get more now. (The fact that said sib chose to play in a rock 'n roll cover band rather than go to college has been conveniently forgotten.)
--You moved away and married into a more affluent family while I stayed here to be closer to our parents, and now I need more help.
--Mom and dad loved their grandchildren to death, and would have wanted to give them money to start out in life; how could you begrudge them that?
--I've had health problems/financial setbacks/personal issues that have put me in this situation, and now when Mom and Dad want to help me, you resent it.

Once you've accepted that your sibling is mired in a quicksand of self-justification, don't try to break through it. It will just be an exhausting and pointless waste of time and energy, because these types of justifications tend to multiply like Gorgon's heads.

What do you do? This is where it gets tricky, because unless your sibling (or cousin, or nephew...) out-and-out stole or defrauded your parents, you have to recognize that it's your parents' money, not yours, to do with what they will. But there are still a number of strategies that others have found effective.

1. Separate the personal and the practical. Recognize that to your sibling this is a financial matter -- he needed money, felt he was entitled (or constructed a new reality to make himself feel entitled) and took it. You have all sorts of emotional issues of trust, respect, and loyalty mixed up in the situation, but your sibling may not see any of this. So depersonalize the situation as much as you can and treat it like any other business deal. Do your parents feel resentful, or do they feel it was a fair deal? Was the money a loan or a gift? If it's a loan, on what terms will it be repaid?

2. Change what you can change -- your own actions -- and leave others' actions to them. What often complicates these situations is resentment, experts say; the sibling who's behaving honorably and responsibly resents the contrast between her role and that of the freeloading sib. Unfortunately, the hard reality is that you can only change yourself, not others. And it's quite possible that your resentment is fueled by your own panic. In other words, you're burdened beyond what you can handle, and desperately wish your sib would help out.

But let's face it: That's not going to happen. So where can you get some help? How can you reduce your load? Look for help from other sources -- neighbors, friends, other family members, your parents' church. Talk to your parents and sibling(s) and explain that you're shouldering more than you can manage, and have to step back a bit. Then wait and see - maybe faced with a need, your parents will demand that slacker sib step up. If not, their response is not up to you, but you can help your parents look for other solutions.

3. Focus on long-term rather than short-term fairness. You may not be able to make the situation fair now, but it can help to think of ways to make things better in the future. Many siblings have had good luck bringing loans or gifts to the attention of the executor of a will, and getting the money treated as an "advance" on that sibling's inheritance. In other words, if your sister "borrowed" $20,000 from your parents for the down payment on a house, her share of the inheritance is $20,000 less than yours. You may need the help of an estate attorney to help you and your family sort this all out, but it's probably worth it to get the issue out in the open.

No question, we've only touched the surface of this important topic. More to come, and please feel free to describe your experiences and solutions.

How Family Caregiving Can Save You Money on Your Taxes

Melanie Haiken — Mon, 19 Oct 2009 07:00:00 -0000

If you care for an aging family member, I'm guessing I don't have to point out to you the parallel with raising children. There's a reason we're called the "sandwich generation" -- we're the peanut butter and jelly holding together two pieces of bread: our children and our aging parents. But I bet you might not realize that many of the tax breaks we receive from the government for childrearing are available in similar form for taking care of our aging relatives.

Here's a rundown of how your status as a family caregiver might earn you some breaks at tax time:

1. Take advantage of income tax breaks available to caregivers. The one I hear about most from my friends in this situation is the ability to claim a parent as a dependent on your taxes. The criteria for doing this? You must have provided more than half of your parent's total support for the calendar year. Also, your parent's gross annual income has to be below $3500. But that's $3500 in addition to social security -- social security isn't counted. If your parent doesn't have a pension and his primary income is social security, you may well qualify.

For you as the caregiver, the tax savings can be significant; this year one exemption allows you to reduce your taxable income by $3500. If you're in the 25 percent tax bracket, that would mean you'd cut your taxes by $600-$900.

To calculate if you provided more than half of your parent or other family member's support, you have to first determine his or her total cost of living, including the value of housing, utilities, food, and out-of-pocket medical expenses.

2. Set up a multiple support agreement.
What if you and your siblings are sharing the care for an aging parent or other relative? In that case, the law offers something called a Multiple-Support Agreement, also known as a Form 2120. Everyone who's financially contributing to the aging family member's support must sign the form and submit it with their tax return. Once you do this, if you meet four basic criteria, you can receive a tax exemption for the dependent. They are:
• You pay more than 10 percent of the dependent family member's support
• The amount paid by you and others totals more than half the family member's financial support
• Each contributor could have claimed the exemption, except that each gave less than one half of the total financial support
• Each contributor who paid more than 10 percent of the support agrees that you can take the tax exemption on your return

In other words, what's happening here is that you and your sibs share care and financial support of your parent or other family member, but you all agree that you -- because of your role as primary caregiver -- get to claim her as a dependent.

2. Set up a flexible spending account.
Many caregivers I talked to recommended FSAs, as they're called. These are an employee benefit provided by many companies; talk to your HR department to find out if your company has one. If so, what you do is estimate how much money you're spending on your parent's medical and other expenses. (Remember to count eyeglasses, dental care, medications, and pharmacy supplies.) You then have this money pulled out of your paycheck before taxes, so the money is tax-free, and you can use it to reimburse yourself for expenses.

3. Claim all possible expenses on your taxes.
You'd be amazed what's deductible if you read the fine print carefully. In many cases, not only are medical expenses for you and your dependents (including your parent) deductible, so is the travel expense to get to the appointment, either as a per mile driving charge plus parking and tolls, or as cab fare. According to the IRS, medical travel expenses are a deductible expense "when anyone accompanies an individual for medical care who is unable to travel alone." Sound like your situation? There you go. According to the IRS, you can also claim medical expenses for anyone you claim as a dependent who's in a nursing home or retirement home.To find out more about tax issues, consult a tax professional or go to the IRS website.

4. Get professional help. The only problem is, figuring out what you can claim and how to claim it is complicated stuff. It's almost certainly worthwhile to get professional help with your taxes if you're in a caregiving situation; you'll benefit from the expertise to save enough that it should more than cover the tax preparer's fees.

So Your Parent Wants to Move In With You -- Can You Afford It?

Melanie Haiken — Mon, 12 Oct 2009 07:00:00 -0000

Recently I heard from Sarah, an old friend, about a hard situation she's in that I'm sure many Caring.com readers can relate to. Sarah's mother-in-law moved in with her and her family more than a year ago, and since then Sarah's had a really hard time dealing with her husband's siblings, who aren't helping out as much as they promised.

But what Sarah's finding even more stressful is that the expense -- both in direct costs and in time lost from work -- of having an elderly person join the household is much greater than she expected. And what really galls her? No one else in the family seems motivated to chip in. "This summer it really got to me," Sarah told me. "We were stuck here in the Midwest heat, working ourselves to the bone keeping up with our jobs and caring for mom, while my husband's sister's family went to the Bahamas, and his brother and his wife spent weeks at their lake cabin. They didn't invite their mom to join them, and it never occurred to them that we could use a vacation too."

The problem is, it's much harder to get situations like this straightened out after the fact, after expectations have gelled and things have settled into a routine. So here are some suggestions culled from elder planning experts for how to set up a working financial arrangement with siblings before your parent or other family member makes the move.

1. Create a “caregiving budget.” Make a list of estimated expenses and determine how much the parent, the caregiver, and/or siblings will contribute. This budget should take into account the full cost of living for the family; not just food and transportation, but mortgage or rent, homeowners' insurance, utilities, etc. Many people make the mistake of thinking, well, I'm already paying this mortgage amount, so I shouldn't charge my parent for a share -- no. Even if your home is big enough that you don't have to make any changes to accommodate your family member, he or she should still share those basic expenses, unless there's really no money available. If not, resentments will arise down the line. Again, this may need to be made clear to siblings.

2. Figure out how much your parent can contribute. Sometimes, aging parents will have sufficient resources (possibly following the sale of their home) to pay the full cost of their care in your home. For example, if Sarah's mother-in-law sold a home before moving in with Sarah and her husband, that money could be used to contribute to Sarah's household. Sibling alert: This is an issue that must be discussed openly ahead of time. In many families, there's an unstated expectation from adult children that they will inherit the funds from the family home. I've heard more stories than you can believe of families where the family home is sold, and the proceeds set aside for future inheritance, while one sibling struggles to support and care for the now non-independent parent. That's not how it should work, experts say. All the siblings need to discuss and agree that the proceeds from the home are to be used for the parent's care during his or her lifetime. And if that care is in one sibling's home, the funds will last much longer than they would if they were used to pay for assisted living.

3. Calculate a fair contribution for the parent to make to household expenses. This is tricky, of course, and has to take into account both what resources the parent has, and what the cost of living is for that particular household. But here's a ballpark way to look at it: If an aging family member becomes part of what's now a five-person household, and the total monthly expenses for that household are $2,500, the new resident might contribute one-fifth, or $500.

4. Call on siblings to contribute. If an aging family member doesn't have resources to pay for his or her care, the siblings together should come up with a payment plan. Really -- it's only fair. If you figure it costs you $1000 a month to have your parent in your home, and there are three additional siblings, you could ask each for $250. Alternatively, your siblings might very reasonably decide that your time in caring for the parent is your contribution, and divide the $1000 three ways.

5. Keep track of additional costs and share those too. Food, housing, and utilities are only the start, and not realizing this ahead of time is one of the biggest stressors for family caregivers, as the costs begin to mount. If you're the one taking Dad to the doctor and picking up his medications, you'll be writing checks for co-pays and prescriptions. There will be special purchases to make and supplies, such as adult diapers. You may have to make changes to your home, such as putting bars in the bathroom or widening a door for a wheelchair. There may be transportation costs, or fees for services. Since you're Johnny-on-the-spot, these expenses will end up coming out of your pocket. Keep a running tab of caregiving expenses and send a regular tally to other family members, with their share indicated. One way to simplify the record keeping? Have a separate credit card and use the monthly bill as your record. If other siblings can’t or won’t pay their fair share on a monthly basis, you'll want to keep even more careful records, as you may be able to recoup your expenses from your parent’s estate before it's divided up.

6. Don't be afraid to hire outside caregiving help and share that expense. Whether you work full or part time, or stay home, you may need to find adult day services, or a senior center that provides meals, or hire a caregiver a few hours a week, so that you have the freedom to take care of your other responsibilities. This is perfectly understandable; don't get stuck in the guilt trap feeling like you signed on to do it all. You may also need transportation for your parent to and from the senior center or day care center, and may need to pay for that, too. Discuss these arrangements with other family members ahead of time, so they don't feel blindsided, and see if there are other options. Another family member might, for example, choose to step in and have Mom come for a visit every Thursday rather than pay for adult day services, and that's fine. But if no one else can provide regular, continuous care you can count on, then you'll need outside help, and that's a shared expense.

7. What about being paid for your time? This one is pretty individual, and every family situation is different. But here's the bottom line: If you or someone in your immediate family has to quit work or cut back hours in order to care for your aging family member, then that lost income is a family-wide issue. Likewise, your time. If your parent needs a lot of day-to-day care that would otherwise be provided in an assisted living facility or by a caregiver, and it's you doing that work, your family needs to acknowledge that time spent, and its impact on the rest of your life. Maybe they'll want to spring for a caregiver, maybe another family member can step in for a few shifts, or maybe they'd prefer to pay you for your time. But no matter what, the contribution of the one doing the caregiving needs to be acknowledged. You can also look into being paid as a caregiver through Medicare.

Of course, if an older family member is already living with you, and some of this advice is hitting a nerve, it's never to late to revisit arrangements. Call a family meeting and be direct and honest. Explain that you're happy having your family member in your home, but there were certain details about how it would all work financially that you didn't know enough to consider at the time. Lay it all out for the rest of the family, and explain that things need to change. It helps if you've made a budget, kept track of expenses, and can demonstrate what is and isn't working. Remember, your siblings are getting off easy, here. All the work and responsibility for your family member's care is falling on your shoulders, not to mention the inconvenience, lack of privacy, and at least occasional frustration and irritation of having an elderly person in your space. So let them step up to the plate in other ways, so you feel supported. It's the only way to protect other family relationships from the stress and strain of resentment.

Senior Fraud Alert: Beware Financial Planners With Shady Credentials

Melanie Haiken — Mon, 05 Oct 2009 07:00:00 -0000

I'll never forget the time my mom came home after a class at a local community center, announcing that she'd met this nice gentleman who was going to help her move her retirement account to a new company that would "pay much better." Luckily for both of us, my mom's account was managed by a trustworthy local advisor who, when she asked to move it, did some quick digging. I got the call, Mom and I had a talk, and all was well. I got lucky, because someone asked questions and knew to call me.

But in other households around the country, things aren't going so well.

Newly minted, self-styled financial advisors are setting up shop to take advantage of seniors, and they can be hard to spot. The trend is coming to light as several states, including Massachusetts, Minnesota, and New York, have big lawsuits pending over legitimate-sounding financial planning services marketed to seniors that are in reality scams. Many of these advisors work by setting up classes or group meetings at senior centers, assisted living facilities, or retirement homes, or offering classes at community centers. Some of them even get to know seniors at church.

It's important for you and your older family members to be on the alert for anyone trying to take charge of your retirement savings or investments who's not qualified and trustworthy. Here are some of the so-called "credentials" that have been turning up in the many investigations and lawsuits launched against senior scams. Avoid taking financial advice from anyone who introduces themselves as a:

"Certified elder planning specialist"
"Registered financial gerontologist"
"Certified retirement financial adviser"
"Certified senior adviser"
"Trust advisor"
"Senior estate planner"

According to financial fraud experts, these titles and similar ones can be obtained merely by taking a correspondence course, followed by a simple multiple choice exam. These courses are being offered all over the place, and the folks hanging out shingles don't necessarily know any more about financial planning than you do. And they may be a lot less honest!

The real title you want? Certified financial planner (CFP), a credential that requires years of study, difficult tests, and an extensive background check.

But the agents aren't the only ones to watch out for. Certain insurance companies are turning up over and over again in lawsuits around the country, accused of selling products to seniors that are completely wrong for them. In many cases, stories are emerging of companies rewarding agents for pushy sales tactics, such as "free lunch" seminars, aimed at vulnerable seniors. The companies most often named by investigators as engaging in questionable practices are:

Allianz Life
Old Mutual Financial Network
American Equity
Prime Capital Services

This doesn't mean that all policies issued by these companies are bad. (And it also doesn't mean that all policies issued by other companies are fine!) It just means that hearing one of these names might be a sign that you should ask more questions.

Keep in mind the best financial rule of thumb, which my parents reminded me of over and over: If it sounds too good to be true, it probably is.

Why You Should Worry When Your Parents Mention the Word Annuity

Melanie Haiken — Mon, 28 Sep 2009 07:00:00 -0000

If you've been reading stories about the explosion of senior fraud over the past few years, you can't help noticing that the word annuity keeps popping up. In fact, the North American Securities Administrators Association, an association of state regulators, says over one-third of all cases of financial exploitation of the elderly involve annuities. In the past few years, hundreds of class actions have been filed against insurers over annuity sales to the elderly, including one in Minnesota against Allianz Life that involves nearly 400,000 people.

How are annuities getting older adults into trouble?
Let's be clear. Annuities in and of themselves aren't bad. For some people -- typically those who are younger or quite well off -- they might be a good investment choice, depending on circumstances. But as a general rule, most types of annuities are not a good choice for seniors.

The reason? The basic rule of investing for older adults is to keep funds liquid and conservatively invested, since the older you are the more likely it is that you'll need your money sooner rather than later. And a sudden health issue could mean you need it now. Yet annuities typically have a whole slew of rules that make it impossible to get your money quickly or -- if there are penalties or it's declined in value -- at all.

So what's an annuity, anyway?
In simplest terms, an annuity is an investment product that has an insurance policy packaged with it.

The problem is, the insurance companies who create and market annuities surround the policies with a whole slew of rules and regulations that make them very complicated and difficult to understand. Annuities do very different things depending on what these rules and regulations say.

And here's where it gets icky: Many insurance salespeople have been known to sell these "products" to seniors despite the fact that they're highly inappropriate -- even counter -- to their needs. In fact, in some of the frauds that have come to light, sales agents have talked seniors into taking money out of investments that were safe and putting them into risky annuities, causing them to lose their savings.

The problem's become such a big one that many states, such as Florida and California, are trying to crack down on the rising number of annuity scams by enacting new laws. Florida, for example, reported that annuity investigations involving seniors went from 75 in 2005 to 299 in 2008. But the insurance industry has fought back, and the laws are stuck in the legislature. So it's up to all of us to protect ourselves and our families.

What do you need to know about buying an annuity?
First and most important, there are four types of annuities:

1. Immediate annuities: The payments begin immediately.

2. Deferred annuities: Payments don't begin until some set time in the future, usually five to seven years or longer.

3. Fixed Annuities: Your money is invested in lower-risk bonds, bond funds, and the insurer's general account.

4. Variable Annuities: Your money's invested in stocks or stock funds -- notoriously high risk.

These distinctions are important, because they provide an easy guide to whether an annuity product is right for an older person.

Here's What Every Older Person Needs to Know About Annuities:

• Immediate annuities are locked in -- you get a payment stream, but you cannot get your money back if you need to.

• Deferred annuities have hefty "surrender charges" if you need to take your money out before the deferment period's ended. So your money's locked in with one of these, too.

• Variable annuities are essentially another way of playing the stock market.

• Most annuities have hefty fees and management charges.

• Annuities are investments; you're investing in the insurance company or other provider of the annuity. So if that company isn't financially healthy, you could lose your money.

• Agents who sell annuities typically get an up-front commission of 3-8% of the total value of the annuity -- so they have a significant incentive to sell it to you, whether or not it's appropriate.

• All deferred and most immediate annuities are counted as assets by MediCaid, so if an agent is telling you this is a way to park your assets where MediCaid can't see them, this is false.

If you or your family has purchased an annuity under questionable circumstances, we'd like to hear from you. And you can get help by calling your state attorney general's consumer fraud hotline or senior fraud helpline. There are also a number of law firms specializing in class action cases involving annuities.

Is Your Family's Money Safe? Tips to Protect Against Scams and Schemes

Melanie Haiken — Fri, 18 Sep 2009 07:00:00 -0000

It happened again last week: another headline about an investment broker whose dubious practices fleeced clients' accounts for two decades before families got suspicious and started asking questions.

The latest scandal occurred in Rock Hill, South Carolina, but the headlines are popping up in local and national papers everywhere. (And then there's Madoff and his ilk, who don't restrict themselves to one geographic area.)

It's one of those worries that keeps many of us up at night. Will our parents and other older family members have enough money to care for themselves for the rest of their lives? (And yes, let's admit it, we do from time to time fret about whether there will be any left over for us.) And is the money they do have secure, well-invested, and protected from scammers?

Here's what happened to those families in South Carolina: Oren Eugene Sullivan, a New York Life securities broker, allegedly managed to abscond with $3.7 million from more than 30 clients over a 20-year period. His alleged victims include 15 widows and two clients who suffered from Alzheimer’s. Twelve of his clients were over 70. Worst of all? A number of Sullivan's clients considered him a close family friend. Wow, some friend.

Talking about money is a touchy subject. You probably don't feel like calling up your parents and saying, "Um, I was wondering, where are your savings invested -- and are you sure they're safe?" Nope, that's probably not the right tactic.

Instead, ask your parents -- or other family members you're concerned about -- to sit down with you in a quiet moment and go over their finances. If the request makes them anxious, explain that it's important that someone else know where their accounts are held, in case of illness or emergency. If you or someone else in your family already knows who will be the executor of the estate when your parents die, then it's important for that person to know where all the documents and account statements are kept. Ask these questions to check each account for red flags:

Is the account with a reputable institution?
Are you receiving regular statements?
Do the statements show the amount of principal, as well as interest, rate of return, etc., and is it consistent with what was originally invested?
Have you been approached by someone suggesting you make major changes to your accounts or investments?
Has anyone suggested you do something "secret" or requested that you not tell anyone about an account or investment?

If you do suspect something's amiss with your family's savings, here are some useful resources. Start by contacting the Securities Regulator in your family's home state. There's also a lot of great information and help available from The North American Securities Administrators Association's Senior Services Center which can be very helpful if you need to investigate anything.

And if you find nothing amiss, you'll sleep better knowing that the money discussion's been broached and your parents or other family members will feel better knowing you're available if and when they have concerns.

Frugal Living Wins Many New Fans

Melanie Haiken — Sun, 13 Sep 2009 07:00:00 -0000

Saving money doesn't sound like much fun, but for many of us in the caregiving "sandwich," frugal living has a different ring -- it suggests that the process of learning to live on a tight budget can be challenging, creative, and even satisfying. (And yes, frustrating and disheartening too.)

If you're caring for aging family members -- and possibly kids at the same time -- it's likely you have plenty of practice in pinching pennies. So you might be interested to know that more and more people are joining our ranks. In fact, it's beginning to seem that frugal living has become a new philosophy for many Americans as the first decade of the 21st century comes to a close.

Even when the current recession -- or depression, as some more bluntly call it -- winds down, experts now say, we're never going back to the free spending ways that characterized many families pre-2008.

For one thing, we've learned to live on less. In many cases, a lot less. Plenty of households have cut their budgets by 30, 40, even 50 percent. But there's more to it than that. Once introduced to the mind-cracking stress of serious debt, most of us would choose never to repeat the experience.

And those who manage to lift the weight of debt off their shoulders often discover there's satisfaction -- even joy -- in learning to save. That feeling of putting a little bit away each month so you're less vulnerable to catastrophe -- priceless, as the Mastercard ad says.

How about you and your family: Have you moved toward a more frugal living style and, if so, do you intend to continue on this path?

To get you thinking, I'm passing along some interesting data compiled in a survey by Money magazine at the beginning of the summer. According to their poll:

9 out of 10 respondents have changed the way they manage money as a result of the crisis.
7 out of 10 respondents said their priorities have shifted.
94 percent said the recession will have a lasting impact on the way they handle their finances.
7 out of 10 said they consider spending time with family more important than ever.
More than 50 percent said they now feel guilty buying things they don't need.
75 percent said increasing the amount they save is more important now.
Almost 70 percent reported that they won't purchase an item if they can't pay for it with cash or a debit card.

For me and my family, frugal living has actually become sort of fun. Yes, I miss those big back-to-school shopping trips whipping through the malls. But my daughters are so proud of their newfound bargain hunting skills that one has started a blog in which she photographs her "finds" and documents the outfits she creates from them. And I can promise you she gets far more satisfaction from comparing notes with fellow thrift shoppers online than she ever got from a pair of full-price jeans.

I, meanwhile, have found enjoyment and satisfaction in learning to cook from scratch for the first time in my life. Home-made spaghetti sauce from homegrown tomatoes beats sauce from a jar any day. You?

Tips to Help Family Caregivers Save Both Time and Money

Melanie Haiken — Mon, 31 Aug 2009 07:00:00 -0000

How often does it occur to you that saving time and saving money are two sides of the same thing -- several times a day, right? The more time we spend caring for our parents and other elderly family members, the more deeply it cuts into our ability to work and earn an income. As summer turns to fall, kids go back to school, and work ramps back up from the August lull, caregivers get stretched even thinner. It's the perfect time to try some relatively simple strategies that could reduce your caregiving burden.

1. Transportation.
Driving someone to appointments, events, and on shopping trips probably makes up a significant part of your to-do list. Some alternatives:
• Help your parent or other family member to convert to public transportation. Senior citizen fares on busses, trains, and subways can add up to big savings with today’s gas prices. Not to mention time-savings. Of course, this is a lifestyle change for many seniors, and you may have to do some confidence-building. What I did: Got my mom a route map and schedule, and helped her figure out simple routes and times that could be used to accomplish common errands. I also got her a cell phone on my family plan so she could call me if she missed the bus or got stranded.
• Car-pool with other seniors. If your parent belongs to a church or synagogue or uses a local senior center, talk to the folks there about car-pooling or van transit opportunities to events, shopping, and other venues.
• Sign up with senior transportation services. These are area-specific, but with a couple of calls you can find out what's available where you live. Start with your Area Agency on Aging and the National Transit Hotline, which provides the names of local transit providers who receive federal money to provide transportation to the elderly and people with disabilities; the toll-free number is (800)527-8279. The good news is, many of these are door-to-door services.

2. Food and Supplies.
Grocery shopping and errands are another time-suck. Instead:
• Order home-delivered groceries. Most major grocery store chains offer home delivery via the phone or internet. Save on gas, and minimize shopping hassles. Search the internet, using your parents’ town and the name of the stores they use. Many pharmacies deliver now as well.
• Apply for discount food delivery. If your parent lives alone and is on a fixed income, investigate whether there are local services in your area that deliver groceries to seniors at a discount, or even free. In the central and southeast United States, the charity Angel Food Ministries offers once-a-month delivery of $60 boxes of groceries for $30 to anyone on a fixed income.

3. Talk to Medical Staff About Cost and Transportation Issues. Let your family member's doctor and the rest of the medical staff know that you're caring for your aging loved one and that everyone is on a limited budget. Explain that when possible, cost, scheduling, and transportation issues need to be taken into account. When I did this, it turned out there was a new clinic closer to a bus line where my mother could access services such as lab tests, eye care, and physical therapy.

Often the doctor can help you choose medications that are less expensive and can help you prioritize among health care treatments, advising you on which ones can be safely delayed. Depending on the type of insurance you're dealing with, doctors can also tell you about public health settings where you may be able to obtain certain health services at a lower cost.

Most importantly, don't be embarrassed or ashamed to let those around you know that money's an issue and time is tight. These are hard times, and many of us are in the same boat. When you tell others you're strapped for time and cash, it's like opening a door. You'll be surprised how much people are willing and eager to help, once you let them in.

Five Debt Triggers -- One Simple Solution

Melanie Haiken — Mon, 24 Aug 2009 07:00:00 -0000

Last week at a summer barbecue, a friend from high school told me a really scary story. When her parents, in their 80s, almost lost their house last year after her father's state pension disappeared, Karen co-signed an equity line of credit to bail them out. When they couldn't make those payments, either, the bank came after her. Now both families are on the verge of bankruptcy.

Sadly, but not surprisingly, this is only one of many stories I've heard like this lately, both in my life and from Caring.com members. In fact, I've heard so many stories with such similar themes that I made a list of the top five triggers that seem to most commonly get multiple generations of families in trouble with debts they can't pay.

Medical bills. Who wouldn't help a family member out in a health crisis? But the need can be so great that it sinks everyone.
Mortgage payments. When one family member is about to lose a house, it's natural for another to step in. But co-signing loans or loaning money to make payments can make one disaster into two.
Property taxes. In my family this was what tipped the scales; my sister had to borrow $20,000 to cover my mother's unpaid property taxes and keep her house off the county auction block. Luckily, this was before the downturn, and my mother was eventually able to pay her back by refinancing her house.
Credit card debt. While this type of debt is individual, we've heard from many Caring.com members about parents deeply in debt and adult children wondering how to help them.
Gambling debts. Lonely older people are vulnerable to casino policies that can rapidly turn small debts into big ones.

If you're in this situation, I'm hoping that reading this list is making you feel better. You're not alone, and it's important not to let shame keep you from getting help.

Now let's turn to the bright side. So many people are in so much trouble with debt right now that new services have sprung up to help. What these services, known as "debt negotiation," or "debt settlement," do is step in between you (or your parents, or siblings, or kids) and the bank or credit card company you owe money to. They negotiate for you, aiming to come up with a compromise that leaves you with an amount you can pay, and placating the bank with an amount that gets them off your back. Although in the past "debt consolidation" was often a scam that got people in worse trouble, these new companies -- under the right circumstances -- offer a real solution, and an alternative to bankruptcy.

This is no isolated trend: Yesterday one of the biggest of these companies, Freedom Debt Relief, announced that during the month of July they settled 5200 separate accounts, saving their customers a total of $16 million and settling a record $27.2 million in debt. They also released their totals from January through July of 2009, and during that period they settled a whopping 30,000 accounts! There, does that make you feel better?

But here's the key piece of information: On average, the people they helped ended up paying just over 40 percent (41.8 percent, to be exact) of what they owed -- and were out of debt! Another way to look at this: The banks and credit card agencies they owed money to forgave 58.2 percent of the debt.

How is this different from debt consolidation, a solution experts advise people to avoid?

Debt consolidation is usually done in the form of a consolidation loan, or in the form of "credit counseling, or a combination. The loan consolidates all of your debts into one single monthly payment, which does simplify matters. However, it's traditionally secured with home equity, so there's the danger of losing your home. And the total amount that you owe isn't reduced, just lumped together. The "credit counseling" part of this is where it really gets confusing; debt consolidation companies promise to work with your creditors to negotiate lower interest rates and payments, -- but not the balance due. And since they're often funded by credit card companies, the ultimate goal is to make sure the full amount of the debt is paid back.

Debt settlement, by contrast, is a compromise between you and the credit card company -- you pay some of what you owe -- and don't go bankrupt, which would leave them with the debt unpaid. In return, they forgive a good portion of your debt.

Several caveats: These companies do charge fees, in addition to the proportion of the debt you have to pay off. The fee is assessed at the end, when the debt settlement has been negotiated. Also, you can end up owing tax on the amount the debt settlement company saves you, if the difference between what you pay and what you owe is more than $600. Depending on your situation, you may have to report it to the IRS as "discharge of indebtedness income."

Also, you usually have to pay a portion of what you owe, typically about 15 percent, up front; then you have two to four years to pay off the rest of the agreed-upon balance. But during the rest of the debt negotiation process, you don't make monthly payments and you aren't charged monthly fees, as you are with debt consolidation.

So how do you find one of these companies, and -- more important -- how do you make sure it's legitimate and not a scam?

Start by checking with The Association of Settlement Companies, or TASC, an organization that oversees good practices in what's now called "the debt settlement industry," and which has standards that a company must meet to be a member and use the TASC logo. To find a TASC-accredited debt settlement company near you, you can use their "Find a member" function.

TASC lists 187 active members, so as you can see this is a fast-growing industry. But I wouldn't just get a name off a list, no matter how carefully vetted. The only way we're collectively going to get out of this economic mess we're in is if we all start talking openly about it, and helping one another. So ask people you know and respect in your community if they know of a debt settlement company or, better yet, have used one. You'll be surprised to find out how many people you thought were doing just fine have had to ask for help.