Managing Someone Else’s Money – Being a Financial Caregiver

Today’s guest blogger is Sandra McKinnon, Human Sciences Specialist in family finance serving southwest Iowa.

Are you managing money or property for a loved one who is unable to pay bills or make financial decisions? According to the Consumer Financial Protection Bureau, 40% of those over 60 years old have a power of attorney. That amounts to over 26 million people in the U.S. with this responsibility.

Being legally designated as power of attorney is one of 4 different types of financial caregivers, also known as a fiduciary. You must be trustworthy, honest and act in good faith.

Other types of fiduciaries include: a court-appointed guardian of property (known as a conservator); a government fiduciary (such as a Social Security representative payee); and a trustee under a revocable living trust. Each of these is a separate responsibility.

Each has duties, powers and responsibilities. In general, there are 4 basic legal duties of a fiduciary:

  1. Act only in best interest of your family member or friend
  2. Manage their money and property carefully
  3. Keep their money and property separate from your own
  4. Keep good records and report as required

Another role of a financial caregiver is to watch out for financial exploitation and be on guard for consumer scams. If you suspect exploitation of an older adult, call the Eldercare Locator 1-800-677-1116 or visit www.eldercare.acl.gov. They will assist you in finding the state or local agency that investigate.

For more information, visit https://www.consumerfinance.gov/consumer-tools/managing-someone-elses-money/ or seek guidance of an appropriate legal professional.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Currency Exchange Cautions

Last month I took a vacation to Ireland. It had been years since I’d traveled outside the US and Canada, so I did some “homework” before I left.  One key step was to talk with my credit card carriers. Two purposes:

  1. Let them know I was going to be traveling (always a good idea, even when traveling in the U.S.).
  2. Find out what their currency conversion fees are.
Dollars becoming Euros

When exchanging U.S. Dollars for another currency, there is always an exchange rate, because U.S. Dollars and Mexican Pesos and Euros and Indian Rupees are not equivalent. Currently, it takes about $1.10 US to buy one Euro, which is the currency used in Ireland.

Beyond that, however, there MAY be another cost: the bank that is converting the money may charge a fee for converting the funds. When I called my credit card companies, I got good news: two of my cards charged no conversion fees! My third card did charge a fee (3%), so I didn’t use it at all.

So far it sounds like I did a great job, right? But no – not completely. My mistake came in a situation I hadn’t anticipated. Sometimes when I was paying for a purchase in Ireland, the store gave me a choice: would I like to have the transaction charged to my credit card in US dollars or in Euros? A few times, caught by surprise, I said “US Dollars.”

Unfortunately, that was the wrong answer, as I learned when I looked closer at my receipts. Because when the store or restaurant ran the transaction in US Dollars, then they charged me a conversion fee (3.5% in one case). The right answer to the question would’ve been to have them go ahead and process the transaction as Euros, since I knew my credit card wasn’t going to charge me a fee.

Was this the end of the world? Absolutely not. It was a small expense, since I only did that a few times before I noticed the fee, and luckily not on any large purchases. But I was still a little disappointed in myself. After preparing to be a smart traveler, I undid the benefit by making a poorly-informed decision on the spot.

I’ll do better next time. And maybe YOU will have a chance to benefit from the lesson I learned!

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Capital Gains Taxes

United States tax documents with cash and the American flag

My husband is retired, so he has more opportunities to spend time in the repair shop waiting for tires to be patched or equipment to be repaired, all the while chatting with his peers. Those conversations result in questions for me when there has been a discussion about finances. The topics of inquiry are usually related to estate planning. The average age of farmers is 57.5 years, so it stands to reason it wouldn’t be about student loans, and he doesn’t need answers when the topic is commodities, livestock or equipment sales.

The most recent ask was the result of a statement concerning a tax liability of 38% if farm ground was sold. “That’s probably wrong” I said, and here is why:

  • Only property owned for less than a year is subject to regular income tax rates.
  • The 2019 tax rates on regular income is 10%, 12%, 22%, 24%, 32%, 35%, and 37%
  • The owner would be able to subtract costs and would only pay taxes on the profit. Farm ground has actually gone down in price or stayed stable during the past year.
  • Income taxes are graduated and rise as your income increases. All single taxpayers pay 10% on the first $9,700 of taxable income. The 37% income tax is calculated on income greater than $510,301.

If the farm ground was owned for more than a year then profits from sales would be subject to long term capital gains taxes instead of regular income taxes.

  • Long term capital gains taxes are 0%, 15%, and 20%.
  • The tax rate would be determined by income. A single taxpayer with income of $39,375 or less pays 0%, 20% is the capital gains rate when a single taxpayer has income greater than $434,551.

If the farm ground had a house on it and the owner lived in it for two of the five years before the sale, then up to $250,000 of profit resulting from the home sale would be exempt from taxes.

There could be an extra tax as a result of the Affordable Care Act. A 3.8% investment tax is collected when a single taxpayer’s investment income exceeds $200,000.

It was suggested that I mail Extension materials from Ag Decision Maker or Money Tips to the repair shop visitor!

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Sports Betting Tips

Today’s guest blogger is Kalyn Cody, ISU Extension Human Sciences Specialist serving the DesMoines metro region. Kalyn Cody photo

Last week, I, like many Iowans, walked into my local casino to set up a profile for online sports betting. 

After a law passed in May and final rules were approved in July, sports betting began on August 15th at many casinos in Iowa.  The law allows for both in-person and online bets, but everyone must first check in at a casino to verify their age and identity. With this new opportunity to gamble in Iowa, it is important that we remember some key tips to bet responsibly and not get in over our heads. 

First, always gamble with a plan.  Pick an amount you are comfortable losing.  Does this amount fit into your budget?  Will you have to sacrifice things you need if you lose?  Additionally, pick an amount you are comfortable winning.  Set a dollar amount at which you will walk away.  It is very common to see a stack of chips or winning tickets and continue playing, only to look down again a bit later with nothing left.  Whether you are winning or losing, have an exit strategy.

Second, never borrow money to make a bet.  Think of sports betting as entertainment.  Would you take a loan to watch the headliner at the State Fair?  To go out to a 4-star dinner?  Every gambler has a bad beat story—probably many—and taking a loss on borrowed money can easily spiral out of control. 

Finally, if you do find yourself struggling with a gambling problem, be aware of resources that are available to help.  The Iowa Department of Public Health has set up a website with a risk assessment, hotline, live chat, and more.  You can also call the ISU Extension Iowa Concern Line at 800-447-1985. 

Enjoy your new options, but remember to stay in control of your bets.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Trends in Saying, “Good Bye”

Dad's Urn
My Dad’s Urn

My brother and I had what I would consider “a lot” of time to prepare for the passing of our father, since Alzheimer’s is a slow-progressing disease. We had time to talk, ask questions, research and make decisions. This was especially helpful since we knew that Dad would most likely pass in Indiana; the funeral would be in Iowa at my church; and the burial would be next to our mom in Minnesota. As we liquidated his Minnesota assets, we consulted our lawyers in Indiana, Iowa and Minnesota as we made decisions about where the estate’s bank account should be located and in which state to file probate. The choice of cremation made for less paperwork and expense when it came to transporting his remains from Indiana to Iowa and then on to Minnesota.

The funeral home director in Indiana made everything very easy and advised us on issues we had not considered like the purchase of a vault for the urn holding dad’s ashes. Not all cemeteries require urn vaults, but Dad’s did. For being nothing more than a small plastic box that is sealed with rubber cement, it came with a hefty price tag. The funeral director suggested finding one online, which was about a fourth the price.

It is interesting the things that are said during the time of grief. Old feelings bubble up. Emotions are raw and run deep. Two of our family members were struggling with the fact that they had not attended my mom’s funeral 30 years ago, and had not even known where she was buried; in some ways they were burying two family members that day. It became apparent to me the important role the graveside service played for these two family members. Interestingly though, the one struggling most had made the decision to donate her body to science. In this way, her body would then be cremated (at no cost to her) and the remains returned to her family. She intends to have no grave, no funeral…no final expenses. Her decision was purely a financial decision. I wonder if she will think differently now that she has experienced the effects of 30 years of deeply buried grief, magnified because she had experienced all the traditional rituals that come with the passing of a loved one.

A financially secure and elderly friend passed away recently. She was devout in a faith which we shared. Her children lived far away and I was eager and willing to help them make all the funeral arrangements through our church. It caught me completely by surprise that they decided that there would be NO funeral. She had the means to pay for such things. She was a long-time member of our church and community, so there were a lot of people planning to say “good bye” in a public way AND a lot of people trying to make sense of this decision. She had donated her body to science and the remains were returned to her children…end of story.

With increased access to information, survivors as consumers are seeking more alternatives to the conventional funeral. Funerals are among the most expensive purchases made in a lifetime. The national median cost of an adult funeral is $7,360. The time to make these decisions is now…not during a period of duress, grief, and guilt. Funeral Directors are excellent sources of information and you may want to check out this document by the University of Florida Extension – The Art of Goodbye; A Closer Look at Emerging Trends in End-of-Life-Rituals.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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Equifax Claim

I didn’t rush to file my claim for a portion of the $425 million settlement from Equifax. In 2017, when the security breach occurred, I confirmed my information had been compromised multiple times by using the look up tool. As an eligible person, I contacted Equifax to put a freeze in place on my file and enrolled in credit monitoring services for a 12 month period.

Everyone is going to benefit from the settlement. In addition to the 3 free credit reports you can receive each year from the credit reporting agencies (one each Experian, Equifax and Transunion), Equifax will be furnishing 6 additional reports for 7 years. Consumers can use an electronic notification system to remind them at set intervals to check their reports.

As a member of the group of 147 million people impacted by the breach, I could request a $25 @ hour payment for the time I spent setting up safeguards to make my identity more secure. I could also opt to request repayment of the fees paid to put freezes in place. Note: Iowa has since disallowed the $10 fee per reporting bureau, so that won’t be an issue in the future. Recent press releases have indicated that both types of payment requests are likely to be paid at a reduced rate, due to the large number of individuals who have filed claims.

Credit monitoring is also an option. It will result in four years of coverage at all three credit bureaus and 6 additional years of monitoring at Equifax. I can also receive enrollment again in a $1,000,000 Identity Theft Insurance policy. A word of caution here: the original policy offered in 2017 included two key measures that limited the scope of benefits. A claim had to be filed within 90 days of an identity theft event and only one claim could be made in a 12 month cycle. Anyone who selects this option should read the policy.

Equifax is required to offer recovery services for those impacted by their breach. To obtain assistance individuals will need to contact the settlement administrator at 1-833-759-2982.

If you need more details about the Equifax settlement or how to take steps to add more security to your personal credit file, visit the Federal Trade Commission website. A claim can be submitted online or by paper; you have until January 22, 2020.

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Who needs an emergency fund?

jar of coins

If you’ve gotten along for years without any money in the bank, you might scoff when people suggest that establishing an emergency fund should be a priority. Perhaps you respond with: “I always find a way to deal with emergencies, even without money in the bank!” You are not alone. A recent survey found that 4 in 10 Americans could not cover an unexpected expense of $400; that might be the cost of replacing an appliance that died or an unexpected car repair.

If you’re one of those 4 in 10 Americans, you’ve probably paid a price for your lack of savings. 

  • Perhaps your landlord or the utility company has lost patience with you, and will no longer give you any leeway; they may even threaten to evict you or disconnect your services. 
  • Perhaps family members avoid your calls because they’re tired of you asking for money. 
  • Perhaps you pay tens (or hundreds) of dollars a month in late fees and interest because of unexpected expenses have put you behind on bills.

Here’s the hard truth: living with no savings creates real problems for individuals and families. Savings is essential for financial stability. It can also reduce family arguments and help you sleep better at night.

So the question is this: HOW does a person build up savings? There are lots of “tricks” people use to save money. For example, they may save all their change, or every $5 bill they receive in change; or they may have a “frugal week” each month, in which they give up extras like coffee, soda or eating out, and then save the money they would’ve spent on those things. I love hearing about the variety of strategies people use!

When it comes right down to it, though, there are two core elements of any savings plan:

  1. You must treat your savings like a bill, and pay yourself FIRST. If you wait, planning to save “whatever is left,” the saving probably won’t happen. Make your spending plan for the month (or the week), figure out how much you can save, and do it first. That is the best way to succeed with saving.
  2. You MUST be saving because it is important to YOU. If you try to save just because I told you that you should, it won’t work. You have to want to save in order to be willing to make the changes required for saving. So think about WHY you want to have some savings built up. Maybe you’ll think back to the stress and drama you experienced the last time an unexpected expense occurred; avoiding that stress might be your reason. Setting an example for your children might be your reason. Keeping the utility company happy might be your reason. Note: It helps if your partner and family also agree that saving is important.

How much should you have in your emergency fund? That’s up to you, but I encourage you to set a realistic goal for the short term. If money is tight, it might take a couple of years to get to $1,000. You need some success sooner than that, so a goal of $100 might be a good place to start. When you reach that goal, you can celebrate! (And then start toward $200).

How have you succeeded with saving? We’d love to hear your stories!

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Medical Bill Mysteries: New Tool

Stethoscope with a $100 bill

For the past year-and-a-half I have joined others in being surprised, frustrated and horrified by the “Bill-of-the-Month” news stories presented cooperatively by National Public Radio (NPR) and Kaiser Health News (KHN). The NPR/KHN team receives real bills from real people across the U.S., for treatments ranging from a cat bite and a knee brace to spinal surgery and stroke.

In every case, the consumer submitted the bill because it either seemed outrageously high or it just didn’t make sense. The investigative reporters dug into the issues, usually gathering information from the medical provider and the insurance company as well as the consumer. Sometimes they found errors that could be corrected to reduce the bill; more often, they uncovered prices that were simply inexplicably high. Sometimes, but not always, shining the light of publicity on the situation led to a reduction or elimination of the bill.

Last month Kaiser Health News launched “Your Go-To Guide to Decode Medical Bills.” This new tool includes three components: 1) Pro Tips for Navigating Surprise Medical Bills; 2) a helpful Glossary; and 3) an example of a medical bill and corresponding insurance documents, with notes highlighting key items to pay attention to. The guide is not a magic wand – it doesn’t make navigating difficult medical bills easy. But it does point consumers in the right direction, so we can get started advocating for ourselves and our loved ones.

The guide reminds us that our consumer options begin even before we seek medical treatment – with a set of items to check on before going in or making an appointment. If, despite advance preparation, you end up with a surprising medical bill, a key step is to request an itemized bill. Medical providers are required by law to provide this if consumers request it. Along with other tips, the guide identifies two websites that can help you compare the price you were charged with prices of other providers: Health Care Blue Book and Fair Health Consumer.

As consumers we need to be our own advocates. It helps to have some guidance on how to do that effectively!

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Navigation Apps- Failures

View of a car's dashboard, steering wheel, and street ahead.

My glove box is full of printed maps and I carry a road atlas with me on vacations. Even when my car was equipped with a navigation system, I still planned my trips with the aid of a printed map.

My experience using electronic navigation aids has been mixed. In the very early days of the programs, our home address was entered on a road one mile south of its actual location. Delivery van drivers had to be warned not to rely on them. We Extension field staff frequently have programs in unfamiliar locations and the apps have been helpful, but I’ve also had experiences with closed roads and wrong locations. This lack of reliability has taught me to allow ample time to search again when I land at the wrong place and ask a local resident for directions.

When it comes to travel, understanding how navigation systems work can help you pick the best one for the job. Examples of features that improve their guidance would be using traffic congestion to direct you to routes that are longer, but less likely to result in a white knuckle drive or traffic jams. Several commercial sites are available that rate the apps and share details about their operation.

Using navigation apps to locate specific nearby businesses and repair services has its own set of problems. One major navigation app has recently come under fire for a serious flaw in its program. Fake business listings are hijacking the names of real businesses, and then providing a phone number that calls a scam artist. The scammer is able to enter the fake business in multiple locations, making it more likely to appear early in the search results.

In the spirit of “buyer beware” it makes sense to use personal sources whenever possible for reliable contact information. Confirm business numbers by cross checking in a local directory or phone book. The Better Business Bureau or local Chamber office is also a source to confirm a location and phone number. Use the police department’s regular phone number if you can find no other source to confirm your information. IMPORTANT NOTE: 911 should only be used for an emergency.

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Peak Alert

Peak Energy Alert

I love the fact that our home has hot-water heat. As a person with allergies, I am not overwhelmed in the summer or winter when the central-air or furnace blows the collected dust out of the vents. But with hot water heat, there’s no option for central air conditioning; I would have to say that this week I would give almost anything to have central air! As I write this during a heatwave, it is expected to hit 95 degrees today with a feel-like temperature of 103 degrees. I can only imagine how widespread the brown-outs will be with everyone retreating to their air-conditioned homes and places of employment.

So, what about those brown-outs? In visiting with my co-worker (who has central-air) I have learned that our local energy-provider has a program called Appliance Cycling. This program will not only reduce the amount of energy used by the homeowner, which will reduce their cost…but the homeowner will also be compensated with a credit of $8/month for participating in the program.

When you sign up for the program, a technician will come to your home and install a small radio-control switch on or near your outdoor central air conditioner at no cost to the homeowner. 

If the demand for electricity escalates to a critical point, a “system emergency” or “peak alert” is announced, and a radio signal is sent to activate the switch on your air conditioner. Your outdoor cooling unit will then cycle off while the furnace fans continue to circulate the cooler, drier air already in your home. 

The program runs from May to September and the cycling events typically occur Monday through Friday from 1 PM – 7 PM…never on weekends or holidays.

My co-worker says she notices a slight difference in the temperature and humidity in their home during peak alerts but nothing that a box fan or ceiling fan can’t make up for. Do you have a similar program in your area?  What has been your experience? As for me…I think I will plan on supper at a restaurant!

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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