At various times during my life I have had the responsibility of helping an aging relative pay their bills and handle their investments. I have been authorized to perform this financial caregiving either as a trustee or as an agent acting under a power of attorney. I can testify from personal experience that helping another person with their financial affairs can be very complicated and time-consuming.
Managing someone else’s money is difficult even for an experienced elder law attorney who understands the laws governing powers of attorney and fiduciary duties. The complications and risks mount for family members who don’t have this kind of knowledge and experience.
Millions of Americans find themselves in circumstances that require them to help a loved-one with finances. They may be authorized to act pursuant to a power of attorney signed by the care recipient. The Consumer Financial Protection Bureau (CFPB) reports that about 22 million people age 60 or older have named someone in a power of attorney to make financial decisions for them. Other older adults receive financial caregiving from guardians, representative payees, trustees, joint account owners and others. Sometimes the support is provided by family members acting without any legal authority at all. Many younger disabled adults also receive financial caregiving help.
These situations are fraught with peril for the person providing the help. The laws are complicated and strict and the helper can be held both financially and criminally liable for mis-steps.
Where can the average American get information about their duties and responsibilities and how to stay out of trouble when managing someone else’s money? One good starting point is to look at the free guides published by the Consumer Financial Protection Bureau (CFPB)
The guides are for agents under a power of attorney, court-appointed guardians of property, trustees, and government benefit fiduciaries (Social Security representative payees and VA fiduciaries). The guides help financial caregivers by walking them through their duties, providing tips on protecting their loved ones from financial exploitation and scams, and offering helpful resources.
The guides are described as being tailored to the needs of people in four different fiduciary roles as follows:
Power of Attorney
Guides for those who have been named in a power of attorney to make decisions about money and property for someone else.
View the power of attorney guides here
Guides for those who have been named as trustees under revocable living trusts.
View the guides for trustees here
Guides for those who have been appointed by a court to be guardians of property or conservators, giving them the duty and the power to make financial decisions on someone’s behalf.
View the guides for court-appointed guardians here
Guides for those who have been appointed by a government agency (e.g. Social Security or the VA) to manage another person's income benefits, such as Social Security or Veterans Affairs benefit checks.
View the guides for government-appointed fiduciaries here
Older adults who are suffering from declining cognitive abilities are at greater risk of falling for scams. The guides contain tips on how to spot financial exploitation and avoid scams.
In addition to reading the guides, it makes sense to talk with an elder law attorney before you start to act as someone’s power of attorney or trustee. The services of an accountant may also be useful in setting up proper accounting and tax procedures.
The CFPB prepared the guides with the assistance of the American Bar Association’s Commission on Law and Aging.