Some of these “financial caregivers” are appointed in private legal agreements while others are named by a court or government agency, but they all have a common desire to assist and protect a loved one.
But managing someone else’s money can be a tricky business, and while many financial caregivers value this opportunity to help, few are given plain-language instruction on their responsibilities. To help navigate those potentially treacherous waters, the ABA Commission on Law and Aging has written four guides for financial caregivers titled “Managing Someone Else’s Money,” published by the Consumer Financial Protection Bureau.
“We found very little guidance for lay individuals who were managing the money or property of family members or friends,” said Charles Sabatino, director of the ABA Commission on Law and Aging. “Publications mostly consisted of discussions of fiduciary concepts such as the prudent investor rule, malfeasance of commingling assets, full disclosure and other matters in legalese. We sought to lay out four understandable duties in simple language.”
The free guides, available online or printed in small orders or in bulk, intend to help caregivers with understanding their responsibilities, watching for and responding to scams and financial exploitation, and knowing where to go to for additional help. While the guides focus on legal duties, they do not give legal advice because situations and state laws vary.
Four basic principles apply for all financial caregivers: act in the person’s best interests, manage money and property carefully, keep their money and property separate from yours, and maintain good records.
Written for a national readership of those with the legal authority to handle an incapacitated person’s funds, the guides cover four specific types of fiduciaries (the formal term for anyone named to manage money or property for someone else):
- Agents under power of attorney — Thirty-five percent of people age 60 and over, 22 million individuals, have a power of attorney, the overwhelming proportion of whom are a family member or friend. A person (the principal) makes a power of attorney so that someone else (the agent) can make decisions for him or her in the event of illness or injury.
- Guardians of property and conservators — A guardian of property, called a conservator or guardian of estate in some states, is someone a court names to manage money and property for someone else whom the court has found cannot manage it alone.
- Trustees for revocable living trusts — In this situation, the principal gives the fiduciary (called the trustee) legal authority to make decisions about money or property in the trust if he or she cannot make decisions because of sickness or injury. The revocable living trust also says who will get the principal’s money after he or she dies.
- Representative payees and VA fiduciaries — A government agency may appoint someone to manage income benefits for a person who needs help managing those benefits, such as the Social Security Administration appointing a representative payee or the Department of Veterans Affairs naming a VA fiduciary.