One of the more challenging situations I deal with on a daily basis is having to take over a loved one’s finances. Sometimes it may happen gradually such as when a loved one has dementia, or it can happen suddenly if a loved one suffers a stroke or other sudden illness.
Regardless of how it happens, becoming a financial caregiver is a huge responsibility that is not to be taken lightly. The law requires that a financial caregiver (legally called a fiduciary) act in the loved one’s best interests. This often can involve much more than just paying someone’s bills. A financial caregiver may have to sell a loved one’s home or other property, buy a new home (and make it handicap accessible), remodel a child caregiver’s home, and manage investments. Whether acting as a financial caregiver under a durable power of attorney or a conservatorship, here are some important suggestions:
- Understand your role. The duties and responsibilities under a conservatorship and a durable power of attorney are not necessarily the same. It is critical that a fiduciary thoroughly understand their obligations and how to fulfill them.
- Keep good records. Good record keeping is essential and it may help avoid family disputes. Avoid using cash for purchases and keep receipts for all transactions. The better organized you are the less likely you are to be accused of financial improprieties.
- Don’t co-mingle. Your finances must always be kept separate from your loved ones. You are asking for trouble whenever your loved one’s income or assets are co-mingled with your own.
- Take better care. You may need to manage your loved one’s finances better than you manage your own. In general, if you do a poor job of managing your own finances, you are probably not the best person to handle someone else’s. The responsibilities and the potential risks of being a financial caregiver are simply too great to be entrusted to a financial derelict.
- Seek help. A financial caregiver has a big job that may last several years. The sooner you understand your responsibilities, the less likely you are to make critical mistakes. Seek help from an experienced elder law attorney to learn what you have been entrusted to do and how to protect your loved one and yourself.