As a caregiver, it is easy to get overwhelmed. There is constant care, ensuring proper…
As our loved ones age, their cognitive abilities tend to decline; this often impairs their ability to responsibly manage their finances. This can be an uneasy conversation to have, but it is definitely a necessary one. Who will oversee their finances when they cannot anymore? We are here to provide you with important information to understand what course of action to take and what problems to look out for if you have to become their financial manager.
Consider a joint account. This may never be needed, but it is better to be prepared. A small action like this will allow things to continue as normal (financially) should any issues arise with your loved one, like a stroke or short-term memory loss. This step is especially important for those whose loved ones are in the early stages of dementia. It is important that selected money managers are trusted, as they could easily take advantage of the situation. Also, it is the best practice to be completely transparent with all transactions. Write down all expenses paid from the joint account, never borrow from the account, and never use the account to buy something that benefits you or a third party. If you and your loved one are unable to agree on a money manager, there are several agencies out there that can help manage your loved one’s finances for you.
Determine a Fiduciary. This will be the “legal guardian” of your loved one’s assets. This person must be determined while your loved one is of sound mind. Let’s look at the different ways to become a fiduciary.
- Trustee: This is someone who has been assigned a trust, which allows for the immediate transfer of assets after death without court interference. Depending on what the trust states, this could mean responsibility for a safe-deposit box or an entire estate.
- Professional fiduciary: This can be an accountant, attorney, or other professional that handles trusts. These professionals should be outlined in a power of attorney agreement which spells out the associated fees and legal authority.
- Court-appointed guardian: This person is appointed by the courts to take care of someone who does not already have a fiduciary and can no longer manage his or her money and/or property.
- Power of attorney: A power of attorney is a legal document that assigns someone the power to make decisions on behalf of someone else. This is usually done early, as your loved one must be of sound mind during the process and in order to revoke it.
- Government fiduciary: These are appointed by government agencies to manage payments issued by that agency. This type of fiduciary is usually a close friend or family member that is authorized to use the benefit payments, such as Social Security, for the loved one’s care.
Be aware of financial exploitation and conflict. We all make errors in judgment; that sometimes means choosing the wrong person to be the fiduciary or on the joint account. This is considered financial abuse and can look like: missing money, abrupt changes in spending, frequent ATM use, and other similar activity. Additionally, money and conversations about it can bring out the worst in people. So, be ready for conflicts early; a great way to avoid them is by:
- Making plans together for care and financial duties, usually before your loved one gets sick.
- Keep detailed records so there is no distrust.
- Have regular family meetings to discuss changes and needs around finances and care.
As these conversations occur, it’s important to communicate with each other and consider what the future looks like- both financially and in terms of care. If you think your loved one may need more assistance than you can give them, contact us today to see how we can help.