What caregivers need to know
February 27, 2018
If your loved one starts having trouble
keeping a checkbook or becomes confused about money, someone must act as money manager. If that someone is you, here’s
what you should know.
Joint Account
Plan ahead. If your loved one is still
writing checks and using an ATM, now is the time to discuss adding a trusted
family member or friend of their choosing to the checking account. This
sensible precaution may never be needed but will allow bills to be paid if a
health issue, such as a stroke or short-term memory loss, should leave your
loved one unable to write checks, comprehend money or use sound financial
judgment. If your loved one is in the early days of a progressive disease such
as dementia or amyotrophic lateral sclerosis,
having a second person on the account is essential. When needed, that person
can step in as a money manager to pay bills, make deposits and withdrawals, and
monitor the balance to make sure your loved one is not being scammed or financially exploited. Changes to a
bank account can be made only when the account holder is fully mentally
competent.
If a money manager takes over, he or she
should cancel your loved one’s credit cards, PayPal, Venmo, department store
cards and other lines of credit.
If mixing family and finances makes your loved
one uncomfortable, there are money-management programs that help with bill
paying. To find one, contact your local National Association of Area
Agencies on Aging.
What Can Go Wrong?
Many people find a joint account to be the
easiest way to pay bills and keep track of expenses. But it is not without
risk.
·
The second person on
the account could use the signing or ATM privilege to steal from your loved
one’s account.
·
Creditors of either
person may try to collect debts from the account.
·
Money in the account
when either person dies belongs to the other account holder. Some states have a
"convenience account" that allows a second person on the account to
write checks and make deposits and withdrawals, but does not include the right
to keep the money remaining after death.
Be Transparent
·
The money manager is
obliged to make decisions that are in the best interest of your loved one.
·
Write the reason for
the check in the memo field.
·
Keep a written record
of expenses paid from the account.
·
Never borrow from the
account.
·
Never use the account
to pay for anything that benefits your loved one and another person. For
example, you may not buy a car to drive your loved one to the doctor and also
use it to take yourself to work.
·
If you and your loved
one previously have agreed in writing that you will be paid for being the
primary caregiver, it’s best to ask another trusted family member or friend to
be the second on the account. That way you are not writing checks to yourself.
·
Some family members
are naturally suspicious. An open-book policy establishes transparency and
prevents suspicions from taking hold.
Make It Legal
While still healthy, your loved one should
choose a trusted family member or friend as the fiduciary — a legal guardian of
the assets. The fiduciary will make financial decisions if your loved one
became unable to manage money. This can be done only if your loved one is fully
competent. Consult a lawyer to draw up the legal documents.
There are four ways to become a fiduciary:
·
Power of Attorney (POA). Sometimes
called durable power of attorney, POA is a legal document in which one person
assigns another the power to make financial decisions on their behalf, should
the assignor become unable to make sound decisions. Just as your loved one must
be of sound mind to grant power of attorney, he or she must be of sound mind to
revoke it. Without power of attorney or a trust the family risks having to go
to court later to file for guardianship, which is expensive, time-consuming,
public and potentially divisive.
·
Trustee.
While in sound mind,
your loved one transfers assets to a revocable living trust and names a trustee. If, in the
future, your loved one loses capacity to make sound financial decisions, the
trustee becomes responsible for keeping the trust’s property safe. This may
mean putting valuable items in a safe-deposit box, maintaining insurance,
paying taxes and making careful investment decisions. As long as your loved one
can make decisions and the terms of the trust allow it, he or she can change or
end the trust.
·
Government
fiduciaries. These fiduciaries are
appointed by a government agency to manage monthly benefit checks issued by
that agency — usually the Social Security Administration or the Department of
Veterans Affairs. To manage other money or property belonging to your loved
one, you must have power of attorney or court appointment, or be a trustee
under a revocable trust.
·
Court-appointed
guardians. If a court finds that
someone cannot manage money or property alone, a hearing is held to appoint a
guardian or conservator. The guardian of assets must act in the best interest
of the protected person, as well as serve the court and report regularly.
Guardians are required to prepare accountings for the court that detail your
loved one’s income and assets, and explain how the money is being spent.
Financial
Exploitation
Sometimes the best person for the job … isn’t.
The person with power of attorney, the partner on the shared checking account,
the caregiver or the guardian may be taking money from an incapacitated person.
This is called financial exploitation. Common signs are:
·
Money or property that
seems to be missing
·
Sudden changes in the
loved one’s spending or savings
·
Convoluted
explanations
·
Taking a lot of money
out of the bank without explanation
·
Using the ATM
frequently
·
Sudden excessive
gift-giving
·
Intercepting visitors
or phone calls, and not letting the loved one speak for himself
If you think a relative has been exploited,
call the police, sheriff or your local adult protective services agency. You
also can alert the bank or credit card company. If your loved one is in a
nursing facility, call the long-term care ombudsman and talk to a lawyer.
Help for
Fiduciaries
The Consumer Financial Protection Bureau
(CFPB) Office for Older Americans will walk fiduciaries through the job,
showing them how to spot scams and financial exploitation, and advising on what
to do if the loved one is a victim.
The CFPB partnered with the American Bar
Association Commission on Law and Aging to produce a series of free booklets, Managing Someone Else’s Money.
Resolve
Conflicts
Money, even when it belongs to someone else,
can bring out the worst in families — particularly siblings who are beginning to reckon with the
impending death of a parent or, in the case of dementia or Alzheimer’s, the
ongoing loss of the person they were. There is little room for family friction,
but it may appear. Tackle the problem before it festers. Reach out to a family
counselor, mediator or social worker who consults with families in your
situation. A support group will give you a place to vent. The Association for
Conflict Resolution has listings of mediators.
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