Things You Need to Know About Managing Someone Else’s Money
There are many different situations where someone may ask you to help manage their money. As people get older, the skills necessary to maintain a monthly budget start to wane. When this happens, the elderly usually reach out to family members for help with their finances. Sometimes the courts will step in and determine that a person is unable to handle their own finances and will appoint someone to manage their accounts. In this situation, the money manager would regularly report to the courts and the actions of the money manager would be closely monitored for fraud.
If you do take on the task of managing someone else’s money, there are legal elements you should be aware of that will affect the relationship. You should choose to manage someone else’s money because you know that person needs help and you want to help. You should not only invite accountability, you should seek it out through legal channels. There are a few things you really need to know if you are going to start helping someone else with their money.
No Qualifications Are Needed
Even in the eyes of the law, you do not need a special financial college degree or any kind of accounting experience to manage someone else’s money. It is possible that you are just good with a checkbook, and you have resources you use to handle the things you are not totally familiar with. When you put an accountability process in place, you will not be asked about your financial background. Any court that you approach is going to be much more interested in your motivation than your experience.
Get A Power Of Attorney If Necessary
If you have been asked to manage the finances of someone who is still mentally lucid but just unable to handle their own money, then it may not be necessary to get a power of attorney. That is a decision you and the other party would have to have on your own.
A power of attorney can be a very versatile document. It can give you broad powers to sign contracts and make financial decisions for someone else, or it can be designed for only specific types of financial transactions. For example, you can be given a power of attorney that allows you to sign contracts on behalf of someone else, but you are not going to be given access to their bank accounts.
If you are preparing to manage the accounts of someone who is completely unable to manage their own finances, then a power of attorney would be a very good idea. This would give you the authority you need to make good decisions for the other party and establish or change financial accounts as needed.
Remember Bill Paying Deadlines And Other Important Dates
One of the very first things you need to learn when you start managing someone else’s money is that their bill payment dates are probably not the same as yours. It is critically important that you set up some sort of reminder system that lets you know when your bills are due, and when the other party’s bills are due. This is not something you should try and do from memory. There are plenty of digital products available that can help with these types of important reminders.
You Are Accountable
You are accountable for your actions when you are asked to manage someone else’s finances. In general, you will be asked to include your power of attorney when you start accounts or do major transactions in someone else’s name. The power of attorney is registered with your local state and town government and, eventually, any impropriaties will start to come to the attention of law enforcement.
If you were assigned to handle someone else’s finances, then the court that assigned you is also watching you very closely. In some situations, you will be required to file quarterly reports outlining the actions you took and the agreements you signed. As long as you do what is in the best interest of the person you are representing, then you will have nothing to worry about.
If family members of the person you are representing suspect impropriaties, they can report you to local law enforcement and you will be investigated. This is why it is extremely important to keep family members updated on major transactions and make yourself accountable to the family in any reasonable way possible.
Never Mingle Accounts
While you might feel it would be easier to handle someone else’s finances if the funds were available to you in your own account, this is a sure way to instigate a fraud investigation. You should always keep your accounts separate, and you should keep meticulous records on every transaction you make from the account of the person you are caring for.
It is a lot of responsibility to be asked to manage someone else’s finances, and our elder law attorneys understand the weight of that responsibility. We encourage you to contact our firm if you have been asked to manage someone else’s money and get the legal advice you need to do the best job possible.