As we all get older, there is a fairly good chance that we might be put into a position of being responsible for the financial affairs of a loved one. Just like caregiving, this role comes from a place of deep love and comes with great responsibility.
It’s vitally important to have financial conversations sooner rather than later, so if you find yourself and your family in this position with changing healthcare needs, everyone must know who the decision-maker is.
I often ask my senior clients, “Who do you think is responsible for financial decisions if you can’t make them?” This approach regularly gives me insights into a family’s ability to transition decision-making to a successor smoothly. Some of the common responses I receive are some variation of the following:
- “My wife is named on the document, but really, it’s my two kids, and they don’t get along.”
- “I’m not sure; I need to clarify that, but probably my oldest would be the one.”
- “I don’t know, but I just want to make sure my ex-spouse and her kids don’t get anything when I die.”
It is important when making these decisions that one take into consideration the temperament and people-skills of the one you designate to manage your affairs if you become unable to do so.
Those of us who have stepped into these shoes learn quickly that the standard of care and the effort needed to “do right” by our loved ones is different than managing finances for ourselves. You might be acting as an agent in a power of attorney document, as a trustee under a trust or as a representative payee or veterans affairs fiduciary or as a court-appointed guardian or conservator.
Remember that your duties are regulated by State law.
When you take on that responsibility, you are now a “fiduciary“for your loved one, meaning you have a legal obligation to act in that person’s best interest without conflict. You are required by law to manage money and property carefully, to keep money and property separate from your own and to keep good, clear records of what you are doing.
Don’t mingle your money with your loved one’s
It’s very important to keep all money and property separate from your own, even if it’s inconvenient. Commingled money can present significant problems even if your family arrived there with the best intentions.
Finally, try to do the following whenever possible:
- Be patient with yourself, but know when you absolutely must act.
- Take small steps, and as early as appropriate.
- When facing an uncomfortable health situation, try not to procrastinate on decisions that must be made any more than necessary.
- Find a qualified guide for yourself, such as an attorney or a trusted friend/family member who has served in a similar role.
- Take comfort in knowing that many others have walked a similar path that you are on in your new role, and others are available to help you.