By: Patty Adams – Marketing Officer of CareGrade.com
Managing finances for an elderly loved one can be a complex process. Many families find the subject of finances awkward and avoid discussing it until a crisis arises. There are steps you can (and should) take to put a financial plan in place before it becomes necessary. Remember that laws regarding matters of powers of attorney vary from state to state, so it’s best to consult an attorney to ensure you are complying with your state laws.
The first thing you should do is have a conversation with your elderly loved one. As him/her what their wishes are regarding their finances and ask who should manage them. If there is a will in place, it should be reviewed and updated if necessary. (And of course if there is no will, now is the time!). Your loved one should then consult with an attorney and determine who should be in charge of their finances in the event it becomes necessary. A durable power of attorney can be designated. A durable power of attorney has the authority to manage your loved ones legal and financial matters in the event they become incapacitated.
If your loved on has already become incapable of managing their own finances and legal matters, it may be necessary to speak with an attorney to establish a guardian that can act on behalf of your loved one. This process tends to be much more complicated if initiated after your loved one has become incapacitated. The courts will want to safeguard against abuse of power in order to best protect your loved one. This is one of the strongest arguments for naming a durable power of attorney before your loved one is incapacitated.
For proper management of your loved one’s finances, follow these guidelines:
• Best Interest
As a designated durable power of attorney, remember your role is to act in the best interest of the disabled person. Therefore, avoid using your loved one’s funds for any of your own uses.
• Separate Funds
You should keep your personal funds separate from those you manage for your loved one.
• Records Maintenance
You should keep accurate records of all transactions you make on your loved one’s behalf. Keep receipts, invoices and bank statements.
• Inform Financial Institutions
Notify all financial institutions your loved one has accounts with, that you are authorized to act on their behalf. Give them a copy of your durable power of attorney to keep on file.
• Consolidate Accounts
To avoid the confusion of numerous accounts, consolidate your loved one’s assets into as few accounts as possible.
• Conservative Investments & Gifts
As durable power of attorney, you should always invest conservatively your loved one’s funds. “Gifts” can only be made with your loved one’s funds if it is specifically addressed in the power of attorney document.
• Document Signature
As power of attorney, the proper document signature should first include your loved one’s name, followed by your signature, followed by “his or her power of attorney”.
Being prepared is the best advice when dealing with your loved one’s financial matters. Although many people avoid discussing financial matters with their loved ones, it’s better to deal with it before it becomes a necessity. This helps to eliminate conflict and confusion. It can also give your loved one peace of mind that their finances will be managed according to their wishes.