Managing a Loved One's Money

Naomi Karp from the Consumer Financial Protection Bureau offers advice on avoiding scams and financial exploitation

Millions of Americans are managing money or property for a family member or friend who is unable to pay bills or make financial decisions. This can be overwhelming, but it's also a great opportunity to help someone they care about, and protect them from scams and exploitation.

The Consumer Financial Protection Bureau's (CFPB) Office of Financial Protection for Older Americans has released four easy-to-understand booklets to help financial caregivers. The Managing Someone Else's Money guides are for agents under powers of attorney, court-appointed guardians, trustees and government-benefit fiduciaries (Social Security representative payees and Veterans Affairs fiduciaries).

The guides help those serving as fiduciaries in three ways:

  • They walk them through their duties.
  • They tell them how to watch out for scams and financial exploitation and what to do if their loved one is a victim.
  • They tell them where to go for help.
Naomi Karp

Naomi Karp from the Consumer Financial Protection Bureau offers advice on avoiding scams and financial exploitation

The guides can be downloaded from the CFPB website at You can also order free print copies and free bulk orders.

Question: How do I know if there has been a conflict of interest?

Naomi Karp: A conflict of interest happens when you make a decision about money or property that may benefit someone else at the expense of your loved one. For example, it may be a conflict of interest if you use your mom's money to buy a car and then use the car mainly for your own needs. Or you use your dad's money to pay your son to do repair work. One of your duties as a financial caregiver is to act only in the best interest of the person whose money you are managing.

Question: My name is on my mom's checks, but my brother is now executor of her will. What is my responsibility in this regard? I was sick some years ago and not expected to live, so I relinquished my role as executor.

Naomi Karp: A joint account is one way that financial caregivers can assist with managing money. With a joint account, a caregiver can write checks and make deposits on another person's behalf.

But people who open joint accounts or add someone to their account for convenience should be aware of a few things. If the money belongs to the older account holder, is not meant to be a gift to the joint-account holder and isn't meant to change the person's estate plan, there may be some risks.

For example: The family member can withdraw money for his or her own use or mismanage the money, creditors of either person may try to collect debts from the account, and when one account holder dies, the other may get all the money in that account.

So, say the older person has a will and wants all property to be evenly divided among three children; if only one of the children is on the joint account, that person will likely get all remaining money in the account even if that means the money and property isn't evenly divided among the heirs.

An alternative that doesn't create these risks is a "convenience account" that some states have. You still can have a family member write checks and make deposits and withdrawals, but it doesn't change the ownership of the money in the account — and it doesn't give the person the right to keep the money when you die.

You asked about a situation where one person is the joint-account holder and a sibling is the executor. Being an executor means you handle the estate after the person dies. So one person can be a joint-account holder during the parent's life, and another person can be the executor. Talk to a lawyer for more information about joint accounts and estates, particularly because each state's laws are different.

Next page: When a parent resists financial help. »

Question: My mom moved in with us a little more than a year ago due to physical needs, and until recently seemed mentally sharp enough to manage her finances. Now that's slipping — two overdrawn accounts in one week, confusion over which account she used to write a check, etc. I want to help her manage her finances (and don't want creditors calling our house), but she is resisting mightily. She wants to prove she's competent to do it herself and is totally in denial when presented with evidence to the contrary. How can I persuade her that it would be a good idea to let me be involved in managing her money?

Naomi Karp: This is a really tough one. Just as many older people resist giving up driving, they also fight giving up their "financial driver's license." Unfortunately, when people develop even mild cognitive impairment, their ability to handle finances is impaired.

One thing you might do is try to convince your mother that, as a first step, you help her with bill paying. She wouldn't give up her own management of finances; she would just be getting some help. That way you could monitor how things are going.

There are also money-management programs that help with bill paying, if you think having a neutral third party would help. To find one, contact your local Area Agency on Aging through

But if your mom has a progressive condition and is likely to continue to decline, it may be important for her to designate someone to handle her finances now, while she still has the capacity to make a power of attorney or a trust. Perhaps having a trusted professional, such as her primary care physician or a family lawyer, make the suggestion would make it more likely to happen.

It's best to make a private arrangement, such as a power of attorney or a trust, rather than having to go to court later to file for guardianship, which is expensive, time-consuming and public. Try to have your mom get some legal advice about the best arrangement for her.

Question: After my mom died, my sister took everything, even money that was in probate. Selfish, but she will get her just reward in the end.

Naomi Karp: Sadly, family members, neighbors, friends, caregivers and other trusted people may take advantage of an incapacitated person. We call this financial exploitation.

Unfortunately, sometimes the perpetrator is an agent under a power of attorney or a guardian or has some other authority to handle the person's money — and that may make it easier for them to take money without permission.

The best preventive measures are to be sure that your loved one only gives the power to handle his money to someone he really trusts. And even then, he should make sure other family members and friends know that the person will be managing his money so they can keep an eye out.

Next page: Know the signs of financial exploitation. »

Here are some common signs of financial exploitation:

  • Money or property seems to be missing.
  • Sudden changes in spending or savings, such as taking a lot of money out of the bank without explanation or using the ATM a lot (especially someone who doesn't usually use it), or making new or unusual gifts for family members or a "new best friend."
  • A relative or caregiver keeps someone from having visitors or phone calls and doesn't let the person speak for himself. If you think a relative has been exploited, call the police, sheriff or your local adult protective services agency. You can also alert the bank or credit card company, call the long-term care ombudsman if the person is in a nursing facility, and talk to a lawyer.

For more information about financial exploitation and what to do about it, check out our Managing Someone Else's Money guides and also our Money Smart for Older Americans guide on preventing financial exploitation.

Question: At what point is it better to have a guardianship of a parent instead of power of attorney?

Naomi Karp: Planning in advance is optimal. If your family member created a power of attorney or trust then you probably won't need a guardianship. However, if the person becomes incapacitated and doesn't have either than a family member may need to file for guardianship.

In some cases, the person's only income may be Social Security or veterans benefits. In this case, the Social Security Administration or the Department of Veterans Affairs can appoint someone to receive checks and spend it on the person's care.

Question: What do you do if you've been appointed guardian, but your siblings act suspiciously and think that the money is being mismanaged?

Naomi Karp: If you are the guardian, you'll have to realize that not all family members may agree with your decisions about your parent's money. Sometimes, sibling rivalry going back many years might still cause tension when parents become sick or incapacitated. To help avoid friction, make sure you do your job as the guardian very well by carrying our all of your duties.

The CFPB's Managing Someone Else's Money guide for guardians of property tells you what your duties are and how to be sure you do the right thing.

Sharing information may help, too. For example, if you are a guardian, you will have to prepare accountings for the court about your dad's income and assets and how you spent the money. Unless your dad told you not to, it's often a good idea to share information and deal with questions about a decision when it happens than to deal with resentment that builds up over time. The court can tell you whether you are required to share accountings. Some family members or friends may not have your parent's best interest at heart. If that's the case, it may be better not to share the information or to ask the court not to share it. Use your best judgment.

Sometimes a family counselor or a mediator may be able to help when you have a lot of family friction over your parents' money. The Association for Conflict Resolution has listings of mediators. See the Where to Go for Help section of the CFPB's guides.

Next page: Protecting a loved one's money while he or she is in a nursing home. »

Question: Have you heard of the True Link Visa card that is for older adults? It allows an administrator to monitor and manage what companies are allowed to charge to the card. You can block certain vendors and types of transactions. Is this a good thing to pursue?

Naomi Karp: There are some banks that currently allow third-party "view only" access that will allow you to monitor activity on accounts. I suggest checking with the bank of the older adult and seeing if this is an option.

Question: How can I protect my mother's money while she's in a nursing home?

Naomi Karp: You and several others have questions about nursing homes and financing.

If you have questions about what happens to your relative's or friend's money or property if she is in a nursing facility, talk to your state Medicaid agency or consult an elder-law attorney, who can advise you on planning for long-term care and the relevant laws. The Managing Someone Else's Money guides have some resources for finding legal help. Also, the American Bar Association has a Web page, You can find a listing of state agencies that provide Medicaid or medical assistance on the federal website

Question: What do I need to do in order to have my name added as power of attorney? Have it on the mortgage? What do I have to do so I can pay her bills through her accounts?

Naomi Karp: You are smart to think about how you can handle finances for your relative if she is sick and can't handle her own money. A power of attorney is one of the ways that people arrange for someone else to manage their money and property if they can't do it themselves. Powers of attorney are legal documents.

People plan in advance by naming someone else to make decisions for them if they become sick or injured. Sometimes they are called durable powers of attorney because they remain in effect after the person loses the ability to handle his or her own affairs.

In order to make a power of attorney, your mother must understand what it means to give someone else the power to manage her money. Once a person becomes incapacitated — let's say due to Alzheimer's disease or another dementia — it's probably too late to make a power of attorney.

That's why it's so important to plan ahead. If a person receives a diagnosis, she may still be able to make legal arrangements before the disease progresses, so consult a lawyer promptly in a case like that.

Once you become an agent under a power of attorney, you can do all of the things the document says you can do. So, for example, usually you can pay bills, make mortgage payments and possibly even sell real estate if the document gives you that power.

But you have to remember that it's not your money and that you are acting for your relative's benefit.

As I mentioned earlier, my agency, the Consumer Financial Protection Bureau, has guides to help you carry out your duties. You can find the Managing Someone Else's Money guide for agents under power of attorney, and then click on the power of attorney guide.

Even though no one likes to think about the possibility that he or she may become incapacitated, it always helps to plan for that possibility.

Editor's Note: This Q&A originally appeared on Facebook. It has been edited for clarity.

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