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How to Manage Someone Else’s Money

Carrying out your loved one's financial decisions

En español | There may come a time when loved ones entrust you with his or her financial business, by way of a power of attorney, designating you as their agent (or attorney-in-fact). As their agent, your primary job is to carry out your loved one's financial directions, ensuring you make decisions the way he or she would want.

See also: Legal Issues: Protections Your Loved One Should Know About.

A power of attorney is a legal document signed by your loved one, which authorizes you to handle business and legal transactions on their behalf. There is no such thing as a "standard" power of attorney. This legal document is tailored to each individual's situation. As an agent, you must be familiar with all the terms of the power of attorney document.

This is not an invitation to take charge of your relative's affairs and do things your way. Your role as an agent is simply to carry out the instructions and wishes of your relative, which, ideally, were laid out very clearly at a time when your loved one was still managing his or her legal and financial responsibilities. Talk with your relative in detail at the earliest convenience so you are sure you understand what he or she does and does not want you to do.

Using the POA document

Make several copies of the original power of attorney and give a copy to each entity with which you transact business on behalf of your relative. Banks, insurance companies and stockbrokers sometimes insist that you use their power of attorney forms. Find out what forms these institutions require and have your relative sign these forms while he or she is still able.

Keep a list of who has a copy of each power of attorney document. When signing documents as an agent, always make clear that you are signing on behalf of your relative. Sign your name and follow it with the phrase, "as agent for _____." Complete the phrase with the name of your relative. If you sign correctly, you will avoid personal liability.

Advice for Agents

  • Make decisions the way your relative would make them, if he or she were able.
  • You have a fiduciary duty to manage your relative's assets carefully and to act in his or her best interest. If you don't do this, you could be sued for abusing the trust given to you.
  • Always keep your relative's assets separate from yours.
  • Keep good records of all your relative's resources and your actions.
  • Avoid misunderstandings by communicating with other family members about how you are managing your relative's affairs.

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