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What Caregivers Should Know About Managing a Loved One's Money

Tools and laws for taking care of someone else's finances

Senior woman with her carer calculating bills


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Age and ill health, particularly dementia or other conditions that affect memory and cognition, can impair a person's ability to responsibly manage one of the most important components of their livelihood: their money.

That makes it all the more important to have the uneasy but essential conversation with loved ones about who will oversee their finances, and how, if they no longer can. Here are some important legal and financial tools to understand and potential problems to look out for if you need to take on the role of money manager or find someone else who can.

Joint account

While your loved one is still able to do things like write checks and use an ATM, discuss adding a trusted family member or friend to their bank account.

This sensible precaution may never be needed. But it can only be taken when the account holder is fully mentally competent and can help ensure that bills continue to get paid if a stroke, short-term memory loss or other health issue leaves your loved one unable to make payments, comprehend money or use sound financial judgment.

If your loved one is in the early days of a progressive disease such as dementia or amyotrophic lateral sclerosis (ALS), having a second person on the account is essential. When needed, that person can step in as a money manager to pay bills, make deposits and withdrawals, and monitor the balance to make sure your loved one is not being scammed or financially exploited.

Once they take over, a money manager should cancel your loved one's credit cards, PayPal, Venmo, department store cards and other lines of credit and payment channels.

If mixing family and finances makes your loved one uncomfortable, there are money-management programs that help with bill paying. To find one, contact an Area Agency on Aging.

What can go wrong?

Many people find a joint account to be the easiest way to pay a loved one's bills and keep track of expenses. But it is not without risks:

  • The second person on the account could use the signing or ATM privilege to steal from your loved one's account.
  • Creditors of either person may try to collect debts from the account.
  • Money in the account when either person dies belongs to the surviving account holder. This can create conflicts among siblings or other potential heirs (see below).

Depending on where your loved one lives, you may be able to avoid these pitfalls with a “convenience account,” which about half the states allow. With convenience accounts, a second person can be designated to make transactions, but only for the benefit of the original account owner. The second person does not get to use the money or inherit it when the original holder dies.

Be transparent

Money managers are obliged to make decisions that are in the best interest of their client or loved one. An open-book policy establishes transparency and can prevent suspicions from taking hold.

  • Keep a written record of expenses paid from the joint account.
  • Never borrow from the account.
  • Write the reason for all checks in the memo field.
  • Never use the account to pay for something that benefits you or a third party, even if it also benefits your loved one — for example, buying a car to drive your loved one to the doctor but also using it to go to work.
  • If you are being paid to be the primary caregiver under an agreement with your loved one, it's best to ask another trusted family member or friend to be the second on the account. That way you are not paying yourself.


While still healthy, your loved one should choose a trusted family member or friend to serve as fiduciary — a legal guardian of their assets.

A fiduciary makes financial decisions for someone who becomes unable to manage money. This can be done only if your loved one is fully competent. Consult a lawyer to draw up the legal documents.

There are several ways to become a fiduciary for a loved one.

Power of attorney (POA)

Sometimes called durable power of attorney, this is a legal document in which one person assigns another the power to make financial decisions on their behalf, should the assignor become unable to make sound decisions. The person assigned power of attorney is called an “agent” or “attorney-in-fact."

Without power of attorney or a trust, the family risks having to go to court later to file for guardianship of a loved one who becomes incapacitated, a process that can be expensive, time-consuming and potentially divisive. Your loved one must be of sound mind to grant power of attorney, and must also be of sound mind to revoke it.


While of sound mind, your loved one transfers assets to a revocable living trust and names a trustee. If, in the future, your loved one loses the capacity to make sound financial decisions, the trustee becomes responsible for keeping the trust's property safe.

Among other things, this could mean putting valuable items in a safe-deposit box, maintaining insurance, paying taxes and making careful investment decisions. As long as your loved one can make decisions and the terms of the trust allow it, he or she can change or end the trust.

Professional fiduciary

You may want to hire a professional with experience in money management to oversee financial decisions, particularly if your loved one has extensive or complicated assets or doesn't live near you.

Help for fiduciaries

The U.S. Consumer Financial Protection Bureau (CFPB) Office for Older Americans provides resources to walk fiduciaries through the job, showing them how to spot scams and financial exploitation, and advising on what to do if the loved one is a victim.

The CFPB partnered with the American Bar Association Commission on Law and Aging to produce a series of free guides to managing a loved one's money.

A professional fiduciary might be a certified public accountant, an attorney or a trust company officer (an employee of a trust company or other business that manages trusts, such as a bank or investment firm).

"The professional fiduciary can assure that assets are managed in a fiscally responsible way, and the law provides protections if the fiduciary fails to conduct their duties and responsibilities in a manner that is not in the best interest of the senior,” says Tina S. Nelson, managing attorney for AARP Legal Counsel for the Elderly, which provides legal services for older Washington, D.C., residents.

A professional fiduciary should be named in a power of attorney agreement, either as an appointee of the agent or as the agent him- or herself. The agreement should spell out the fiduciary's fees, and it can include a provision giving family members legal authority to relieve the professional if they are dissatisfied with his or her performance. An elder law attorney can help caregivers find an appropriate fiduciary.

Government fiduciary

These fiduciaries are appointed by a government agency to manage benefit payments issued by that agency — usually the Social Security Administration (SSA) or the Department of Veterans Affairs (VA).

Government fiduciaries are typically family members or close friends of the beneficiary, but a qualified organization (for example, a nursing home) may be selected. They are authorized to use benefit payments for a loved one's care and well-being but cannot manage other assets belonging to that person; that requires power of attorney, a trusteeship or a court appointment.

Social Security. People or entities appointed to manage a recipient's Social Security benefits are called representative payees. They must keep track of how they use the monthly payments funds and make the records available for SSA to review upon request. (For some payees, these reviews are mandatory.)

Veterans benefitsThe VA will appoint a fiduciary for a veteran who is deemed unable to manage benefits due to age, illness or injury. A court order or medical documentation of the person's condition is required. The VA will conduct an examination of the fiduciary (usually someone chosen by the veteran), including a background check, credit review, and interviews with the prospective fiduciary and character witnesses.

Court-appointed guardian

If a court finds that someone who does not have a fiduciary can no longer manage money or property alone, a hearing is held to appoint a guardian or conservator. As a guardian, you are required to act in the best interests of the protected person and provide the court with a regular, detailed accounting of your loved one's income and assets and how their money is being spent.

Financial exploitation

Sometimes the best person for the job ... isn't. The agent with power of attorney, the person on the shared checking account, the caregiver or guardian may be taking money from an incapacitated person. This is called financial elder abuse.

The U.S. Consumer Financial Protection Bureau Actual estimated that actual and attempted losses from financial fraud targeting older Americans topped $6 billion between 2013 and 2017. The average case cost the victim $34,200; those taken advantage of by a fiduciary lost an average of $83,600.

Common signs that a loved one is being financially exploited include:

  • missing money or property
  • abrupt changes in spending or saving habits
  • convoluted explanations for financial activity
  • frequent ATM use
  • large, unexplained bank withdrawals
  • sudden, excessive gift-giving
  • a fiduciary, money manager or other person intercepts visitors or calls and doesn't let loved ones speak for themselves

If you think a relative is being or has been exploited, contact law enforcement and your local adult protective services agency. You also can alert the loved one's bank or credit card company. If your loved one is in a nursing facility, call your state's long-term care ombudsman; you might also want to talk to a lawyer.

Family conflicts

Money, even when it belongs to someone else, can bring out the worst in families — particularly siblings who are beginning to reckon with the impending death of a parent or, in the case of dementia or Alzheimer's, the ongoing loss of the person they were.

Jo McCord, a gerontologist and family consultant at the Family Caregiver Alliance, notes these common points of contention:

  • The family member who serves as primary caregiver is not the one who holds power of attorney, meaning one has to ask the other for money.
  • Family members believe that responsibilities are distributed unfairly or show favoritism.
  • A family member shows up only when a loved one is in the hospital.
  • The primary caregiver wants to receive payment. How much is appropriate? Should family members who help on occasion also get paid, proportionately?

Tackle such problems before they fester. The Family Caregiver Alliance suggests these steps to minimize or deal with family conflicts:

Make plans together for care and financial duties, before a loved one gets sick.

Keep detailed records if you have power of attorney for a parent, and send them to your siblings. Such record-keeping is required by law, and being transparent with the family can reduce distrust and head off legal disputes.

Think about what you really want from your siblings. If you need help in the form of time or money, ask. Don't assume they know you're having difficulty.

Have regular family meetings to talk about financial and care issues.

Seek impartial counsel if a conflict persists — for example, bring a family therapist, mediator, social worker or trusted clergy member into the discussion.

Check the Association for Conflict Resolution's member directory for practitioners in your state — some may specialize in elder care issues. A caregiver support group can also give you a place to vent.

Don't let inheritance disputes divide the family. Discuss estate plans with parents while they're still alive.

If assets are divided in a way you consider unequal or unfair, remember that it was your parents’ decision, not your siblings'. If you suspect there was undue influence or foul play, consult a lawyer or adult protective services.

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