Over 90 million Americans care for a loved one. This is due to the disabilities, disease or financial struggles associated with aging. (According to the Caregiver Action Network). Financial caregivers play an important role. You want your loved ones to maintain the best quality of life possible. The American Bankers Association has offered the following tips for financial caregivers.
“It’s extremely important that caregivers understand their role in managing day-to-day finances and planning for future expenses to ensure that all their loved ones’ needs are met.” - Corey Carlisle, ABA Foundation executive director.
- Learn the rights and restrictions that apply to your role. What is a Financial caregiver? It can mean power of attorney, trustee, and federal benefits fiduciary, or someone with a duty to act and make decisions on their loved one’s behalf. Learn the legal responsibilities of your assigned role.
- Manage money and other assets with wisdom. You may be in charge of daily, unexpected and future expenses your loved one may incur. It is important that you cut unnecessary costs and budget to ensure that all money is properly allocated. (Especially if your beneficiary has a fixed income or limited finances.)
- Recognize danger signs. Seniors have become major targets for financial abuse and fraud. Make sure to stay alert to signs of scams or identity theft that may put your loved one’s assets in peril.
- Keep careful records. When acting as a financial agent, proper documentation is not encouraged but required. Organized financial records, up-to date lists of assets and debts, and a streamline of transactions.
- Stay informed. Watch changes in financial status of the beneficiary and take appropriate action. Also, be sure to stay up to date on changes in the laws affecting seniors.
- Seek professional advice. Consult a banker or other professional advisors when you’re not sure what to do.
Here is an explanation of the various roles and responsibilities of three types of financial caregivers.
Power of attorney (POA)
POA, designated by your loved one, gives you the authority to act and make decisions on their behalf. This includes managing and their bank and other financial accounts. Authority continues if loved one becomes incapacitated and ends when revoked or your loved one dies.
Trustee
Authorized once you are named as trustee or co-trustee of a revocable living trust. Your authority applies only to the property noted in the trust. You're authorized to protect, manage and distribute the trust’s assets as directed in the trust document. Authority continues after the death of the trust creator or grantor.
Federal benefits fiduciary
You will accept/delegate federal government benefit payments in the beneficiary's best interest. (Social Security and Veterans Affairs benefits). The beneficiary receives funds through an account set up for this purpose. Being a representative payee for Social Security benefits or a VA fiduciary for VA benefits, requires you to keep detailed records of all transactions related to the beneficiary. And, you must file annual reports detailing how benefits were used.
Fun facts:
- The Caregiver Action Network began promoting national recognition of family caregivers in 1994.
- President Clinton signed the first NFC Month Presidential Proclamation in 1997.
- Every president since has followed suit. Each November, they issue an annual proclamation recognizing and honoring family caregivers.
For more information on the role of financial caregivers, visit www.caregiveraction.org. For tips and extra resources, visit aba.com/seniors.
