As time passes, you may need extra help managing your finances. You can appoint a financial caregiver to help, but before authorizing someone to this role, consider the type of help you might need and how to choose the right person.
As people age, they may require extra care, support in their daily lives, and financial help.
Talking about finances can be tricky, and some people may find it difficult to discuss them with their loved ones. However, it is important to have conversations as life circumstances change, perhaps due to aging, disability, illness, or other factors.
CaringInfo describes financial caregiving as managing finances for an older person or someone who is seriously ill or requires other assistance.
A financial caregiver may perform various tasks, including:
- paying bills
- monitoring bank accounts
- filing taxes
- managing trusts
- taking on a financial power of attorney
- filing insurance and benefits claims
A financial caregiver could be a trusted family member, friend, or professional.
Why is it important?
It is important to have a plan so your loved ones know how to carry out your wishes and manage your finances if circumstances require it.
According to the ABA Foundation, these circumstances may include:
- emergencies
- cognitive decline
- risk of fraud
Did you know?
You can allow your loved ones to help you with medical decisions, such as Medicare. You can do this by filling out an authorization form.
You can also allow your loved ones access to your Medical records. This can help with Medicare, medical appointments, and making medical decisions.
The Consumer Financial Protection Bureau indicates that understanding your options around financial caregiving can help you make informed decisions about your needs and who you would like as your financial caregiver.
Informal financial caregivers
| Type of caregiver | What it is | How it works |
|---|---|---|
| Conversation partner | This gives a trusted friend, relative, or professional an overview of your finances, even if you don’t wish to share everything with them. | • Ask your bank or broker to send statements to your chosen partner. • Ask your trusted person to accompany you when you visit your banker or broker. |
| Trusted contact person | Many banks and brokers allow you to add a trusted contact person to your accounts. This means the financial institution can contact your trusted person under certain circumstances, such as if they believe a scammer is targeting you | • Trusted contacts have no access to your money. • Your financial institution may contact them if they see signs of financial exploitation. |
| Convenience account | This allows you to name someone to help deposit, withdraw money, or write checks. It is not the same as a joint checking account, where you own the money jointly with someone else, and the other person automatically receives the money upon your death. A convenience account allows someone to help you with your money but does not change the ownership of the account. | A convenience account allows someone to help you with your money but does not change the ownership of the account. |
Formal financial caregivers
| Type of caregiver | What it is |
|---|---|
| Power of attorney | This legal document gives someone else the authority to make decisions about your property or money if you are unable to do so. Different types of power of attorney are: • Durable power of attorney: This becomes effective upon signing. • Springing power of attorney: This allows you to manage your own finances as long as you are able to do so and make sound decisions. • Healthcare power of attorney: This gives another person the authority to make healthcare decisions on your behalf. |
| Guardian | If a court decides you are unable to manage your money yourself and you don’t have a power of attorney in place, the court can appoint a guardian or conservator to manage your money and property. The court can either name separate people to make financial and healthcare decisions or appoint the same person to make all decisions. |
| Trustee | This person makes decisions about property or money in a trust. They only manage the money or property in the trust, not your other assets. A revocable living trust gives this trustee the authority to make decisions about the assets in the trust if you are no longer able to make them. It also specifies who receives the assets in the trust upon your death. |
| VA fiduciary or SSA representative payee | The Department of Veterans Affairs (VA) or the Social Security Administration (SSA) may appoint someone to manage your VA or SSA benefits if you cannot manage them yourself. This person can only manage the benefits from the agency that names them. |
What do I do next?
- Speak with your financial institutions about what informal financial caregiver options are available.
- Speak with an attorney about your legal options:
- Consult your local legal aide office:
- Speak with the SSA about a Social Security representative payee.
- Visit the VA website for more information on the fiduciary role and how to apply.
You do not have to appoint a financial caregiver via legal documentation. It is not uncommon for people to look after a loved one’s finances without legal paperwork.
However, it can be useful to put a power of attorney in place while you are still able to make your own decisions. This can help with your own and your loved one’s peace of mind.
According to CaringInfo, many financial institutions will not speak to another person without written documentation. If you do not have a power of attorney, your loved one will have to petition a court for authorization.
Durable power of attorney
A durable power of attorney is a legal document
- medical
- legal
- financial
Depending on the terms of the document, a durable power of attorney can take effect as soon as you have signed it or when you can no longer make decisions on your own.
Usually, a durable power of attorney remains in effect until you cancel it or upon your death.
Questions to ask when choosing a financial caregiver
- Do I trust this person?
- Do I feel comfortable sharing my wishes with them?
- Will they carry out my wishes the way I want them?
- Are they willing and able to take on this responsibility?
- Will they manage my money and property carefully?
- Will they make decisions in my best interest?
- Will they keep good records?
- Will they be able to keep my money separate from their own?
It can be challenging to know where to begin when managing a loved one’s finances or choosing someone to care for your financial future.
Have a conversation
It can be helpful to start a conversation about the future of your or your loved one’s finances early on before an emergency happens or cognitive decline begins.
You may wish to plan your conversation ahead of time. You can refer to someone you know as an example of the importance of financial planning. You can also use “what if” questions to see if the person you are speaking with is the right person to be your financial caregiver.
Example “what if” questions
- What would happen if I went into the hospital?
- How would you take care of my bills?
- Would you help me take care of my finances if I could not?
- Would you keep your finances separate from mine?
It can also be helpful to talk about your expectations. This may include ensuring your caregiver:
- understands your finances in case you have any questions
- pays bills on time
- reviews your accounts
- manages your finances
- keeps an eye out for fraud or scams on your accounts
You can assign caregiving tasks to those closest to you and ensure they can and are willing to coordinate their roles.
Documentation
Once you have spoken with your loved one, ensure that all the legal documentation is in place.
This may include:
- power of attorney
- additional documentation that your financial institutions, the SSA, or the VA may require
- documentation for estate planning, such as a will or living trust
Proper planning and communication can make financial caregiving less overwhelming.
It can help to set a spending plan or budget with your financial caregiver. Following these steps can make this process easier:
- List all sources of income, including pensions, social security, and any other sources of income you have.
- Document all your expenses, which may include housing, groceries, medical expenses, and utilities.
- Calculate the difference by subtracting the costs from the income.
- Set any excess aside for savings and make adjustments f there is a shortfall.
You may wish to create more than one spending plan. For example:
- Estimate your income and expenses if you continue to work and pay for care.
- Estimate your income and expenses if you reduce your working hours or cease employment.
Going into more detail
The following tips can help you discuss your finances in more detail and help you and your caregiver plan better for the future.
Document your assets
Tracking your assets can be an important part of managing your finances.
- Accounts and titles:
- Make a list of all your financial accounts, including checking, savings, retirement accounts, credit accounts, and investments.
- Make sure you know your account titles, as this will determine how your assets are accessed. For example, a joint account allows access by more than one person. Payable on death (POD) or transferable on death (TOD) accounts transfer directly to your beneficiary upon your death without going through probate.
- List your beneficiaries. Review and update your beneficiaries for any IRAs, life insurance, pensions, or other accounts.
- Important documents:
- Gather important documents, such as tax returns, account statements, and insurance policies.
- Track your online accounts and securely store the login information for future access.
Make a list of credit cards and loans
Create a detailed list of all your credit cards, loans, debts, and other financial obligations. You may want to track the following:
- Credit card payments: Be sure to list your balance, due date, and contact details for each account.
- Loans: Include any mortgages, car loans, and student loans, and note each lender and payment terms.
- Buy Now Pay Later (BNPL): Be sure to list any buy now pay later accounts and balances, as these often get overlooked.
- Automatic payments: List any automatic payments you have and note redirection instructions if something happens to the payment account.
It is also important to understand any insurance coverage you may have. Some health plans, long-term care plans, or disability plans may require prior notification before providing any medical services. Knowing who to contact and when can make this easier.
Here are some additional resources for information on financial caregiving and other aspects of caring for a loved one:
If you do not have someone in your life whom you would trust as a financial caregiver, there are money management programs that may be able to help. You can find help in your area using the Eldercare Locator.
As you age, you may find that you need more help in your daily life, including managing your finances. It can be helpful to allocate a financial caregiver early on before you need one.
This person can help you manage your accounts, pay bills, and review your accounts for fraud. This may be the same person who helps you with medical decisions and daily caregiving, or you may have a different person to be your financial caregiver.
Starting the conversation early and setting a plan for the future of your finances can help make this transition less overwhelming for you and your caregiver.