The Responsibility of Handling Other People’s Money

More and more often as we meet with clients, a recurring topic of conversation is the responsibility of handling the financial affairs of others. Whether that’s for an older adult parent or relative, or whether it’s the handing off of that responsibility to a son, daughter, friend, or other trusted party that concerns our older adult client. As the population continues to age, there is a growing need for older adults to plan for the shift of the responsibility of handling their financial affairs, either now or in the future, to someone else for a variety of reasons—medical, dementia or other incapacity issue, or simply the desire not to have to handle one’s own day-to-day financial affairs.

It is important to be aware that there are a number of roles that you might be assigned to in order to handle the financial life of an older adult; and it is important that these be planned for in advance to avoid potential conflicts in the future:

  • Social Security Representative Payee – The Social Security Administration allows for a representative payee to be assigned in the case that there is an incapacitated recipient of Social Security (family or friends of the recipient that must be 18 years or older).

  • Long Term Care Insurance Lapse Provision Designee – Someone assigned to receive notices in the case that long term care insurance premiums are not paid on a long term care insurance policy. The designee has the responsibility of making sure the premiums get paid until the insured needs to go on claim.

  • Agent for Funeral Decisions – Some states (now including Michigan) permit the appointment of an agent to manage the funeral arrangements for a person, which can be separate from the Executor of the Will.

  • Power of Attorney – General Power of Attorney for General/Financial Decisions allows the power to handle bill paying, banking, investments, IRA and other distributions, and any other financial decisions on the person’s behalf, serving as their financial fiduciary (and making decisions based on their best interests).

As the Power of Attorney, use the resources you have available to you:

  • The professional team – the client’s Financial Planner, CPA, attorney, physician, etc.

  • The client’s Personal Record Keeping Document and Letter of Last Instruction, if they have one.

  • The client’s Financial Plan and history with their planner – this will tell a story about how they have lived their financial life and their historical patterns (especially helpful if you are assisting someone who has developed dementia or cognitive impairment). It’s helpful to begin to attend meetings with the client and their financial adviser, if the client is comfortable, as soon as you know there is an issue and if you know you will be involved in assisting the client now or in the future.

Planning ahead for your involvement in handling money for an older adult is always suggested, so that you can get familiar with the client’s situation, the team members involved, and the resources available. Being a financial fiduciary is a big responsibility, one that you don’t want to take lightly or push off until the last minute to tackle. Contact your planner or myself, at Sandy.Adams@CenterFinPlan, if we can be of assistance in handling these or other Long Life Planning matters.

Sandra Adams, CFP® , CeFT™ is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

Raymond James Financial Services, Inc. and its advisors do not provide advice on tax or legal issues, these matters should be discussed with the appropriate professional.