Managing Someone Else’s Money

Millions of Americans are managing money or property for a loved one who is unable to pay bills or make financial decisions. This can be very overwhelming. But, it’s also a great opportunity to help someone you care about, and protect them from scams and fraud.
Naomi Karp – CFPB

Indeed, many of us at sometime must manage the financial affairs of a parent, another relative or close friend. It’s challenging enough to manage one’s own finances. Taking care of someone else’s financial assets and managing expenses can be downright daunting.

The Consumer Financial Protection Bureau (CFPB) provides four easy-to-understand booklets to help financial caregivers. The Managing Someone Else’s Money guides are for agents under one of four different circumstances. These are available as PDF documents or print copies can be ordered.

  1. Powers of Attorney
  2. Court-appointed Guardians
  3. Trustees
  4. Government Fiduciaries (Social Security representative payees and VA fiduciaries.)

These Guides are to help someone who has this responsibility now, or may in the future. They are not for legal advice. More information is available on the CFPB web site Financial Protection for Older Americans, including the print copy ordering.

The guides are written for the “everyday” person and are easy to read and understand. A portion of the “Powers of Attorney” is reprinted below to provide a sense of what to expect.

Why read this guide?

Like many people, you may never have been a guardian of someone else’s property before. That’s why we created Managing someone else’s money: Help for court-appointed guardians of property and conservators. This guide will help you understand what you can and cannot do in your role as a guardian. In that role, you are a fiduciary. For this guide, a fiduciary is anyone named to manage money or property for someone else. You’ll find brief tips to help you avoid problems and resources for finding more information. This guide is for family and friends serving as a guardian of property, not for professionals or organizations. The guide does not give you legal advice. State laws vary, so you may have additional duties. Talk to a lawyer if you have questions about your duties. If you want to learn about how to become a guardian of property, this guide is not designed for you. Talk to a lawyer or read other guides from your state bar association or others

What is a fiduciary?

Since you have been named to manage money or property for someone else, you are a fiduciary. The law requires you to manage Martin’s money and property for HIS benefit, not yours. It does not matter if you are managing a lot of money or a little. It does not matter if you are a family member or not. The role of a fiduciary carries with it legal responsibilities. When you act as a fiduciary for Martin, you have four basic duties that you must keep in mind:

  1. Act only in Martin’s best interest. 
  2. Manage Martin’s money and property carefully.
  3. Keep Martin’s money and property separate from yours.
  4. Keep good records.

As a fiduciary, you must be trustworthy, honest, and act in good faith. If you do not meet these standards, you could be removed as a fiduciary, sued, or have to repay money. It is even possible that the police or sheriff could investigate you and you could go to jail. That’s why it’s always important to remember: It’s not your money.

Guardian of property questions and answers:

What is a guardian of property?

A guardian of property is someone the court names to manage money and property for someone else whom the court has found cannot manage it alone. Sometimes a guardian of property is also appointed as guardian of the person. A guardian of the person makes Martin’s health care and other personal decisions. Sometimes a different person is appointed to be the guardian of the person, or Martin himself may still be able to make these personal decisions. This guide only covers duties of the guardian of property. Terms can differ. In many states a guardian of property may be called a conservator or guardian of estate. Martin’s money and property is called his estate. A person under guardianship may be called an incapacitated person, protected person or ward.

What are your responsibilities as a guardian of property?

As guardian of property, you have a double duty—both to Martin, the person you are serving, and to the court.

Duty to Martin
You must always keep Martin’s best interests in mind. In managing his money, you must act for his good and not for your own good. Involve Martin in decisions as much as possible.

Duty to the Court
You are an agent of the court. The court has trusted you. You must report to the court regularly and be ready to answer any questions. When do your responsibilities end? Your responsibilities as Martin’s guardian of property last until the court relieves you of your duties. The court may do this because someone else has been appointed, Martin has died, or Martin no longer needs a guardian.

Much More

The guide itself has much more information than what was reprinted here. If you, or someone you know, is responsible for someone else’s money, or may be in the future, visit the CFPB web site to learn more and download the appropriate guide.

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