Managing the finances of another is a complex, unique matter. Read the following information provided by experienced attorney Doug Lauenstein to so you can stay well-informed.
There are at least 25 million people in the U.S. with the legal authority to manage someone else’s money. If you’re managing funds for someone, it’s important to know all the implications and responsibilities that accompany this task.
At times, the mistakes made can be permanent and detrimental to the lives of their loved ones. Whether it’s putting money in the wrong hands, or simply neglecting specificities, consider these six helpful tips to avoid significant errors regarding your loved one’s finances.
Put your plans in writing while everyone is healthy.
Make sure your parents have a Will and Power of Attorney documents drafted well before they’re needed. Also, be sure they specify wishes for digital assets, such as rights to domain names and social media accounts. Lastly, an overview of all assets, accounts and insurance information should be written out.
Ease your parents’ fear of losing control.
Often times, when someone is older, they are slowly losing control over different aspects of their life and this process can be scary. When a family member or friend tries to help, they might shut down. To avoid any uneasiness, approach the situation from a standpoint of support, not total control.
Involve other family members.
Tension can be created when one sibling begins to handle a parents’ finances on his or her own. To reduce this tension, hold a family meeting where everyone is present to brainstorm and can come to a mutual agreement. It is also suggested that you bring a witness whenever you visit a safety deposit box or handle large transactions.
Don’t add your name to a parent’s bank account.
Although it may seem like an easy way to control an account, giving yourself joint-ownership over an account can create a swarm of problems. This action could cause medical assistance application problems when applying for nursing home assistance or result in all the money going to you if a parent dies, even if that is not the your parent’s intention. It may be better to keep the parent as the account owner with an authorized Power of Attorney on the account.
Protect money against thieves.
Do your research concerning common financial scams. Creating alerts for account activity regarding a bank account or credit card is a simple solution that can save a multitude of headaches.
Follow the rules, including state-specific ones.
If your parent receives government benefits, such as a Veterans Affairs pension or Social Security payments, handling their finances can become trickier. Government agencies will need to grant you authority to oversee benefit checks. However, this authority is separate from the
Power of Attorney needed to handle the remainder of your parent’s assets.
Although these suggestions may help you avoid costly mistakes, it is still important to discuss your unique situation with an experienced attorney. For more information regarding the management of your parents’ finances, contact experienced attorney Doug Lauenstein.