Tips for Financial Caregivers

The Consumer Financial Protection Bureau (CFPB) has published four guides to help financial caregivers, particularly those who handle the finances of older Americans, carry out their duties and responsibilities in managing someone else’s money.

Each guide explains the role of a fiduciary (a person named as an agent to manage the money and property of another person) and explains what the fiduciary can and cannot do in their role.  The guides outline the four primary responsibilities of a fiduciary:

  • To act in the best interest of the person they have been appointed to assist;
  • To manage the person’s money and property carefully;
  • To keep the money and property of the person separate from the fiduciary’s own assets; and,
  • To keep good records of transactions conducted on behalf of the person.

The guides also warn fiduciaries if they fail to meet these standards, they could be removed as a fiduciary, sued, or have to repay money. It is even possible the fiduciary could be found guilty in a court of fraud, financial elder abuse or theft and be fined, imprisoned, or both.

As indicated, the CFPB has published four separate guides reflecting the role of four different fiduciary capacities:

  • Power of Attorney – A power of attorney is a legal document in which a consumer (the “principal”) gives another person  legal authority to make decisions about his/her money or property should he/she become sick or injured.  Under a power of attorney, the person named in the fiduciary capacity is known as the “agent” or “attorney-in-fact.”  The Power of Attorney document outlines the responsibilities of the agent.  The principal has the right to revoke the Power of Attorney appointment at any time and the appointment automatically ceases upon the death of the principal.
  • Guardians or Conservators – A guardian is someone the court names to manage money, property and sometimes the health care, for an individual whom the court has found is not capable to manage such issues on their own.   A person under guardianship may be called an incapacitated person, protected person or ward.  Sometimes one person is appointed to be the guardian of money and property (“the estate” of the ward) and a second person is named the guardian of the person to make the healthcare decisions.  A guardian of property may be called a “conservator” or “guardian of estate.”  Guardians have obligations to both the ward they assist and court that appointed them.  Guardians typically have to make periodic reports to the court.  A guardianship appointment ceases upon the death of the ward or revocation by the court.
  • Trustees – The third guide is for trustees under revocable living trusts. In these cases, ownership of some or all money and property has been transferred to a trust and, as a result, the person named as a trustee has the power to make decisions about assets owned by or held in the name of the trust.  If there is more than one person appointed, they are co-trustees. A successor trustee may also be named and acts only if a trustee can no longer fulfill that role.  The trust grantor has the ability to name a new trustee at any time.
  • Representative Payees and VA Fiduciaries – From time to time, a government agency may find it necessary to appoint someone to manage income benefit payments of a person.  For example, the Social Security Administration may appoint a representative payee to manage a person’s Social Security benefits payment. The Department of Veterans Affairs has a similar program, but the person appointed is called a VA fiduciary. A representative payee or VA fiduciary only has authority to manage the benefit checks of the agency appointing him/her. They do not have legal authority to manage other property, financial affairs, or medical matters for the beneficiary.  To control other matters, the representative payee or VA fiduciary must have legal authority from another source, such as through a power of attorney, trust, or court appointment.  The agency naming the representative payee or VA fiduciary has the ability to revoke or change the appointment at any time.

All of the guides contain tips on how to spot financial exploitation and avoid scams.  The guides also include a list of agencies to contact to report fraud or a scam, as well as contact information for other agencies and organizations that can help financial caregivers with their duties.

Institutions are encouraged to provide financial caregivers copies of the guide applicable to their appointment in order to help them better understand their role, responsibilities and legal obligations, as well as the consequences for not acting in the principal’s best interest.  The guides can be found on the CFPB website.

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