Being a caregiver can involve finances, as well

Taking care of an elderly loved one, a parent, relative or family friend, can sometimes mean going beyond the physical to the financial.

This can be fraught with pitfalls, but also can be as essential as getting the person to doctor’s appointments and seeing to it they take their medicine.

“One of the toughest things about taking care of an elderly relative is becoming a financial caregiver,” according to a recent Wall Street Journal piece by Kelly Greene. “Many adult children take on the role so gradually that they don’t realize they have done so. Financial caregivers, formally called ‘fiduciaries,’ are expected to act in another person’s best interest, manage his finances carefully, keep them separate from their own and maintain good records.

“It’s a big job, and it is easy to mess it up accidentally when it lands in your lap, especially when you are juggling a loved one’s health-care challenges and other basic needs.”

“The caregiver has many tough decisions to make,” Sally Hurme, Health and Family Project adviser at AARP, the advocacy group for older Americans, told Greene. “If you add the layer of managing money, it gets even more complicated.”

Officials with the Consumer Financial Protection Bureau see a need to protect the finances of older adults from mistakes and fraud, according to the story. The agency recently published four guides under the title “Managing Someone Else’s Money.”

“The CFPB guides spell out the duties for people in four specific fiduciary roles: people named agents under a power of attorney to make decisions about a family member’s money and property; those appointed by a court as guardian or conservator to manage money or property for someone who can no longer do it on his own; trustees in charge of living trusts; and those appointed by a government agency to manage Social Security or veterans’ benefits,” Greene wrote. “The CFPB tapped the American Bar Association for help in figuring out where fiduciaries can get tripped up and offering guidance on how to handle sticky financial situations involving elder care.”

Greene offered these highlights:

• Understand the power. It is important to follow the directions in the power-of-attorney document, “even if you have the best intentions in doing something different,” the bureau’s guide says.

• You also need to understand how the document says you will know when the power becomes effective, and to involve your loved one as much as possible in decisions about his or her money and property.

• In addition, you should avoid conflicts of interest by refusing to lend your loved one’s money to yourself or others. You also can’t pay yourself for the time you spend acting as agent, unless the power of attorney or state law allows it, and then you need to document carefully how much time you spend and what you do.