If you are in a situation that requires you to manage money or property for a loved one who is unable to, it is undeniably a challenging undertaking. The Consumer Financial Protection Bureau offers a five-part guide to help the millions of Americans who are trying to navigate these tasks.
The CFPB’s site breaks down advice into five smaller guides covering the different options people have when they need to take the fiduciary reins for someone else. We’ve summarized each guide here, so you can quickly see which one pertains to your specific needs.
General Questions About Financial Caregiving
The CFPB “Considering a Financial Caregiver?” guide covers the basic questions you’re probably weighing if you are considering becoming or needing a financial caregiver. It breaks down examples of when you can be an informal financial caregiver vs. a formal one, what those different roles entail, and tips for assessing whether someone can capably take on those jobs.
Power of Attorney
One of the formal financial caregiver roles is called power of attorney. This is a legal document that gives someone the authority to make decisions about someone else’s money or property. Granting power of attorney is a common procedure when someone can no longer handle their own finances, and there are a few different types. A durable power of attorney becomes effective upon signing, a springing power of attorney allows someone to manage their own finances as long as they have the ability to make sound decisions, and a health care power of attorney gives authority to make health care decisions.
The CFPB power of attorney guide covers all the questions you might have about this formal role. The guide breaks down the four basic duties of a fiduciary, common loopholes and obstacles, and how to navigate relationship issues that often arise in these situations. It also provides tips for avoiding scams and financial exploitation, and resources you can contact should you need any help.
The CFPB court-appointed guardians guide is for those who have been appointed by a court to be guardians or conservators, giving them the duty and power to make financial decisions on someone’s behalf. A lot of the information looks the same as what’s in the power of attorney guide – the main difference between the roles has to do with who appointed the legal fiduciary. The guide outlines the typical responsibilities of a guardian, the roles of a fiduciary, tasks you may need to undertake, and who to reach out to for help.
A trustee makes decisions about money or property in a revocable living trust; the trustee can only manage the money and property within the trust, not any of the other assets belonging to that person. The CFPB trustees guide again offers much of the same information, but it’s tailored to the particular scenarios that arise when a trustee is appointed. It breaks down the three roles that exist under a living trust (grantor/trustor, trustee and beneficiary), when a trustee’s responsibilities may end, and what your role would typically look like.
The CFPB government fiduciaries guide is for those who have been appointed by a government agency to manage another person’s income benefits, such as Social Security or Veterans Affairs benefit checks. Typically, a VA fiduciary or SSA representative payee can only manage the benefits from the agency that names them. Managing other property or money requires other formal financial caregiving arrangements. The principle applies to other agencies as well: If you are a guardian, power of attorney or trustee, you need to be appointed representative payee or VA fiduciary by the agency paying the benefits to have any official decision-making capacity.
The CFPB exists to make sure banks, lenders and other financial companies treat financial caregivers fairly. The organization offers additional resources and assistance, if needed.