Taking over a friend or family members finances can be a daunting task.

Navigating strained family dynamics can make it even harder.

No Interest Til Almost 2027?

A mother and daughter smile at each other while holding hands. The mother is elderly and the daughter is middle-aged.

It’s not all about the money. Help your loved onemake a living willto ensure their medical wishes are correctly carried out.

Its often a mix-and-match approach that evolves over time.

Thats why its important to assess your specific situation and consider your loved ones capacity to be involved.

Both people on the account have full legal control over the money.

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Joint accountscan be useful, but its important to understand the potential risks.

Money inside a convenience account stays with the account holders estate after death.

(It doesnt automatically pass to the other person named on the account.)

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Not all states offer convenience accounts.

However, it never hurts to speak with banks and ask what alternatives are available.

When the owner dies, any money in the account goes to the owners estate.

Power of Attorney

Another option is establishing power of attorney.

Creating a power of attorneyis easier than you might think.

Many states offer free power of attorney forms online.

However, ensure the form you use is valid and complies with your states laws.

Consider consulting with an attorney to verify everything is in order.

Anyone can be named as a power of attorney.

The person chosen as power of attorney is called an agent or attorney-in-fact.

Revocable Living Trust

One way to manage someone elses money is through a revocable living trust.

A trustee is the person who makes decisions about the money or property held inside the trust.

Thats why guardianships are usually only considered when no other reasonable alternatives are available.

These fiduciaries can be family members, friends or qualified organizations.

Representative payees are appointed to manage Social Security benefits, whileVA fiduciarieshandle veterans benefits.

You must keep records of how the funds are used and make them available for review by the agency.

For veterans benefits, a background check and interviews are conducted.

Its important to note that fiduciaries only have authority over the specific benefit checks issued by the agency.

Professional Fiduciary

Professional fiduciaries are people or organizations that specialize in managing someone elses money.

Theyre bound by legal and ethical standards to act in the best interests of their clients.

When drafting the agreement, check that to clearly outline the fiduciarys fees and responsibilities.

To find a suitable fiduciary, reach out to an elder law attorney who specializes in these matters.

How Do You Start Managing Someone Elses Money?

Becoming your loved ones financial caregiver usually doesnt happen overnight.

For most families, its a gradual transition.

Here are some important things to keep in mind.

Managing someone elses money requires lots of organization and transparency.

If you have a strained relationship with your family member, consider enlisting professional help.

Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.

She focuses on retirement, investing, taxes and insurance.

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