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Managing Other People’s Money

December 10, 2013

Life brings surprises – not always good and not always without responsibility.  Occasionally, you can end up having to care financially for someone else – a parent, an adult child, a close friend or a not-so-close relative.  Here are some basics to be aware of.

 

  • Before you start, you need to obtain the authorizing document – either a will, trust agreement, power of attorney or court order.  You also need to make sure you fully understand your role, duties and responsibility and who else needs to be informed and reported to
  • If an insurance bond is necessary, you will need to arrange for a policy
  • Also determine if you will be compensated and how
  • Make sure you have, or will have, no conflicts of interest.  It is also best to avoid any appearances of a conflict, even where there are none
  • Do not comingle their affairs with your own
  • You will need to locate all of their accounts and assets
  • Arrangements will need to be made to consolidate assets and prepare an inventory that will need to be watched over and accounted for
  • If inadequate cash is available, then investments will need to be sold
  • You will need to arrange to be able to write checks on their accounts.  This needs to be done as quickly as possible.  You will need to bring an official copy of the authorizing document to the bank and other depositories of the person you      are financially caring for
  • You will need to coordinate what you are doing with the health care proxy to determine the needs of the person and time frame this will be done over [either a few months, years or permanently] and the cost
  • If there are family members, they should be advised of the situation, your role and your request for input
  • Proper investment arrangements will need to be made.  If you are not financially oriented, you will need to engage an investment professional and/or manager
  • You will need to engage an attorney and accountant
  • You should get copies of all necessary documents such as the will, health care proxies, living wills, powers of attorney, contracts, employment agreements, retirement plans, leases and anything else that might need to be monitored
  • Discuss financial arrangements with the place where your principal is or will be residing
  • Locate all outstanding bills
  • Arrange to reimburse the health care proxy for any of their out of pocket expenses
  • You should start out by immediately keeping careful, complete and meticulous records
  • Tax records will need to be kept in order and you will need to locate prior year tax returns
  • Funeral arrangements will need to be determined and arranged for including obituary notices if deemed appropriate
  • Get a list of people to notify of the condition and then do so appropriately
  • Either the apartment will need to be cleaned and lease cancelled or a house put in marketable condition and sold
  • Arrange to open a Post Office Box and have mail transferred there
  • Find out if there are any safe deposit boxes, locate keys and see what is inside them.  Make sure you have someone accompany you to the box to witness the contents
  • Any personal items should be collected and saved for the person or their family
  • If there are funds being held for minor children, coordination will need to be done with the guardians,and investments synchronized with trusts or other documents providing for their financial well-being
  • If Medicaid will be applied for, speak to an attorney who could advise you on how to go about it.  Note that you will need copies of bank and brokerage statements and complete details of transactions going back five full years, so you      will need to start locating these
  • A preventative action, while everything is ok, is to make arrangements to have access to some ready funds if there is a sudden need.  This can be done by having the principal open a bank account with a reasonable balance and making you the limited power of attorney on that account.  This is so you will be able to immediately write checks if the need arises

 

This is a start of what you should expect when called on to manage someone else’s affairs.  The care needs to be at a higher level than you might do for yourself.  Good luck if you find yourself in such a situation.

2 Comments leave one →
  1. Robert Nagler permalink
    December 11, 2013 6:26 pm

    HI Ed This is a good list and I will use it to help me with my sister and I found the
    information is very usefult

  2. Gede Prama permalink
    January 12, 2014 11:21 am

    Dear friend, Thank you very much, I was really happy to have been following your blog. I’m still a lot to figure out, and here I can only say that you are an awesome blogger, full Inspiring and hope you can inspire more readers. Thanks and greetings compassion from Gede Prama 🙂

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