What is a Fiduciary?
In the financial-services world, being a fiduciary essentially means that you must act in your client's best interest; in the caregiving context, it means you have to do the same for your aging relative.
Confused? To help you, the Consumer Financial Protection Bureau (CFPB) on Tuesday published four guides aimed at helping caregivers understand how to best perform the task of managing someone else's finances, including a description of the duties of a fiduciary. As one of the guides sums it up, "The law requires you to manage [your family member's] money and property for her benefit, not yours" and to keep the family member's property separate from your own.
Though the tone of the guides is generally encouraging, the materials also include this warning: "If you do not meet these standards, you could be removed as a fiduciary, sued, or have to repay money. It is even possible that the police or sheriff could investigate you and you could go to jail."
- People named as a power of attorney
- Trustees of a living revocable trust
- Court-appointed guardians
- People who represent a recipient of Social Security or veteran's benefits.
How Many Caregivers Manage Money?
"These 'lay fiduciaries' take on the task with the best of intentions. But without the knowledge of what this task actually entails, they may not be able to do a good job," Eisenhower said.
The guides also address the issue of financial fraud committed against older Americans, and offer some tips on what to watch for to make sure your elderly relatives are not at risk. Certainly, fraud is a big problem for seniors who may be isolated or dealing with health issues that make it difficult for them to protect themselves.
Ways to Spot Fraud
Some novel approaches are being tried to combat the problem. For example, in September, several federal agencies called for banks to report suspicious activity that might signal the financial exploitation of their older customers.
Doctors can play a part in preventing elder financial abuse, too. MarketWatch.com's Anne Tergesen described last year a program that has trained more than 3,000 doctors nationwide to keep an eye out for financial abuse, including asking questions along the lines of, "Do you have a will? Has anyone asked you to change it?"
The bottom line: understand your obligations if you manage money as part of your caregiving duties and seek information from the CFPB or another source if you need help understanding your responsibilities.
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