facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
Assigning Financial Caretaking Roles Thumbnail

Assigning Financial Caretaking Roles

When people think about older adults and money, a worry high on the list is fraud and abuse. While it is important to guard against this possibility, the biggest risk to your financial security as you age is actually your own actions. Decreasing ability to make complex financial decisions occurs early in the aging process. The decline may not be noticeable to you or your family, and suspicious financial transactions may be the first sign that a problem exists.

Because of this risk of financial exploitation, it is important to prepare for potential changes long in advance. Simplifying assets, using account aggregation, and having a clear investment policy statement is a great start toward maintaining your ability to take care of your finances as long as possible. Even with these processes in place, at some point, you will want to identify a financial caretaker, that is, someone who can step in as a safety valve to watch and help manage your finances. This will ease the transition when one or more financial caretakers have to assume complete control over your finances.

This process will be much easier if discussions are held early, and agreements are made in advance on how your finances will be handled by your future financial caretaker. By creating and using a family agreement for financial caretaking, you will reduce uncertainty, worry, family arguments, and the chance that you will experience financial fraud and abuse.

What should you include in a family agreement in regards to financial caretaking? A good agreement spells out the responsibilities and expectations of both sides. These agreements must be individualized to your situation, but should include the following:

Your responsibilities

  • What is the structure of your finances and have they been simplified appropriately?
  • Are you using an account aggregator or have you written out explicit instructions of how your bills should be managed?
  • What is the investment policy that should be followed for your assets?
  • Who completes tax returns and when will you allow your financial caretaker access to your returns?
  • When will you provide viewing access to your financial information so your financial caretaker can keep an eye on your finances?
  • When will you provide your future financial caretaker with the ability to access your accounts?
  • What will trigger turning over the management of your finances to your financial caretaker?
  • Who else will be provided information on your finances?

Your financial caretaker's responsibilities

  • How often will they look at your accounts?
  • How often will finances be reviewed with you?
  • What will be their process for writing bills, preparing tax returns, and following your investments?
  • How often will they provide information about your finances to others?