Managing A Senior’s Money
Many seniors, particularly seniors who have lost their spouse, need help managing their finances – often something as simple as writing checks and paying their bills. This help can take the form of a child or a friend who volunteers to keep track of the bills and pay them as they come due. How this is done is a very important decision and often done without much thought of the legal consequences.
Seniors generally turn to two different ways of handling the problem: 1) making a child or friend a joint owner of bank and/or investment accounts; 2) giving a child or friend the authority to manage the senior’s finances with a Durable Power of Attorney.
Unfortunately, it’s simple for a senior to go to his or her bank and make a child or friend a joint owner of the bank or investment account. When that is done, the senior has not only given the child or friend the authority to sign checks and the pay bills but has created a problem that can have very serious consequences.
The senior has made the child or friend a 100% owner of the account and, like any owner, the child or friend has an owner’s right to withdraw money from the account for any purpose. Too often the purpose is to pay his or her bills. Even worse, when the parent or friend dies, the volunteer becomes the sole owner of the account and has no duty to turn over the money to members of the deceased’s family.
In almost all situations a Durable Power of Attorney is the better choice over joint ownership. In a power of attorney the senior gives the child or friend the authority to act for the senior. But it does not confer ownership.
However, a power of attorney can also be misused and it is important that the senior and his or her family consult with an Elder Law attorney so that he or she can talk with the persons involved, explain their obligations and review the different choices that are available with the family.