Have you witnessed your mom, dad or grandparents having trouble managing money on a day-to-day basis? Are you worried that they may become vulnerable to scams or identity theft? What would happen if you had to suddenly take over management of your parent's finances—paying bills and managing their money? There's not only the day-to-day management but the annual tax returns as well.
If you legally assume control of another's finances, you become a fiduciary, legally bound to act in their best interests. It's critical to avoid anything that causes you to benefit personally from this arrangement.
Here are some ideas to help you protect your mom, dad, grandfather or grandmother from financial missteps:
If you take on fiduciary responsibility, you will want to avoid mixing your assets with those of your relative. Also, it's a matter of approach. Even if you're "in charge," be sure to involve your relative in as many decisions as possible. And remember whose money you're managing—it's not always up to you to decide what her best interests are. Step back if that's what she wants. Assure her from the start that she can cancel everything if necessary. She should understand that she maintains the right and authority throughout the process.
Watching your friends or relatives struggle mentally or fall victim to scams is devastating. By helping with finances, you aim to provide peace of mind for everyone involved.
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