13 May 2016
Seniors: Choosing a Financial Caregiver

When you think of a caregiver for an older person, what comes to mind? Most people think of someone who helps with physical tasks. But as people get older, they may also need someone they can turn to for help in managing their financial affairs and making financial decisions—in other words, a financial caregiver.

What is a financial caregiver?

A financial caregiver is not a financial professional, such as a banker, financial planner or a broker. He or she is a person who helps you manage your money and other assets, and your relationship will probably evolve over time. The more help you need, the more the financial caretaker can do on your behalf.

A financial caregiver:

  • Helps you with day-to-day finances and helps you plan for future financial needs
  • Identifies benefits for which you may be eligible
    • Tax reductions or home energy assistance for senior homeowners
    • Extra help paying for prescription drugs
    • Reduced fares on public transportation
  • Is vigilant about protecting you from financial exploitation
    • From people you know
    • From unknown scammers
  • Establishes relationships with your bank and other professionals

Why have a financial caregiver?

There are three principal reasons:

1. To help you avoid preventable problems such as missed payments, lapsed insurance or unpaid taxes.

2. To help alert you to potential fraud

3. To have someone in place to handle your affairs if you can’t

Who is a good choice?

What personal characteristics make someone a good choice as a financial caregiver?

  • Someone you know well and trust implicitly
  • Someone with the knowledge and common sense to do things right
  • Someone who can interact effectively with family members and financial professionals.
  • Someone younger than you are, who will be able to act for your lifetime

Hints for choosing financial caregivers

Evaluate the advice—financial and otherwise—they have given you in the past. The only way to judge how people will act going forward is by evaluating how they’ve acted until now. Of course, there’s no absolute guarantee that how they performed in the past will continue in the future.

Weigh how they manage their own finances. How carefully they manage their own money is an indication of how they will manage yours.

Ask your banker and lawyer what factors to consider in making your choice. Bankers and other professionals have lots of experience working with financial caregivers, so they’re in a position to provide insights and guidance.

An evolving relationship

Choosing someone as a financial caregiver is only the first step in what is likely to be a multi-year relationship. However careful you are in choosing a caregiver, the best approach is to move ahead slowly. Then, if you aren’t happy with the way the relationship develops, you can make a switch before giving this person any real decision-making authority.

You should be the one in control, advancing the relationship with a financial caregiver at the pace you choose. Be suspicious of a caregiver who pushes too hard, or is even vaguely threatening.

One way to start a relationship with a financial caregiver is by asking for advice on specific issues and evaluating how helpful the information is.

Ask the caregiver for help with specific tasks:

  • Reviewing statements and preparing tasks
  • Organizing your financial records
  • Filing your tax return

Get help with paying bills

A bank can help protect your assets and make it easier to manage your money by setting up a separate checking account with a limited balance. You can use this account to pay bills and have it replenished from your primary account on a pre-arranged schedule. That way, you can share the account information with your caregiver while limiting access to your primary account.

What about giving the caregiver access to your ATM card and PIN?  While doing so can facilitate payments, there are dangers if the same PIN and password are used on other accounts. Creating a separate PIN and password for the bill-paying account will increase the level of security.

Why not a joint account? A joint account holder is a joint owner, so what’s yours is also that person’s.

  • There is no fiduciary responsibility to use the money for your benefit or in your best interest. In fact, a joint account holder can legally empty the account at any time.
  • If the joint account holder has outstanding debts, such as unpaid bills or a court-ordered settlement, the funds in that joint account can be seized for payment because that person’s name is legally on the account.
  • If you intend to pass assets to more than one beneficiary at your death, anything you own jointly becomes the property of your joint owner, so it can’t be left to anyone else.

Before deciding to establish a joint account, discuss the option with the bank and a lawyer.

Limits of informal arrangements

Informal arrangements with financial caregivers have some significant limitations.

• The caregiver has no legal authority to help you if you are unable to manage on your own. (That authority would come with a Power of Attorney.)

• The caregiver has no fiduciary (legal) obligation to act in your best interest.

• There is no legal record of the relationship, which would complicate efforts to get your money back or sue for losses if the caregiver is dishonest.

Formal arrangements can provide you with added protections and control. Consider giving a trusted person your Power of Attorney. Click here for an article on Power of Attorney and other legal documents that can help protect you and your estate.

Risks with financial caregivers

It’s sad but true that a financial caregiver can be unscrupulous, even if you’ve done everything right in choosing one. For example, with your account numbers and passwords, a caregiver could:

• Transfer your assets to their own account

• Use your money to pay their own expenses

• Make decisions you don’t agree with

Worse yet, you may not know anything is wrong until the damage is done and you may not know how to respond if you discover the betrayal.

Do the benefits outweigh the risks?

Smart money skills support working with a financial caregiver despite the potential risks. Having a financial caregiver is essential, especially as you get older. It’s often the only way to protect your assets.

Delay will make handling your finances more difficult. Starting a relationship before you are truly in need of day-to-day help will give you and your caregiver time to exchange information and set up a system for organizing your paperwork and paying bills, etc.

Waiting too long can require the courts to intercede. It may mean that a judge will appoint a guardian or conservator who might not have any idea about your preferences.

Managing the risks

There are ways to manage the risk of an irresponsible caregiver. The first line of defense against potential abuse by a financial caregiver is to stay involved.

• Be skeptical. If acting in your best interest, the caregiver should be willing and able to explain what’s happening clearly enough for you to understand.

• Never sign anything without checking with your bank or lawyer. Be especially wary of documents that aren’t completely filled out or major changes to your bank or investment accounts that take you by surprise.

• Be assertive. Never hesitate to end a relationship if you’re uneasy about what’s happening.

• Most important, don’t blame yourself or be ashamed to admit there’s a problem. That will only make the situation worse. Report the situation to your banker or lawyer so they can help you find a solution and avoid further damage.

How your bank can help

How can your bank help you manage your money and your relationship with a financial caregiver?

  • When you’ve chosen a financial caregiver, the bank can assist your agent or representative in handling all aspects of your account, from determining the account ownership and opening the account to daily management of your assets.
  • Your bank will alert you to suspicious activity on your account. You may have a choice of how to receive these alerts: email, text, phone, or paper.
  • Your bank representative will help you review statements and explain specific entries.
  • Your bank representative can answer your financial questions or refer you to an attorney or other professional.

Working with your financial caregiver

Working with a caregiver must be collaborative. Making it a successful relationship depends on both of you. A trusted financial caregiver can help you protect your financial security and avoid fraud while ensuring that your money is used as you wish.


The information above was adapted from a presentation provided by the American Bankers Association.



The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.


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