Managing your finances can be hard. Managing the finances of a relative or a friend can be even harder. You want to honor your loved one’s wishes and respect his or her boundaries, but at the same time you need to act in his or her best interest. It can be hard to know where to begin or whom to trust. Not only are there legal obligations that come with this responsibility, but the added emotional stress of caring for a family member or friend can feel overwhelming.
So let’s start with the basics: What is a power of attorney? What does it mean for you, and what should you look out for? Being informed, prepared, and alert will help make a difficult situation as comfortable as possible for all involved.
Be Informed: What Is a Power of Attorney?
A power of attorney is a written document in which one person gives legal authority to another to make decisions about his or her money or property. If you’ve been named to manage money or property for someone else under a power of attorney, you are the fiduciary. It doesn’t matter if you’re managing a small amount of money or a lot, or if you’re a family member or not – you’re now legally responsible for managing that money or property for the benefit of that person, known as the principal.
