Managing a Parent's Money to Pay for Care: The Legal Tools in Plain Terms

The Consumer Financial Protection Bureau (CFPB) sorts the options into informal help, such as sitting in on a meeting with the bank, and formal arrangements that give someone legal authority. The California Courts self-help guide lists the formal ones as alternatives a family should consider before asking a court for a conservatorship.

This page describes each tool in general terms. It is not legal advice, and which one fits your family is a question for an elder law attorney. The health care side, including what a family can do when a parent says no to a move, is in when a parent refuses assisted living.

The main tools compare this way:

The California Courts guide describes a power of attorney as an agreement that allows one person to name another to make financial or other decisions on their behalf. It can be durable or springing, where a springing power comes into effect when something occurs, such as a determination of incapacity. It can be limited to one decision. The person who made it can change or end it.

The CFPB's guide for agents sets out four duties: act only in the person's best interest, manage the money and property carefully, keep it separate from your own, and keep good records. Its practical rules follow from those. Read the document and do what it says, because the agent's authority is limited to what the document and state law allow. Pay the person's expenses from the person's funds. Sign as agent, in a form such as "Juan Doe, as agent for Martina Roe", never with the parent's name alone.

One limit surprises families. The CFPB says an agent cannot manage government benefits such as Social Security or VA benefits without a separate appointment from the agency.

Adding a son or daughter to a bank account is the quickest fix and the one with the most side effects. The CFPB explains that in a joint account the money is jointly owned and the joint account holder automatically gets the money when the owner dies. A convenience account, sometimes called an agency account, lets a helper deposit, withdraw and write checks without changing who owns the money. Ask the bank which kinds it offers.

The CFPB's guide tells agents to avoid joint accounts, and to get legal advice before changing one that already exists. A joint account also does nothing for Social Security. The Social Security Administration says that having a joint bank account or a power of attorney is not the same as being a payee, and that a person must apply to it and be appointed. How that works is in using Social Security and pensions to pay for care.

If a parent can no longer manage money and never signed a power of attorney, the remaining route is the court. In a conservatorship, a judge appoints a conservator. The California Courts guide says a conservatorship of the estate is the kind that handles finances, and that one person may be appointed for both the person and the estate or different people for each.

The standard is in Probate Code section 1801. A conservator of the estate may be appointed for a person who is substantially unable to manage his or her own financial resources or resist fraud or undue influence. The section adds that substantial inability may not be proved solely by isolated incidents of negligence or improvidence.

The courts guide stresses two things. Needing help is not enough: a judge can appoint a conservator only if it is shown to be necessary. And anyone asking must explain why less restrictive options would not work. For conservatorships of the estate, the guide's own advice is to talk to a lawyer.

Once the authority is in place, the work is routine. These habits come from the CFPB's guides:

1. 1

   Keep your parent's money in your parent's name

   Never deposit it into your own account or anyone else's.

2. 2

   Pay the home from your parent's funds

   Spending your own money and paying yourself back makes records hard to keep. If you must, keep the receipt and a note of why and when.

3. 3

   Write everything down

   Keep a list of what you receive and spend, with dates, amounts and reasons, and keep receipts even for small expenses. Avoid paying in cash.

4. 4

   Involve your parent where you can

   Ask what he or she wants, and share the records with another relative as a precaution unless the document says you cannot.

5. 5

   Watch what you sign at the care home

   Signing as agent is different from promising to pay from your own pocket. See who is responsible for the assisted living bill.

Authority over someone's money can be misused, by a relative as easily as by a stranger. The signs to watch for, and where to report them, are in financial elder abuse warning signs. If anyone is in immediate danger, call 911. Complaints about a licensed care home go to California's Community Care Licensing Division at 1-844-538-8766.

Hamssa Benrekia is a senior living placement specialist in Torrance who helps families in the South Bay and Harbor area find licensed assisted living communities and board and care homes. She starts with care needs and the monthly budget, and can say which homes in her area may fit it. She does not give legal or financial advice and does not handle anyone's money.

More topics are in the California Assisted Living Placement Guide. To talk about a search, contact Hamssa.