There are many different circumstances that could necessitate assigning someone else responsible for making financial or business decisions on an individual’s behalf.
A person may desire to have another responsible for finances if they are acting as a guardian or trustee for a minor child. A person might give this responsibility to another if they go through a marriage or divorce and want their debts separated from the other party’s credit history. Alternatively, they may wish for someone else to make financial decisions on their behalf because of an illness such as dementia.
Let’s go over some common situations that may require you to handle someone else’s financial decisions.
You might be asked to act as a guardian for an incapacitated relative, friend, or colleague.
It is common for doctors to assign guardianship of patients who are not able to make decisions on their own. For example, if someone has Alzheimer’s disease, they might be unable to think rationally and thus be unable to decide what treatments they should seek.
Appointing guardianship can be completed through a power of attorney, which allows an appointed guardian to make financial decisions if someone becomes disabled or ill to the point they are incapacitated. Once appointed, you should ask the person what you should know about their financials, including where they bank and how much is in each account. If possible, learn whether they have an estate plan, too.
Acting as a trustee for a minor child
A person may desire to have another responsible for finances if they are acting as a trustee for a minor child.
A trustee is someone who manages the money or property of a minor on behalf of the minor’s parents or guardian. When a person becomes a parent, they may wish to appoint someone like their child’s trustee to handle all financial matters such as their education, medical needs, and other expenses. The trustee makes decisions on the child’s behalf but must regularly report to the parents.
A trustee may be appointed by the parents or guardian of a minor, either in their will, through a formal power of attorney document or as part of an official guardianship arrangement. More than one person can be named as trustee for any given minor child.
Marriage or divorce
Someone might give financial responsibility to another if they go through a marriage or divorce and want their debts separated from the other party’s credit history. When a couple gets married, they will register their debts together, which is the same as if they had taken them on together. They can, however, separate these debts by filing for divorce.
In some cases, one of the partners could ask the court to appoint them as responsible for making financial decisions for the other partner. If the court does, this individual will be called a guardian or conservator. If you are appointed as a conservator by the court, the decision-making power is over all of your partner’s financial decisions.
Additionally, if one has a poor credit history and marries someone who is responsible with their finances, the spouse who has a clean credit history may wish for someone else to make financial decisions on their behalf.
The decision to appoint someone else to make financial decisions on an individual’s behalf should not be taken lightly. Many different circumstances could necessitate assigning another person responsible for making these decisions.
If you’re considering appointing somebody else as your conservator or guardian or have recently been asked to handle someone’s finances, it is important that you have some sort of agreement in place so there will always be clear understanding about who has authority over what financial matters.
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