Keeping Records When Managing Someone Else's Money

When you pay bills for a parent or handle money for a loved one, you hold a big trust. Good records are how you show that trust was well placed. A clear list of what came in, what went out, and what is left can end most doubts before they start.

This guide shows you what to write down and when you must show it. If you are just starting to help with bills, read our guide on helping a parent manage bills while respecting independence first.

Key takeaways

• If you manage money for someone else, the law treats you as a fiduciary. One of your four core duties is to keep good records.
• Write down each sum you take in or pay out: the amount, the date, the reason, and who was paid.
• Keep receipts and short notes, even for small costs.
• Keep the person's money apart from your own. Pay their costs from their funds, not yours.
• A representative payee must keep records of all Social Security payments and how they were spent or saved, and give them to the Social Security Administration when asked.

Why records are part of the job

The Consumer Financial Protection Bureau, known as the CFPB, calls a person who manages money or property for someone else a fiduciary. Once you are named to do this work, you have duties set by law, no matter who you help or how large the sums are.

The CFPB names four basic duties for a fiduciary:

The CFPB has a free guide for each main role: agents under a power of attorney, court-appointed guardians, trustees, and government fiduciaries such as representative payees. Each guide says the same thing: you must keep true and complete records of the money and property in your care.

Your role shapes what you must report. Our guide on power of attorney, joint accounts, trusted contacts, and representative payees lays out how these roles differ. State laws vary, and the CFPB guides do not give legal advice, so talk to a lawyer if you are not sure what the law asks of you.

• Act only in the other person's best interest.
• Manage the person's money and property with care.
• Keep the person's money and property apart from your own.
• Keep good records.

Start with a full list of what there is

Good records start on day one. Before you pay a bill, list what the person owns and owes. The CFPB tells fiduciaries to have a list of all money, property, and debts:

Date the list, and update it when an account opens or closes.

• Each bank account, with the bank name and the last four digits.
• Each source of income, such as a pension, rent, or a benefit check.
• Each bill that comes due, and when.
• Each debt, with who is owed and how much.
• Key papers, such as the deed and the power of attorney form, and where each is kept.

What to write down each time money moves

The CFPB asks for a detailed list of all you receive or spend for the person. For each item, write down the amount, the date, the reason, and the name of the person or firm paid or who paid you. Add any other key fact, such as the check number.

Keep receipts and notes, even for small costs. The CFPB gives this model note: "$50, groceries, ABC Grocery Store, May 2." Write your note soon after you spend the money. Keep bank statements too. If your list and the statement do not match, find the gap and fix it in writing.

Habits that keep your records clean

Do not pay in cash when you can help it. The CFPB tells fiduciaries to avoid cash, ATM cash draws, and checks made out to "Cash." Cash leaves no trail. A check or card leaves a record on its own. If you must use cash, keep the receipt or write a note the same day.

Pay the person's costs from the person's funds. If you pay from your own funds and pay yourself back, your records get muddy fast. If you must use your own money, keep the receipt and note why, what for, and when you paid yourself back.

Keep the money apart at all times. Never put the person's money in your own account. Avoid joint accounts. Keep each account in the person's own name, so it is clear the money is theirs. When you sign for the person, sign to show your role. The CFPB gives this form: "Juan Doe, as agent for Martina Roe." Never sign just the person's name.

Read bills and statements at once. The CFPB tells fiduciaries to pay bills on time and to check bills and bank statements promptly. A fast check catches a wrong charge while it can still be fixed. If you are paid for this work, log it too. The CFPB says the fee must be fair, and the work, time, and reason must be logged.

Store the records in one safe place

Pick one place for all of it: one file box, one folder set, or one file on your computer. Keep the first list, your log, receipts, and bank statements there. Store paper in a locked place, since the records hold private facts. For files on a computer, use a password and keep a backup copy.

Under a power of attorney, the form or state law may say that someone else can review your records. That is one more reason to keep them clear.

If you are a representative payee, the rules are stricter

A representative payee is named by the Social Security Administration, known as the SSA, to receive Social Security or SSI benefits for a person who cannot manage their own benefits. A power of attorney does not make you a payee, and a joint bank account does not make you a payee. You must apply and be appointed by Social Security. The SSA notes that the Treasury Department does not accept a power of attorney for Social Security or SSI checks.

As a payee, the SSA requires you to use the benefits for the person's current and future needs. Any benefits not needed for current needs must be saved in an interest-bearing account or in savings bonds. You must keep records of all payments and how you spent and saved them. You must give all records to the SSA when asked. You must complete reports on your use of the payments, as required. You must report any change that could affect the person's right to payments, such as a move, a marriage, a new job, or the person's death. You must return any payments the person was not entitled to.

The SSA mails an annual Representative Payee Report to payees who must complete it. If you get the report, fill it out promptly and mail it back, or send it online as the form directs. The SSA says the report is simple if you keep clear records all year.

Some payees do not have to file the annual report: a parent of a minor child who lives in the same home as the child; a legal guardian of a minor child in the same home; a parent of a disabled adult in the same home; and a spouse. If you are in one of these groups, you must still keep records and make them ready for review if the SSA asks.

The SSA says the bank account must be titled so it is clear the money belongs to the beneficiary, not to you, and to pick an account that keeps fees low and lets you keep clear records.

You may pay yourself back from the benefits only for real, fair out-of-pocket costs you paid for the person, such as a cab fare to a doctor visit. The sum must equal the cost you paid, and you must keep records of these costs. You may not charge a fee for being a payee unless you are a qualified group payee approved in writing by Social Security; the SSA never approves a single person to charge a fee.

Records help you spot fraud and fix errors

Clear records also help you see when someone else does wrong. If a charge no one can explain shows up, your log shows it at once. To learn the tricks thieves use, read our guide on recognizing common impersonation and investment scams. If you find a gap in your own records, note what you found and what you did to set it right. Do not rewrite old pages to hide a gap.

Who covers what

• Record-keeping itself: this work is the helper's own job. Medicare and Medicaid do not pay for the time you spend keeping records for someone else.
• Representative payee duty: if you are a representative payee, you must keep records and report to the Social Security Administration as the SSA requires. Verify the current rules at ssa.gov before you act.

Sample Situation

Linda is the agent under a power of attorney for her father, Sam. The SSA has also named Linda as payee for Sam's Social Security check. On her first day, Linda lists Sam's bank accounts, his pension, his rent, his power bill, and his credit card debt, and keeps the list in a file box.

Each week, Linda logs what came in and what she paid. She tapes each receipt to a sheet with a short note: what it was for, the date, and who was paid. She pays Sam's bills from Sam's account and signs each check as his agent. When her brother asks how their dad's money is doing, she shows him the file box. His doubts fade.

When the SSA mails Linda its annual payee report, she fills it out in one sitting. Her log already holds each cost and what was saved.

Your next step

When you are ready to look at what care itself may cost, see our guide to care costs. It lays out the main costs of care, so you can plan with real figures.

Sources

• https://files.consumerfinance.gov/f/documents/cfpb_msem_national_agents_guide.pdf
• https://www.consumerfinance.gov/consumer-tools/managing-someone-elses-money/
• https://www.ssa.gov/payee/faqrep.htm?tl=5%2C10
• https://upload.wikimedia.org/wikipedia/commons/8/86/Senior_couple_at_home_checking_finance_on_credit_card_from_above.jpg