Managing Someone Else's Money Lawfully
Family members frequently begin helping with finances informally — collecting pensions, paying bills, using a card. This works until a bank questions it, or until capacity declines and formal authority becomes necessary and unavailable.
The levels of authority
Informal help with the person's full knowledge and consent, such as being present while they bank online, is generally unproblematic while they retain capacity and are directing matters.
Third-party mandate or authority on an account allows a named person to operate it on the account holder's behalf, arranged directly with the bank. It usually ends if the account holder loses capacity.
A power of attorney for financial matters allows an appointed agent to act, and a durable or lasting form continues through incapacity. This is the arrangement most people actually need.
Where capacity has already been lost without a power of attorney in place, an application to a court or tribunal for deputyship or guardianship is required. It is slower, more expensive, publicly recorded and involves ongoing supervision and reporting.
Why timing matters
A power of attorney can only be made by someone who understands what they are doing. Once capacity is lost, that route closes permanently.
This is why the arrangement should be made well before it is needed, as routine planning rather than a response to decline.
Duties of anyone acting
Act in the person's best interests, not your own or the family's.
Keep the money separate from your own. Mixing funds is the single most common source of difficulty and suspicion, even where intentions were entirely honest.
Keep records of everything: income, expenditure, and the reasoning for significant decisions.
Involve the person in decisions to whatever extent they are able, and follow their known wishes.
Do not make gifts beyond what is customary and modest without specific authority, since gifting from someone else's funds is a common area of dispute and investigation.
Practical arrangements
Register the authority with each institution, which usually requires certified copies and takes time. Doing this before it is urgent avoids problems.
Some banks have specific processes and dedicated teams for this, and they vary in how straightforward they are.
Where more than one attorney is appointed, understand whether they must act jointly or can act independently, since joint appointment can cause practical difficulty.
Protecting everyone
Transparency with other family members prevents most disputes. Sharing an annual summary of what was spent and why costs nothing and avoids suspicion.
Where possible, appoint more than one attorney or arrange oversight, which protects the person and also protects the attorney from allegations.
This article is general information and not legal advice. Arrangements and terminology vary considerably by jurisdiction; consult a qualified solicitor.
Article Was Generated By AI.