Duty 2: Manage Roberto’s money carefully

As Roberto’s fiduciary, you might pay bills or taxes, oversee bank accounts, pay for things he needs, and do other things to manage his benefits. You have a duty to manage Roberto’s money very carefully. Use good judgment and common sense. As a fiduciary, you must be even more careful with Roberto’s money than you might be with your own!

Follow these guidelines to help you make careful decisions:

  • Make sure Roberto’s day-to-day needs for food, clothing, and shelter are met first. Only then should you spend money on Roberto’s medical, dental, and personal needs to improve his daily living conditions or comfort, such as:
    • Improvements in his home or apartment;
    • Recreational activities, magazine subscriptions, cable TV;
    • Educational or training expenses, if they are needed to improve Roberto’s life; and
    • Car payments, if his other needs are met and Roberto needs or owns the car.
  • Pay bills on time. Make sure bills are sent to you. Review bills and bank statements promptly.
  • Protect unspent funds. After you pay Roberto’s regular expenses, if money is left over, you must save it in a federally protected or state-insured interest-bearing account or U.S. savings bond. The interest earned always belongs to Roberto.
  • Consider Roberto’s dependents. If Roberto has a spouse or dependent family members, consult the Social Security Administration or the VA about whether you can use any of his money to pay for their needs.
  • Protect Roberto’s money from creditors’ claims. The law protects Roberto’s benefits. Creditors are not allowed to legally take his Social Security or VA funds, with certain exceptions. His bank generally must protect up to two months’ worth of benefits. But if Roberto owes a debt to the federal government or for child or spousal support, special rules apply. Seek legal help if a debt collector sues Roberto. If Roberto has funds from other sources (for example, pensions, gifts, savings), don’t mix them with his Social Security or VA funds. Mixing funds may make it harder to protect Roberto’s Social Security and VA funds from people who may have claims against him.
  • Don’t overlook taxes. Be aware that some people who get Social Security or other federal benefits may have to pay federal income tax, depending on their total income. As Roberto’s fiduciary, each year you will receive a form showing the amount of benefits paid to him during the previous year. Consult an income tax preparer to determine whether Roberto will owe taxes. Be sure to pay taxes on time. You may be able to access free tax preparation services. Visit irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers for more information. AARP Foundation also offers free tax preparation services. To locate a site, visit aarp.org/applications/VMISLocator/searchTaxAideLocations.action

Avoid possible conflicts of interest.

Sometimes people have good intentions but do things they shouldn’t. Because you are now a fiduciary, you should avoid any conflicts of interest. Here are a few examples of possible conflicts of interest:

Whose car is it?

You used Roberto’s money to buy a car. You use the car to drive him to appointments, but most of the time you drive it just for your own needs. This may be a conflict of interest.

Should you do business with family?

Roberto needs repair work in his apartment. You hire your son and pay him from Roberto’s money. This may be a conflict of interest, even though the work was needed. It appears that you put your personal interest to benefit your son in conflict with Roberto’s interests.