Eddy & Schein can help repair or avoid financial fraud.

Daily Money Managers: Agents Under a Power of Attorney, Trustee or Executor

Have you been struggling to identify trustworthy people to act as agents under power of attorney (POA), trustees or executors for yourself, your loved one or your clients?

With an aging population in which many people don’t have adult children or younger friends to whom they can turn, there is a growing need for people who can be fiduciaries. Some Daily Money Managers (DMMs) who choose to perform these duties and are properly insured, may be the right choice as fiduciaries.

DMMs generally work in clients’ homes managing financial, legal and insurance matters, as well as coordinating clients’ relationships with their trusted advisors. They work closely with Geriatric Care Managers who manage the medical and physical care of clients. DMMs who are members of the American Association of Daily Money Managers (AADMM) have passed a background check and adhere to the industry’s Standards of Practice and Code of Ethics. Those who choose to be fiduciaries are aware of the legal obligations of a fiduciary.

What is the benefit of hiring a DMM? Plain and simple: a DMM has skills and knowledge that many family members may lack. Moreover, family members might be willing to be fiduciaries, but distractions such as family, work and other obligations may keep them from doing the best job. At times, family dynamics also get in the way. Choosing a DMM from the community where the client lives (instead of having an agent under POA across the country, as some family members are) also means the client will have more attention and emergencies will have a faster response time.

A DMM can act as agent under POA, or have a limited POA to handle specific financial responsibilities – a checking account, for instance.

In choosing a DMM to be a fiduciary, ask about the kind of insurance they carry. Just as attorneys carry Errors & Omissions Insurance, so do DMMs. Errors & Omissions and Fiduciary Insurance purchased through the broker affiliated with AADMM is carefully crafted to cover DMM services. If you hire a DMM firm with employees, confirm that the firm carries a Fidelity Bond with good limits to protect against the possible theft of a client’s property by the firm’s employees.

If a DMM is chosen to be a fiduciary, but the DMM is not currently working with the client, the DMM will want to ensure that he/she is kept informed of the client’s situation. The DMM will also arrange for an initial (usually paid) visit in the home of the client to become acquainted with the location of papers and gather all the information about the client’s finances. The DMM may then schedule periodic paid visits (every 3, 6 or 12 months) to confirm that the situation has not deteriorated, to keep informed of any changes in assets and where they are currently located. These visits will allow the DMM to step in as a fiduciary as seamlessly as possible when the need arises.

Once acting as an agent under a POA, the DMM would be paid an hourly fee for work performed as an agent or if acting as a trustee or executor, any statutory rate.

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Eddy & Schein Group has offices in New York and California.

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