As the population ages, more elderly individuals rely on debit cards for their daily financial needs. This article provides a guide for attorneys covering legal responsibilities and best practices for managing money for the elderly, what the attorney needs to know under a Lasting Power of Attorney for Finance.
It is particularly important for those managing the finances of the elderly donor with diminished capacity or for those who have lost mental capacity.
Understanding Legal Responsibilities
Fiduciary Duty
An attorney has a fiduciary duty and must act in the ‘best interests‘ of the donor. This includes managing the donor’s funds responsibly, avoiding conflicts of interest and keeping detailed records of all transactions. Using a debit card is a good way to manage money for the elderly, especially with the new App based services. Anyone else who is authorised to use a debit card, for example a carer, must also provide receipts for any and all expenditure.
Key Points:
Best Interest: Always act in the best interest of the elderly person, prioritising their financial well-being and security.
Record Keeping: Maintain meticulous records of all transactions made with the debit card, including receipts, bank statements and logs of expenses.
Avoiding Conflicts: Avoid any actions that could be perceived as self-dealing or conflicts of interest.
Security Measures for Managing Money
Choosing the right debit card
Selecting an appropriate debit card is crucial for security and ease of management. For guidance on this, please read our article: Best debit card solutions for the elderly. Look for cards that offer robust security features and cater to the needs of elderly individuals.
Some Key Features to Consider
Spending Limits: Cards that allow setting daily spending and withdrawal limits to prevent excessive or fraudulent use.
Real-time Notifications: Cards that offer real-time alerts for transactions to monitor account activity.
Fraud Protection: Cards with strong fraud protection measures, such as chip technology, two-factor authentication, and zero liability policies.
Protecting Personal Information
PIN Security
Ensuring the security of personal and financial information is paramount to prevent fraud and identity theft. This might include setting a secure, strong and unique PIN and avoiding using easily guessable numbers, like the date of birth. Educate the elderly person on the importance of keeping their PIN secret. A PIN is often something that can get forgotten. The attorney can help the donor by knowing what the PIN is so they can remind the donor of it when needed. This is better than the donor carrying the PIN number on a piece of paper near their card!
Monitoring
Monitor statements regularly, review bank statements and transaction histories for any unauthorised transactions or irregularities. Also, update security features by utilising the bank’s security features, such as account alerts, two-factor authentication and secure online banking practices. The attorney will be able to manage finances easier by showing the bank or finance institution their Lasting Power of Attorney for Finance to gain access to the account.
Managing Debit Card Transactions
Daily Management
Effective daily management of the debit card ensures that the elderly person’s financial needs are met while safeguarding their funds. Some key practices included setting up direct debits and automating regular payments, such as utility bills and subscriptions. This will avoid missed payments and ensure consistency.
Budgeting
Also, creating a budget that outlines the elderly person’s monthly income and expenses. Use this budget to monitor spending and manage funds effectively. It is also wise to have an emergency fund. Maintain a small emergency fund in a separate account to cover unexpected expenses without disrupting the elderly person’s daily finances.
Handling Disputes and Unauthorised Transactions
Despite best efforts, unauthorised transactions and disputes can occur. Attorneys need to be prepared to handle these situations promptly and effectively. They need to be reported immediately. Contact the bank immediately upon discovering an unauthorised transaction to limit potential losses and start the dispute resolution process.
Document Everything
Keep detailed records of the unauthorised transaction, including dates, amounts, and any communication with the bank. Stay in regular contact with the bank until the dispute is resolved and any unauthorised funds are recovered. Try and have safeguards in place to protect the donor from being scammed in the first place, especially on the phone. There are specialist phones that can block spam callers.
Legal and Ethical Considerations
Informed Consent
Ensure that the elderly person is fully informed about their financial arrangements and consents to the use of their debit card by the attorney. This is unless the donor lacks mental capacity, in which case the attorney must use a best interests decision. Clearly explain the role and responsibilities of the attorney, including how the debit card will be used. Also, provide regular updates to the elderly person about their financial status and any significant transactions.
Financial abuse is a significant concern for elderly individuals. Attorneys must be vigilant in preventing and identifying any signs of abuse. This might include unexplained withdrawals. Sudden changes in spending habits or account activity especially where records or receipts for transactions made with the debit card are missing.
Regular Audits
Conduct regular audits of the elderly person’s accounts to ensure all transactions are legitimate. Consider involving a third-party, such as a family member or financial advisor, to review the account activity periodically.
Carer’s cards
If the donor has lost mental capacity, it may be that you will need to get a debit card for the carer. The best solution is a card that the attorney can control. Recently a company called Sibstar created a debit card specifically for the elderly with dementia in mind. The card is backed by the Alzheimers Society and has an App that the attorney can use to control the funds. It has real-time reporting and notification, spending limits and many more controls.
The attorney must make sure that they get receipts for all transactions. Either the carer can keep the physical receipts or the carer can scan or photograph the receipt and send it to the attorney digitally. The attorney must then check and file the receipts.
Conclusion
Managing debit cards for the elderly requires a careful balance of oversight, security, and respect for the individual’s autonomy. Attorneys play a crucial role in ensuring that the financial interests of elderly clients are protected while providing them with the tools they need for daily financial management. By understanding legal responsibilities, implementing robust security measures, and adhering to ethical standards, attorneys can effectively manage debit card use for the elderly, safeguarding their financial well-being.
