There may come a time in someone’s life when they need help with their finances.   Perhaps someone needs help paying bills, filing taxes, or other tasks.   The bigger question is, can the person still oversee their finances with assistance, or do they need someone to take over this task?  If a person needs help, then they can hire a bookkeeper.  If someone needs to take over, that is when the Power of Attorney is activated, or they need to bring on a Fiduciary.

What does a bookkeeper do for older adults?

The role of a bookkeeper varies depending on the needs of the person.  Some people need bill management services, while others need help gathering documents to file taxes.  Suppose a person has more complicated finances, such as rental properties, small businesses, legal obligations from a past marriage or relationship, etc. In that case, some bookkeepers can help with this, too.  Keep in mind that a bookkeeper is different than an accountant.  Bookkeepers are low-level accountants since they focus on daily tasks, while accountants can file taxes and analyze finances.

A bookkeeper can help with the following tasks:

• Daily money management – includes paying bills and overseeing bank and credit card transactions.
• Tax preparation – helps gather information, including 1099s and write-offs, and then provides the information to a CPA or tax specialist so that the person can file their taxes on time.
• Healthcare and insurance payments—Oversee medical bills and insurance coverage, including meeting any deductibles. Also, pay insurance premiums so there is no lack of coverage.

Are there licensing requirements for a bookkeeper?

The qualifications for a bookkeeper are different from those of an accountant.  An accountant has a higher level of education, has to pass a CPA exam, and maintains continuing education requirements.   On the other hand, a bookkeeper is considered a low-level financial person. Therefore, the law does not technically require bookkeepers to be “licensed.”  However, accreditation programs are available to bookkeepers, which helps increase a person’s marketability over unlicensed competitors.

What does a Fiduciary do?

While a bookkeeper can assist a person with their finances, a Fiduciary takes on a more significant role by taking over their finances.   A person can appoint someone to be their Power of Attorney and enact the role, which implies a fiduciary responsibility.   Another option, if someone does not know or trust someone to be their Power of Attorney, is to hire a person or organization to act as a Fiduciary and take on the role.  Fiduciaries and Power of Attorney are required to put the client’s best interest ahead of their own, with a duty to preserve good faith and trust.  Fiduciaries are thus legally and ethically bound to act in the other’s best interest. With that said, a Fiduciary has the following duties:

• Duty of Care – They must make informed decisions that protect the beneficiary’s interest.
• Duty of Loyalty – They are to act in the beneficiary’s best interest at all times.
• Duty of Good Faith – They are to act within the law to advance the beneficiary’s interests.
• Duty of Confidentiality – They must maintain confidentiality of all information relating to the beneficiary.
• Duty of Prudence – They must administer matters and make decisions concerning the interests of beneficiaries with the highest degree of professional skill, caution, and critical risk awareness.
• Duty to Disclose – They must disclose all relevant information that could impact their ability to carry out their fiduciary responsibilities and/or the well-being of their beneficiary’s interests.

Are there licensing requirements for a Fiduciary?

Most fiduciaries have a Bachelor’s degree, but some have a master’s degree.  Some fiduciaries gain professional experience in the finance world.  In California, fiduciaries must meet the necessary education/experience requirements, pass a background check, complete 30 hours of approved pre-licensing education credits, and pass the state’s licensing exam.

If you notice someone struggling to pay their bills on time or manage their money, consider whether they need to work with a bookkeeper, enact their Power of Attorney, or hire a Fiduciary. These are significant decisions, so include the person in the conversation.

STAGES is a resource for the aging community.