A fiduciary is someone who has a financial responsibility to their clients and keeps their best interests at heart when making financial decisions.  A fiduciary will never try to sell you a product. I am a fiduciary because my job requires a legal, ethical, and moral standard when working with each client.

More Than Just Dollars and Cents

The dictionary definition of fiduciary concerns itself with the handling of funds and the strategic moving of assets, but I take the responsibility a step further. My 20 years of experience have molded me into a (quite charming) know-it-all when it comes to payroll taxes and other regulatory requirements in Connecticut and New York, as well as the federal government.

The biggest, most important thing I educate people about is not reporting, or recording, the amount paid out to live-in help and home health aides.

• The IRS has spoken: Home workers are employees, not contractors
• You must withhold taxes from your employees
• A contractor, or 1099, must have a business name and a tax ID number
• A contractor may be required to prove that he or she owns a business

Years ago when I first started my business I was working for a small company doing bookkeeping at their office. They were subject to an audit, and at the time I was being paid as a 1099 employee and not a W-2 employee. The IRS requested me to prove that I was an independent employee by showing business cards and my brochure. This law holds true not only for caregivers but for all independent employees.

Making Enemies (in a good way)

I have had the pleasure of working with just about every type of person there is. One of my favorite group of people to serve is the seniors who sacrificed so much and make up “the greatest generation.” Unfortunately, the sacrifices they made mean nothing to the various con artists and scammers out there. The bad news for them is that I am a whistleblower. Here are just a few examples of some questionable situations that I have helped fix over the years:

• A couple mysteriously ran up $180,000 in credit card charges, including several lavish expeditions to Barney’s and Saks. I knew my clients had never spent that way, and when informed of the charges they were grateful that I was looking out for them.  
• A house painter convinced a senior to have his car repaired by the painter’s friend instead of taking it to a professional. This could have been a very bad thing to do because it might have voided the warranty.  
• In order to run an errand in town, a home health aide obtained a signed, blank check from her senior client and proceeded to “go to town.”
• A home health aide was apparently bored at work and convinced her client to buy a large television and an iPad, complete with a data subscription.

Conservatorship

Conservatorship is a legal concept which entails the process of electing someone to take care of a disabled individual. I have been honored to be a conservator many times in my career. Below are two examples of conservatorships of the estate that illustrate how a fiduciary’s obligation to a client doesn’t end when the client dies:  

• I served as co-conservator for a woman whose bank account was not nearly as grand as her class and personality. My task was to do all the bookkeeping because my co-conservator did not have much knowledge in that arena. We were in a spend down situation, where the goal was to spend her money down until she was on Medicaid. Because she suffered from a terminal cancer, the need eventually arose for her to move into a state-run nursing home, which meant that what was left of her money had to be forfeited to the State of Connecticut.
  
  After she passed away, I saw that there was a hold on her checking account, even though there was a zero balance. I spoke with her attorney who told me that the state seized what was left in the account. I used my authority as a conservator to close the account before any more fees from the bank could be posted.
• In another case, I became conservator for somebody who would pass away only a short time after hiring me. As I was performing my review of this person’s accounts, I saw that one of them had funds  in it. As this was another Medicaid/nursing home situation, and my client had no heirs, I closed out the account by cutting a check to the State of Connecticut. Though no one knew the money was in the account, what I did was the right thing to do as a conservator and in the eyes of the law.

Refusing Gifts

A true fiduciary does not accept gifts from her clients, no matter how close the relationship. A perfect example of this came up recently with a client I adore. She came to me during one of my regular visits and tried to gift me a beautiful diamond bracelet. Despite the personal friendship that had developed between us, I remembered my chief role was that of a fiduciary. In this case, I took the easy way out: I reminded her about her soon-to-be wed granddaughter and suggested giving the bracelet to her instead of me. My client was very excited about this idea, and we wrapped the gift together. I learned a lot about my client’s life and family in the process, and I never had to say the words: “I cannot accept gifts.” But I had to wonder – would other people have accepted the bracelet?

Join me next time for three more tips to help you find the right fiduciary.