Things can change as we get older. Someone who could easily manage their finances may require help from a trusted friend or family member.
It's estimated that 22 million Americans 60 and older have named a power of attorney to make financial decisions for them. Millions of others have court-appointed guardians to handle money matters.
Often, these are nonprofessional money managers or "lay fiduciaries" who try to do the best they can without any sort of formal training.
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"Many older Americans have lived frugally and planned carefully for their later years," said Nora Eisenhower, assistant director for the Office of Older Americans in the Consumer Financial Protection Bureau. "It is critically important that they and their resources are supported by a financially savvy loved one who understands the importance of maintaining good records, investing prudently and avoiding conflicts of interest."
The CFPB just released guide booklets to help people deal with a situation that can feel overwhelming. They spell out in plain English the main duties and the four main responsibilities of a fiduciary:
- Act in the other person's best interest: A fiduciary should not loan or give the person's money to themselves or others. They also should avoid any conflicts of interest.
- Manage their money and property carefully: This includes paying bills on time, protecting unspent funds, investing carefully and having a list of all money, properties and debts.
- Keep their money and property separate from yours: That means no joint accounts, and paying the person's expenses with their own funds and not from the fiduciary's money.
- Maintain good records: The fiduciary should keep a detailed list of the money received or spent on the person's behalf. Avoid paying in cash in order to have a record of purchases and keep all receipts.
There are four guides, one for each of the four different types of fiduciaries: people named in a power of attorney, those appointed by a court to be guardians or conservators of property, trustees under revocable living trusts and those appointed by a government agency to manage income benefits, such as Social Security or veteran's assistance.
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