What are the liabilities of being a power of attorney? As an attorney-in-fact, you may be contacted by creditors of the principal for debts owed; however, you are not financially liable. Nevertheless, the creditors do have the right to attempt to collect payment from the principal.
Risk of Mismanagement or Abuse
Since the legal instrument grants considerable authority to these individuals, they might potentially use this power for personal gain. For instance, an untrustworthy agent could mismanage or steal financial assets, leading to significant asset loss or debt accumulation.
The answer to your question is NO. Being named a POA gives you the authority to act on the principals behalf. But, it does not result in the POA being obligated for any of the principal's debts and liabilities.
An agent can only transfer money to themselves if the POA document explicitly allows it. Self-transfers without explicit authorization are generally considered a breach of fiduciary duty and can lead to legal consequences.
Things You Can't Do As a Power of Attorney Agent
Write a will for them, nor can you edit their current will. Take money directly from their bank accounts. Make decisions after the person you are representing dies. Give away your role as agent in the power of attorney.
While you aren't financial liable, as the attorney-in-fact, you're still the point of contact for the principal's debts. Creditors have a right to attempt to collect the funds that are owed.
Financial Obligations
An agent with a POA must manage the principal's funds and pay bills, including nursing home expenses, using the principal's assets. They cannot be personally liable for the bills unless they've signed an agreement making themselves responsible.
Can a Nursing Home Override a Power Of Attorney? Generally, a nursing home cannot override the decisions made by an agent with power of attorney. The purpose of a POA is to give a trusted individual legal authority to act on the principal's behalf when they can no longer make decisions.
For example, for power of attorney to be durable in California, it must contain specific language to that effect. Power of attorney documents must also either be notarized or signed by two witnesses. These errors and others can render the power of attorney void.
Is an attorney more powerful than a lawyer? Not necessarily. While attorneys specifically represent clients in court, both lawyers and attorneys have the same level of legal education and training. The distinction is more about their role, rather than their power or authority.
A financial power of attorney is a legal document that authorizes an agent to act on your behalf in financial matters. Financial POAs function as proof that the designated agent has the power to manage the principal's finances.
Here's the good news: The answers to the above questions about the POA are straightforward. Your responsibilities depend on the type of POA assigned to you. Accepting a POA doesn't make you liable for your relative's debts.
Potential Disadvantages of Being a Power of Attorney
If you breach your duty, you could owe the principal compensation for damages. The principal could sue you if you did not act in their best interest. A POA could be held responsible if they sign an agreement that could hold them financially liable.
This type of financial exploitation is illegal and punishable under California laws and federal laws. If you believe an elder is a victim of elder abuse, every county in California has an Adult Protective Services agency.
Generally speaking, debt can't usually be transferred to another person. If you're not named on the credit agreement and you didn't sign it, or put your name down as a guarantor, then in most cases, the debt can't be transferred to you.
Making financial and legal decisions on behalf of the principal. Hiring third-party professionals (such as lawyers and CPAs) to assist with power of attorney responsibilities. Litigating on the principal's behalf in court. Making safe investments of the principal's assets.
When a loved one passes away, you'll have a lot to take care of, including their finances. It's important to remember that credit card debt does not automatically go away when someone dies. It must be paid by the estate or the co-signers on the account.
A power of attorney gives one or more persons the power to act on your behalf as your agent. The power may be limited to a particular activity, such as closing the sale of your home, or be general in its application. The power may give temporary or permanent authority to act on your behalf.
Limits of a Power of Attorney in Property Sales
The agent can legally proceed with the sale if the POA grants the authority to sell certain property, whether real estate, personal property, or other assets like stocks. However, the agent cannot sell the property if the POA doesn't explicitly grant this authority.
It's a completely valid, and sometimes responsible, choice to decide against serving as an agent under a power of attorney. If you choose to decline, the best thing to do is have an honest discussion with the person executing the power of attorney.
If the principal wants to see the visitor, the POA cannot interfere. If the principal lacks mental capacity, the POA (a/k/a the attorney-in-fact) may control most aspects of life. However, restricting access to friends and family is not normally done unless necessary to protect the principal.
To pay yourself, keep detailed records of your tasks and time spent, document payments, and consult the POA document to confirm authorization. Seek approval from the principal (if possible) or relevant family members to maintain transparency.