March 23, 2023
Are You Financially Liable When Acting As A Power Of Attorney?
In this episode of Berry’s Bites, Chris Berry answers the question: Is a person financially liable when they act as a Power of Attorney?
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Is a person financially liable when they act as a power of attorney?
This concept of serving as a. Whenever you’re serving as either a financial power of attorney, maybe you’re serving as a medical power of attorney, maybe you’re a trustee, so you’re acting as a trustee, managing money. Maybe you’re an executor of a will. The big thing with all of these things, Is that you are serving really as what’s called a fiduciary, and this word fiduciary.
It’s used different ways as a certified financial planner and an attorney, like I have to serve as a fiduciary for my clients. But when you’re serving as an agent under financial power of attorney or. Serving as an agent under the medical power of attorney, or you’re serving as a trustee under a trust or the executor under a will, you’re stepping in into this role of a fiduciary, meaning you don’t actually own the checking account that you’re writing a check on.
You don’t own the investment account that’s in the name of the trust. You don’t own what’s in the trust. The trust owns it. Or if you’re serving as financial power of attorney for someone, that person owns that account. And so the question is, was really kind of focusing on this idea of. All right, I’m serving as a medical power of attorney for someone.
Now, let’s say they rack up a bunch of long-term care costs or hospital bills or medical bills. Are you liable as the agent for the individual’s medical bills? And the answer is no. You’re not liable for their expenses, like you’re supposed to use their money for whatever their costs would be. And this is where there’s some coordination.
Between the medical and financial power of attorney. So the medical power of attorney allows you to make decisions with regards to the medical care, but obviously there’s going to be questions of how do you go about paying for that? Well, that’s you as a financial power of attorney. You could use that individual’s money.
To write a check and just sign it, not in your name, you would sign it as p o A for Jim Smith. So let’s say that you were the agents for Jim Smith Here. What you would do is you would sign the check with your name, and then you would just write p o a after it. So you’re using Jim Smith’s money, his checking account to pay for his medical bills.
Now, if all of those costs kind of aid into Jim Smith’s bank account, they can’t come after your bank account. The only way that you would ever be li. Is if you don’t follow this fiduciary standard, if you don’t act in the individual’s best interest, but typically the person that you’re appointing is a financial power of attorney or medical power of attorney or trustee, like you trust ’em.
That’s why you’re pointing that person. A lot of times it’s a spouse and then kids, but really to specifically answer the question, you’re not financially liable when you’re acting as a POA for someone unless you were like embezzling their money or something like that, so you wouldn’t be on the hook for their medical bills.