Don't be liable for debt when serving as power of attorney

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question for the expert Dear To Her Credit,
I've been reading your elder abuse and credit card stories. This happened in our family. My brother and I caught it in time for our mother to have enough money left to live in assisted living for her final years.

Her baby son (age 50) charged over $12,000 on three of her credit cards. The money is still due. My other brother and I have power of attorney for our mother and the accounts are closed. We are also preparing a small claims suit against our younger brother to document his debt.

I have been able to access these accounts online except one, but I am concerned about giving my name, address and so on to the credit card companies. We recognize the estate must pay the bills after our mom dies, but I am afraid of damaging my credit and being held liable for the debts. Without getting a lawyer at this point, would giving the companies my information and power of attorney make me responsible personally?  -- Patrice

Answer for the expert Dear Patrice,
No, signing for your mom's bills in the capacity of power of attorney absolutely does not make you liable for her debts. You do need to be careful, however.

For most adult children, no one is ever going to check up on your expenditures while you're taking care of your own mother. You do the best you can and are careful not to spend money on credit that you know cannot be repaid, and all's well.

In your case, unfortunately, Baby Brother may come around and cause all kinds of trouble. He's been accused of spending $12,000 of your mother's money -- now the most natural response would be to point the finger at you and your other brother and accuse you of doing the same thing. It's a sad situation when it comes to this.

Here's how to protect yourself.

First, make sure everyone knows you are strictly acting as your mother's power of attorney in all your business dealings. Philadelphia attorney Kathleen DeLacy, with Reger Rizzo & Darnall, says, "What she needs to do is make sure whenever she discusses anything or signs anything, that she signs her name as 'Attorney in Fact' for her mother. Never just sign her name."

As long as you identify yourself as your mom's agent, your credit history  should not be affected and you should not be liable for the debts. DeLacy can't guarantee no one would ever try to make a case otherwise, but at least you have a leg to stand on.

Of course, you owe your mother a fiduciary duty to always act in her best interests. DeLacy says, "If she breaches that duty ... she can be liable to her." Even if your mom can't tell you what she wants, acting in her obvious best interests should keep you safe.

It's also important to keep your finances separate from your mom's. With contention about money in the family, I wouldn't charge so much as a candy bar for myself on your mom's credit card. When you go up to the register at the drug store, you'll have to ask them to ring up two separate sales. It's a small inconvenience, but it protects you from allegations of taking advantage of your mother.

Money issues bring out a side of people you may have never seen before. Family members get greedy, or rationalize they have money problems or that they have something coming to them. Your mom is lucky that you stopped your brother from spending more on her credit cards and leaving her with nothing to live on. Let's hope the rifts in the family can be mended and your mom can live peacefully for the rest of her life.

See related: How to detect and prevent elderly financial abuse

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Updated: 11-24-2017