Is POA responsible for medical bills?
The law does not require you to pay the medical bills only because you have a
POA—the bills go to the individual’s health care insurer or their estate.
Deciding to pay medical bills for a loved one is purely a personal choice.
Therefore, medical debt collectors cannot come after you for your parent’s
medical bills after they die.
Is POA responsible for nursing home debt?
You should not feel obligated to pay nursing home debts left behind when the
principal dies. The contract they signed with the institution clearly states who
should cover their bills. When they die, the POA does not make you
responsible. The executor must oversee the use of their estate to cover the
debt.
However, it is critical to note that as an agent and one of the principal’s most
trusted companions, you can find yourself liable for the principal’s debt in
several ways:
- Co-signers. A person who intentionally guarantees or co-signs a debt together with their principal will remain liable after the principal’s death. It does not matter who among the two parties benefited from the debt. If you agree to co-sign a loan with the principal, the contract states that you owe the debt too. If they die, you are responsible for the debt. So, you want to be mindful about creating a situation where you co-sign a debt with power of attorney.
- Joint Accounts. If the agent and the principal hold a joint bank account, any debt remaining from the account is left under the agent’s care when the principal dies. The survivor must settle any debts accrued from the account in full, regardless of who benefited it.
- Communal Property. In certain states, you have the same rights to property and liabilities as your spouse. You share equal responsibility for debts. Under these state guidelines, marital property (both assets and liabilities) is considered communal. Liability on debt, therefore, falls on the surviving spouse. The nine states with community property laws include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
If you plan on getting married in these states, you will want to find out if it’s
wise to marry someone already in debt.
Who settles the principal’s debts?
In the event of death, all the outstanding debts liable to the principal should be
settled using the property in their estate left after death. The family members
of the principal are not responsible for any debts owed by their deceased
relative. However, if a family member or members were co-signatories,
guarantors, or joint account holders, the debt will automatically fall to them.
Can a power of attorney get me into debt?
If you use POA against the contract, you could get into debt. Cases of POA
fraud, which are common, or abuse of power that results in debt are your
responsibility. So, while it can feel like a privilege to be an agent, it comes with
a serious duty to observe the law.
Should you pay a POA debt collection?
Acting in the principal’s best interest includes using their money to pay any
debts they may have. So, if they can afford to pay, you must disburse
payments to the respective lenders (if the contract allows you). If you
unreasonably refuse to pay such debts, their accounts may go into collection,
which could ruin their credit.
On the other hand, the law does not require you to pay for the principal’s debt
out of pocket, and no creditor or debt collector should harass you on their
behalf. You have a right to dispute the account a collection agency is
imposing on you. The Debt Validation Letter is your first line of defense.
Because they won’t be able to prove the debt is yours, they have to stop
contacting you about it.
Some unscrupulous debt collectors may even take you to court. Whatever you
do, don’t ignore the Summons. You should respond immediately by filing a
written answer with the court. Once they get an Answer, most debt collectors
will dismiss the court case.
