When you have a power of attorney over an aging parent, it gives you the ability to make financial decisions in your parent's place. It does not give you absolute authority and power, however. If you take action without understanding your rights and responsibilities, you could put your own finances and your parent's estate at risk.
With a power of attorney, you are a fiduciary
If your parent named you in their power of attorney to make decisions on their behalf, you are a fiduciary. As a fiduciary, you have a duty to act solely in the interests of your parent when acting under the power of attorney.
This means that you cannot profit from any decision you make. You must avoid conflicts of interest and self-dealing when making financial and business decisions for your parent. Some examples of conflicts of interest and self-dealing include:
- Selling your parent's home for a less than a fair market price, whether to yourself, a friend or other family member
- Transferring your parent's funds to your own account for your own benefit
- Using your parent's money to invest in your own business venture
These are just a few common examples of the types of issues that can arise when acting under a power of attorney. Even if you have the best of intentions and are following your parent's wishes, you may inadvertently violate your duty as a fiduciary. If you do violate this duty, it can result in legal action against you and you may owe damages for any loss to your parent's estate.
What can you do to avoid issues?
Whether your parent used a free DIY form or worked with a lawyer to create an estate plan, you need experienced legal counsel to review the document and give you tailored advice about what powers the document gives you. A lawyer can help you understand what you can and cannot do under your parent's power of attorney. Your lawyer can also help you take legal action so you can make the decisions you need to properly care for your aging parent.