If you have been appointed as agent under a power of attorney for another person, whether an elderly parent, grandparent or disabled sibling, you should know that, absent particular and unlikely circumstances, you are not personally responsible for paying nursing home bills from your own funds. However, that does not mean that the nursing home will not try to get you to pay them.
What Is A Power Of Attorney?
A Power of Attorney for Property is a very flexible and inexpensive method for one person (‘the “principal”) to give another person (the “agent”) legal authority to manage some or all of the principal’s financial affairs. The agent has the obligation to make decisions based on the preferences of the principal and the authority granted in the document. An agent may not override the wishes of the principal.
An agent is a “fiduciary,” which means that the agent must act with the highest degree of good faith on behalf of the principal and in accordance with the principal’s best interests, not the agent’s interests. The law holds the agent to the “prudent man rule,” which means that the agent must exercise “due care” and manage the principal’s funds not as if they were the funds of the agent but with the care needed for managing funds of another. The agent should avoid speculative investments, even if the agent would be willing to take more risk with his or her personal funds. In general, the agent has authority to do whatever the principal may do – withdraw funds from bank accounts, trade stock, pay bills, cash checks – except as expressly limited in the power of attorney. When transacting business on behalf of the principal, the agent must use the principal’s finances as the principal would use them for the principal’s own benefit. It does not, however, transfer liability from the individual to their agent, which means that the agent is not personally responsible for paying nursing home bills from the agent’s own funds.
There may be some instances that result in the agent being held responsible for nursing home bills. This includes self-dealing, borrowing funds and failing to use the principal’s funds to pay for their care when funds are available. If there is any unlawful behavior on the part of the power of attorney, this is grounds for liability.
Even though, as an agent under the power of attorney, you are not personally responsible for paying for nursing home bills, a nursing home may still attempt to obtain payment from the agent. Fortunately, having a power of attorney to act on behalf of someone else does not mean you are personally liable for that person’s financial obligations and you can certainly refuse to pay.