Is a Power of Attorney Legally Responsible for the Debts of the Deceased?
- A person, called a principal, can give someone else power of attorney as long as he is alive and of sound mind. The party receiving the power, the agent or attorney-in-fact, can only act while the principal is alive. A former attorney-in-fact might be liable for the debts of the principal in some situations, such as where the two were both a party to a debt. In general, however, he attorney-in-fact is not responsible for those debts he entered into on behalf of the principal.
- An agent's powers terminate once the principal chooses to end the relationship, when the terms of the power of attorney state otherwise or when the principal dies. The agent can continue to act on the principal's behalf until he learns of the termination, or until he learns of the principal's death, but not after. Any debts the agent incurs on behalf of the principal become the principal's debts, not the agent's.
- A person who dies and leaves behind property, either debts or assets, is generally known as a decedent, while the property is referred to as an estate. If an agent incurred a debt on behalf of the principal, that debt, at the time of the principal's death, becomes part of the estate. The estate must then be handled according to the probate procedures of the state in which the principal lived.
- The probate process is dsigned to settle an estate, meaning it takes all the property owned by the decedent and ensures they are accounted for and then given out to new owners. A court will appoint an executor, also known as a personal representative, to settle the estate. If, for example, the decedent had debts, the executor must account for them and then pay them off with any estate assets. The agent that incurred the debt on the principal's behalf is not responsible for paying it back.
Power of Attorney
Termination
Estates
Settling
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