Last week, I began to answer a reader’s question about the liability of a person acting under the authority of a durable power of attorney.
Specifically, the reader was concerned about the liability of the agent (also called the “attorney-in-fact”) when acting for an elder who resides in a nursing home and who no longer has private funds to pay for care. The reader was concerned that the agent’s personal assets would prevent the elder from receiving Medicaid.
The reader contemplated “giving up” the power of attorney to prevent this from happening.
A durable power of attorney authorizes an agent to take action on behalf of the principal. The agent does not become liable for the debts of the principal merely by virtue of acting as the agent under the power.
However, agents must always be careful to act only in a representative capacity. For instance, as long as the contract at the nursing home is signed by the agent in his or her representative capacity, the agent does not become personally liable for the bill at the nursing home. The agent could become personally liable if she signs the contract at the nursing without indicating her representative capacity.
In general, an agent under a durable power of attorney is acting as a fiduciary and must observe the standard of care applicable to trustees.
Durable powers of attorney are strictly construed by courts and agents should be mindful that they do not exceed the power authorized by the document. If the exercise of the power is improper, the agent is liable to interested persons for damages and losses resulting from the breach of fiduciary duty.
While there is potential liability associated with acting as an agent under a durable pow er of attorney, the mere fact of having such power would not make a principal ineligible for governmental benefits. In fact, giving up the power could pose problems for the elder in a nursing home who may no longer have the ability to make his own decisions and would no longer have a person empowered to make decisions on his behalf.
Some states have filial responsibility laws which attempt to make family members responsible for the necessities of their parents. Florida does not have such laws.