FAQs About Powers of Attorney and Directives

Is an Agent Named in a Durable Power of Attorney Legally Responsible for the Debts of a Principal?

by Rania Combs

A Durable Power of Attorney is a powerful document that allows an agent, or attorney-in-fact, to manage the financial affairs for another person, called a principal. The agent is able to act only while the principal is alive. When the principal dies, the executor or administrator of an estate takes over to settle the estate.

When an agent accepts the responsibility granted under the Power of Attorney, he establishes a fiduciary relationship. The fiduciary relationship requires that the agent avoid conflicts of interest and act in good faith, in the principal’s best interest, within the parameters of the powers granted in the Power of Attorney.

When acting for the principal, the agent should always disclose his or her identity as an agent by printing the name of the principal and signing his or her name as “agent” or “attorney-in-fact.” The agent must also keep accurate and detailed records of each action taken or decision made on behalf of the principal.

Generally, as long as the agent is not a party to the debt, and has acted responsibly and within the parameters of the powers granted in the Power of Attorney, the agent will not be personally liable for the debts of the principal.

About Rania

Rania graduated magna cum laude from South Texas College of Law Houston and is the founder of Rania Combs Law, PLLC. She has been licensed to practice law since 1994 and enjoys helping clients in Texas and North Carolina create estate plans that give them peace of mind.

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