A power of attorney is a legal authority that you confer to an individual who gets the right to make financial transactions on your behalf. You are not liable to pay for the personal liability if you have been assigned a power of attorney. Before you confer power of attorney to an individual, make sure that you consult with a lawyer who has deft knowledge related to POAs.
Who is an agent?
The agent who has been assigned with a power of attorney also has the right to access your bank account, pay bills, and manage your debts on your behalf. This individual also holds the authority to make decisions regarding your medical care. You can still manage your affairs even after assigning a power of attorney to another agent. Remember, as long as you are not mentally challenged, the agent is liable to abide by your stated wishes.
What is the role of the cosigner?
The responsibility of a cosigner and an agent is different, as the former is presumed to hold some level of financial liability. The cosigner is equally liable to incur the debt or responsible for repaying the debt if the actual purchaser fails to pay back the owed amount. However, it will be determined based on the agreement.
If the cosigner is equally responsible for incurring the debt, then the creditors can pursue the cosigner for collection. But the creditors should approach the principal debtor who incurred the debt before collecting debt from the cosigner.
Fiduciary duty opposed to financial liability
A fiduciary duty is a duty conferred to an agent by assigning a power of attorney. According to the fiduciary duty, the agent must honestly perform their duty in your (principal's) interest. The agent should not misuse the authority of a power of attorney by using their personal resources to conduct financial transactions on your behalf. In this situation, they are not liable to pay for the financial obligation for the transactions conducted on your behalf. However, the agent will be responsible for paying off the debts if they agree to serve as a cosigner for those transactions.
How can a power of attorney be misused?
The agent can face legal consequences if they misuse your given POA. An agent might be sued in civil court or face criminal trials based on violation of the law. You could put your agent behind bars if the individual failed to perform the duties honestly set out under a power of attorney. Therefore, agents should execute their duties honestly if they don't want to face civil consequences.
About the Author: The following article is written by Sophie Kinsella, a contributory guest columnist for various websites and communities, including Oak View Law Group. She has completed her Graduation in Finance and is currently working with an Investment company located in California. She has written some great articles on bankruptcy, investment opportunities, debt settlement, debt settlement services, and many more.