This may just be one of the top 10 questions elder law and Greenville estate planning attorneys are asked by clients. For many Americans who have aging parents – especially with mental or cognitive decline – it can be a tough thing to watch a once strong and mentally capable parent succumb to illnesses. What makes it even more difficult is watching them fall behind on payments and suffer a financial decline as well.
At the Elliott Frazier Law Firm, we help families protect hard-earned assets while avoiding unnecessary heartache and loss. Although it’s always best to plan for the future, even where planning may have failed or been non-existent, there are usually things we can do to help before it’s too late. One specific area where we get a lot of questions is in regards to the issue of debt.
Who Owes Debt – Parent or Child?
If you’re an adult child of an aging parent, you are likely concerned about how your parents’ decline could affect your own finances. After all, you may have been dealing with banks, credit card companies, nursing home facilities, and many other things for years. These people and businesses may know you as the primary account holder, even though your name may not appear as the legal owner on any of the paperwork. This is where it gets tricky.
The General Rule in South Carolina
The general rule is that you are not responsible for debts just by virtue of being someone’s relative. This would be absurd. Think about it. Are your parents liable for your mortgage? Not unless they co-signed for it. Are they responsible for paying your car note, credit cards, your children’s private school tuition? Absolutely not. Does your brother or sister have any legal obligation to pay your water or phone bill? No way.
So, the same rule applies to your parents. You are an adult. They are adults. Unless you specifically co-signed for a loan or account, you have zero obligation to pay for it.
What if You Are an Agent Under a Power of Attorney?
No again. Simply being someone’s agent under a trust or power of attorney document does not make you individually liable for or responsible for their debts. However, naturally, there are exceptions.
The Exceptions in South Carolina
Of course, the law is nothing without exceptions. Here are four clear situations where you may be liable for a parent’s debts:
- You co-signed for a debt;
- As power of attorney, you signed as a “personal guarantor”;
- You accidentally misused or misappropriated your parent’s funds for personal use, and Medicaid made payments for which they seek reimbursements from you; or
- You used a parent’s insurance proceeds or funds for personal purposes, and now the insurance company or medical care provider wants reimbursement.
Where to Turn For Help in Greenville
For complex issues involving debts arising out of a power of attorney, trustee, or other caregiver relationship, contact the Elliott Frazier Law Firm today. We may be able to help provide clear guidance and advice to prevent further difficulties as you manage your role as both loving relative and caregiver.
Angela Elliot Frazier is a Family Law Attorney who practices in Greenville, SC. She graduated from the University of South Carolina School of Law, and has been practicing law for 14 years now. Angela Frazier believes in helping you through one of the most stressful times of your life. Learn more about her experience by clicking here.