If someone close to you has executed a Power of Attorney appointing you attorney-in-fact, you should feel honored. That person – called the “principal” – has placed a great deal of trust and confidence in you.
You might also be a little concerned. After all, one of the things you’re authorized to do, as attorney-in-fact, is to sign for debts on behalf of the principal. In fact, the Power of Attorney might even authorize you to buy property and sign for a mortgage in the name of your friend or loved one. And, a lot of people who sign such documents worry that they’ll be obligated to pay back the debt.
Acting Within Your Authority
The good news is that, generally, as attorney-in-fact, you’re not personally responsible for the principal’s debt. Of course, this is as long as you’re acting within the authority and instructions given to you by the Power of Attorney document. What does this mean?
- You have to act honestly
- You have to act in the interests of the principal
- You have to faithfully and completely follow the instructions of the Power of Attorney
Acting Outside Your Authority
Plus, you need to be aware of when your authority to act as attorney-in-fact ends. If you use the Power of Attorney to sign for a debt when you don’t have the authority to do so, you could be held personally responsible for that debt. For example:
- If the principal has revoked the Power of Attorney, then, of course, you no longer have the authority to act in his or her name.
- Once the principal dies, the Power of Attorney is automatically revoked.
- In Texas, if you were married to the principal but get divorced, the divorce automatically revokes the Power of Attorney.
And, of course, if you’re otherwise personally responsible for a debt, then you’ll have to pay it. For example, if you’re married to the principal and the two of you took on the debt together, then you’re on the hook.