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How does bankruptcy affect a power of attorney?

My parents will shortly be declaring bankruptcy, we also want to set me up as a financial power of attorney for them. Should we wait and set up the POA after the bankruptcy has been filed or discharged or is it OK to do it now?
Status: Open    Oct 06, 2016 - 02:39 PM

Elder Law

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Oct 07, 2015 - 12:16 PM

It should not matter if before or after. If your parents need assistance now do it now. If they have mismanaged their money to the point of bankruptcy you should consider changing the account to a fiduciary account where neither of them have withdrawal privileges. You having power of attorney does not stop them from continuing to use the account unless you make it a fiduciary account.

Oct 08, 2015 - 10:34 AM

Declaring bankruptcy will not have an impact on power of attorney. As the agent on a POA, you are able to act on the Principal's behalf - but that doesn't render their assets yours. If your parents need you to assist them with their finances or other matters now, then you may find it helpful to have the POA prior to filing for bankruptcy. Your parents are still able to act independently even once you’re appointed POA. This is something that you’ll want to keep in mind if your parents are filing for bankruptcy because they’ve mismanaged their funds due to dementia or other medical condition.

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