I have power of attorney and my sibling wants me to make him a loan. How to handle this?

1 answer | Last updated: Sep 20, 2016
A fellow caregiver asked...

My father has alzheimers and I have power of attorney. I recently sold his home and my brother suggested we "loan"ourselves the proceed of the sale since our father will never need these funds (he is very financially secure) My sibbling feels that instead of leaving the money in the bank, we should be able to loan ourselves the money and give our father the same interest the bank would. I don't know how to handle this and am very uncertain about this decision. We are both his only legal heirs and even though this will come back to us one day, I don't know..... If I decide to say no, I'm afraid my brother will be very upset and won't understand. I understand his logic but I need to feel OK with this. Am I overreacting?

Expert Answers

Michael Gilfix is a Fellow of the National Academy of Elder Law Attorneys (NAELA) and a Certified Specialist in Estate Planning by the State Bar of California. He was chosen as a Super Lawyer by his peers and has been a national leader in the fields of law, long-term care, tax, and asset protection for more than 35 years. He writes and lectures about these topics across the nation and is the primary author of Tax, Estate, and Financial Planning for the Elderly: Forms and Practice. He has successfully advised thousands of families about protective long-term care planning.

You are not overreacting.

Since you were named in the power of attorney, you are a "fiduciary." This means that your job is to protect and preserve your father's assets with an exclusive focus on his well-being. The type of loan your brother suggests does not even sound like a loan. It sounds like an advance on his inheritance. Since it is not in your father's best interest from any perspective, this alone makes it inappropriate. Moreover, take a look at the power-of-attorney. Unless its terms explicitly allow you to loan his assets to yourself, his agent, you do not even have the power to do so. If you take any advantage, it could be viewed as self-dealing or a breach of your fiduciary duty.

Also understand that just because a person is diagnosed with Alzheimer's Disease, it does not mean that he lacks capacity and should be ignored. A person in the earlier stages of Alzheimer's typically has legal capacity and can make his own decisions. Be careful about your assumptions.

To have the document properly reviewed, talk with an experienced estate planning or elder law attorney who can give you proper legal advice. Until you do that, do not make these loans.