Legal & Financial Help

[ryansride2017]

Hy mother-in-law and her husband are both near 60 years of age and have a big debt/spending problem. They continually spend needlessly on things they don't need. They have a car payment, a truck payment, a boat payment, a RV payment, credit card bills and home equity loans. If I would add up their total assets and subtract their liabilities, they have a negative net worth. They don't have life insurance. About 2 years ago, they asked my wife to go to a lawyer to sign a document giving her power of attorney if one or both of them become medically unable to make financial decisions and be executor of their will.

My first question is whether her creditors (if they were both deceased or unable to make decisions) can come after our personal money because my wife would be the power of attorney or executor.

Secondly, do you think it is unreasonable of me to ask my wife be removed from being the power of attorney and the executor of the will in light of the disgusting debt problems? I see a time in the future where the debt collectors could be calling our house to collect a judgment due to the legal documents my wife signed. Especially considering some collectors are rather ruthless in their collecting practices. I think having to go through the negotiating process with so many collectors is something I don't want my wife and myself exposed to. It's needless aggravation brought upon by people who don't want to grow up and take financial responsibility for themselves. If you were in my shoes, what would you do?

 

[mechanicx]

Being a POA or executor does not make you responsible for the other person's debts, and the creditors generally won't bother the executor. You would have to be married to the decedent to have any possible legal and financial responsible for the debt. If the estate is insolvent then creditors just right off the debt. But it's possible creditors could call the estate's executor and see if there's any funds in the estate to pay debts.

The main thing is why bother being a POA or executor for someone that has nothing but debt? If you have no assets then you don't really need an executor. Being their POA would probably be OK and no real risk. I think they should just file bankruptcy. You're not really an executor until you probate the will in probate court. Then the creditors get dealt with if there is anything in the estate after higher order expenses are paid like funeral, any income taxes and any lawyer fee. If there's no money, then the debts just don't get paid. Life insurance if there was any is seperate from being POA or executor or probate and would just have beneficiares listed. This money is also not available to creditors since it belongs to the benefeciares and not the decedent basically.

 

[Kestas]

I really don't believe that having power of attorney will transfer any of the debts or obligations to your wife or yourself. It's only used to facilitate your wife with handling the financial affairs of her parents.

Read the document closely and you'll understand. She'll be hopfully using an attorney to draw up the documents. The attorney can explain how the document works and answer your questions.

There was a time in history where children were responsible for their parents' debts. Those days are long gone.

 

[ryansride2017]

"Being a POA or executor does not make you responsible for the other person's debts, and the creditors generally won't bother the executor."

I didn't think they could but it definitely was worth asking.

"I think they should just file bankruptcy."

The thing is, with their mental state, they will think they have a clean slate and start the process back over again...sad and frustrating at the same time.

 

[ryansride2017]

Originally Posted By: Kestas
I really don't believe that having power of attorney will transfer any of the debts or obligations to your wife or yourself. It's only used to facilitate your wife with handling the financial affairs of her parents.

Read the document closely and you'll understand. She'll be hopfully using an attorney to draw up the documents. The attorney can explain how the document works and answer your questions.

There was a time in history where children were responsible for their parents' debts. Those days are long gone.


I just don't want to deal with the frustration of all the creditors looking for their money.

 

[mechanicx]

If their finances are as bad as it seems. They probably don't need an executor.If they have a bank account or a car they can just have it set to transfer to you on death. Then there would be nothing left to probate and no executor. The creditors will probably see the death posted in a searchable database and realize that since they weren't notified of probate that they need to write off the debt.

Being an executor would only slightly raise the possibility of being called by a creditor. But you aren't responsible so they are not likely to waste time on that. So they probably wouldn't bother, and if the estate doesn't have valuable things like a house, savings funds or vehicles worth say over $5,000 then there is nothing to probate. As I said you can have bank accounts set to pay on death to a beneficiary. And being a POA would be pretty risk free to do.

 

[The_Jeff]

How does the wife feel about the situation? Does she even think this is your business.

Only the worst third world countries pass debts on to the next generation. These countries get their chops busted for debt servitude, so-called slavery, etc.

If one of her parents (probably the 2nd to die) were on his/her deathbed, POA would be very handy. Even with debt collectors barking at the door you can write checks for the basic needs of life; keeping the electricity on and food in the fridge.

 

[oggb]

Originally Posted By: eljefino
How does the wife feel about the situation? Does she even think this is your business.


I didn't see a single sentence in your original post that even mentions how your wife feels about it. Stop asking people on an internet message board and ask your wife to consult with an attorney so that you can be absolutely certain.

 

[ryansride2017]

Originally Posted By: eljefino
How does the wife feel about the situation? Does she even think this is your business.


She's disgusted by the debt and it only reinforces her decision never to loan or have a credit card with as much as a penny balance. When she signed the previously mentioned papers, we didn't realize their problem was as involved as it is. We are discussing the possibility of unraveling ourselves from the situation entirely. The reaction of the mother-in-law will be interesting after that is done.

 

[Dave Hess]

Laws vary from state to state but I would stay the heck away from them wanting for you and your wife to have 'the power of attorney and the executor of their will'

I am in your same situation but my parents are not broke.

 

[PandaBear]

I'd say stay away as well. That'll not give them the false sense that since you guys are "inheriting" their wealth afterward they could milk you guys while they are alive.

My in laws are in similar situation due to unemployment, they are financially responsible but I do not see them finish their mortgage with anything above water. In the end we'd be lucky not having to pay for their retirement or let them move in with us.

Sorry to hear about the situation.

 

[addyguy]

If they are in their early 60's, are in reasonable health, and have THIS much debt, they will be forced into bankruptcy LONG before they are dead.

I don't know if they are retired yet, but if they retire, their income will go down, as it usually does, and their debts will catch them pretty quick.

I think the debts will be discharged long before you have to administer their will, and it will just be minor clean-up work. I wouldn't worry about any reprocussions of helping them out.

 

[JHZR2]

Sad situation. They will likely have to work until they die, at least at wal-mart. Id worry less about being POA and moreso about them being so bad off that they have to live with you and live off you to survive.

I'd have a real serious sit down with them (not you, your wife - you stay out of it completely, in fact out of the room/home), and discuss the debt issues and the long-term concerns. An adult discussion is warranted.

Id also start giving them the Dave Ramsey books and perhaps even sign them up for the class.

 

[Kestas]

My good friend is a psychologist. He spends at least half of his time helping his patients deal with their financial issues.

 

[ryansride2017]

Originally Posted By: JHZR2
I'd have a real serious sit down with them (not you, your wife - you stay out of it completely, in fact out of the room/home).


That's just it. My wife asked if I could sit there with her as they have this discussion. I know I am going to come across as the evil son-in-law in all of this. But if that is what is to happen to get us out of situation...so be it. I see nothing but trouble ahead for us dealing with their issues if we continue on the road we are on. The Dave Ramsey books are a great suggestion, but it would just fall on deaf ears if you take into account the mental ability/responsibility of who we are dealing with.

 

[hattaresguy]

I wouldn't worry about it, they have nothing so if they die/get sick and can't work anymore their creditors/the state will take it all.

Its sad for people who have their act together, but they can go bankrupt and go right on state programs and be fine.

You only get screwed if you have money.