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315 W. Ponce de Leon, #600
Decatur, GA 30030, USA


What Liability Adult Children Can Have For Their Parent’s Debt

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What Filial Responsibility Do Children in Georgia Have for their Parents’ Debts?

As more of our aging parents are experiencing cognitive decline prior to moving into a nursing home or retirement community, some adult children are signing the entrance contracts for their parents in their own name – the adult child’s name, not the parent’s name. This is what often happens when, in legal terms, the parent(s) no longer has the capacity to make financial or medical decisions for themselves. And this is how some adult children are unknowingly finding themselves on the hook for their parent’s expenses.

It’s common that most adult children aren’t familiar with their parent’s financial situation. I encourage my elder law clients to have family meetings and fill their adult children in on their financial situation before signs of mental decline begin. I also encourage the adult children of their aging parents to start enquiring about their parents’ financial situation.

The Trouble With Unknowingly Becoming A Guarantor

Whether signing for a parent entering a care facility or simply signing off on a cellphone agreement, if you sign your name in lieu of one or both parent on a contract without adding any additional language, then you may be stating that you’ll make payments on your parent’s behalf. Clearly, there is widespread misunderstanding of what it means to sign a contract for a cognitively impaired loved one.

How To Avoid Becoming Your Parents’ Guarantor

One way around this kind of trouble is for the parent to have an estate plan that includes a Financial Power of Attorney. Once appointed as the Financial Power of Attorney, the child will sign all subsequent legal documents on their parent’s behalf as their parent’s agent, which does not create individual liability for the contract they sign in their fiduciary capacity.

If you’re named the agent for your parents on a financial power of attorney document, you will have access to your parents’ bank and brokerage accounts to pay the retirement or nursing home on their behalf. Another way to separate your responsibility as power of attorney from any personal financial obligation is to sign your parent’s name as the responsible party on the contract, and after that write, “by [your name] as power of attorney,” followed by the date.

More importantly, don’t ever sign anything you do not fully understand, particularly something suggestive of a personal guarantee. And, even more importantly than that, encourage your parents to create an estate plan while they are fully mentally competent. While you’re at it, create one for yourself too! Give our office a call at 404-370-0696 to discuss your situation in greater detail before you take any financial action on your parents’ behalf.


Looking to find an experienced estate lawyer in the Georgia area who is skilled in asset protection and estate plan preparation? Shannon Pawley is an attorney in Georgia with expertise in estate planning and asset protection. Shannon can provide assistance with creating an estate plan to include making a will and how to establish a trust properly. If you have questions about asset protection or questions about making an estate plan, reach out to Shannon and she will be glad to help answer all the estate planning questions you might have!

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