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My husband sold his grandmother’s house and paid off our mortgage — now his family is threatening to sue

Dear Moneyist,

My husband and I took his grandmother in after his grandfather gave up the ghost in 2013. She lived with us for 4 years. During this time my husband had sturdy energy of lawyer over his grandmother. They shared a checking account and used the cash she made off of promoting her property to pay off our house, by which she lived in. We had to acquire a house that may higher accommodate her disabilities and her canine.

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She invested $225,000 in our house. The settlement to use this cash used to be made between my husband and his grandmother whilst she lived with us. Since hanging her in a house, we’re promoting our house and the use of the cash she invested in our house to quilt her nursing house prices. My husband’s mom desires to sue us for different bills she is claiming we used of the grandmothers whilst she used to be residing with us.

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We didn’t make her pay any expenses whilst residing with us. My husband’s mom used to be her healthcare agent.

Basically, she took it upon herself to download my husband’s and his grandmother’s checking accounts. (She stole the statements from the grandmother’s room.) She seemed in the course of the statements during the last 4 years and says we owe the grandmother cash as well as to the $225,000.

My husband’s mom confirmed up in 2016 and made up our minds to put the grandmother in a house. She is now threatening to sue us for the cash that used to be invested in our house, plus any cash he spent from their joint account. Does my husband’s mom have grounds to sue?

Worried spouse

Dear Worried,

Your husband’s grandmother lived with you for 4 years. Giving up her house and her lifestyles’s financial savings turns out like a steep worth to pay.

It could also be that you simply began out attempting to do the correct factor, however can have been blinded through this monetary alternative. It used to be dangerous and, most likely, unethical. You don’t say whether or not he additionally had monetary energy of lawyer, as well as to scientific. Whatever the solution, I imagine you will have to do no matter you’ll to make this proper in your husband’s grandmother and appease your better half’s mother.

You had been type to take on your husband’s grandmother, however this used to be completed as a part of an ill-advised monetary transaction. There are a number of problems that would pose an issue for you and your husband. Did your husband act in his grandmother’s hobby or his personal? Was his grandmother of sound thoughts and/or used to be she below any more or less duress? Was she depending on you and your husband?

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A power of attorney gave your husband the legal authorization to act on his grandmother’s behalf. But along with that power of attorney comes a fiduciary duty. That requires putting your husband’s grandmother’s interests ahead of his own and acting in her best interest. Was it in her best interest to sell her home and use the proceeds to pay off your mortgage? Probably not.

Critically, a fiduciary must not engage in self-dealing. In Tewksbury vs. Tewksbury, a 2011 case involving a power of attorney, the Court of Appeals of Ohio ruled: “Self-dealing runs counter to the fiduciary duty that the attorney in fact owes to his principal. The proper method to carry out these transfers …is to appoint an attorney in fact who is completely disinterested in the transactions.”

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This is part of a power of attorney’s duty of care. Drendel & Jansons law firm in Batavia, Ill. breaks it down: “Even when a transaction between an agent and the principal appears to be reasonable, and even if the parties consent to the transaction, any benefit to the agent derived from dealing with the principal’s assets and accounts is presumed to be a violation of the fiduciary duty.”

There are other duties that a power of attorney must uphold: Duty to protect, duty to preserve and maintain the principal’s assets, duty to disclose changes to the principal’s affairs to others with an interest (that includes your mother-in-law and any other relatives or legal heirs) and a duty to properly invest. To that point, your husband’s grandmother’s name is not on the deeds of your home.

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Proving someone is cognitively impaired can be difficult. But elder financial abuse can occur when the principal is of sound mind if there was some kind of undue influence and/or if the principal was dependent on his or her carer. The Elder Justice Act covers “financial or material exploitation is the illegal or improper exploitation or use of funds, property, or assets of an older adult.”

The fact that you are prepared to return the $225,000 by selling your home or, indeed, refinancing, suggests to me that you realize that what you did was not such a good idea. Your mother-in-law is clearly angry and — whether she decides to pursue legal action or not — she is making you sweat. A lawyer could, at the very least, best prepare you for the worst and help you make this right.

In the meantime, this legal and financial limbo leaves you and your husband — not unlike many elderly people who can no longer live alone — in a very vulnerable position.

Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyist and please include the state where you live (no full names will be used).

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