When a elderly parent loans money to a grandchild is it the concern of her children?

Does your mother's physician agree with your belief that her cognitive abilities might be impaired? Most well-drafted Powers of Attorney are prepared to remain effective even after the principal (your mother) becomes incapacitated, a diagnosis that needs to be addressed not only by you, but by your mother's doctors. As your mother's agent, you have only the responsibilities and authority that the Power of Attorney itself grants to you. In the case of most POAs, you're authorized to act on the instruction and in the best interests of the principal. When the principal actually becomes incapacitated, if ever, the duties that you owe to the principal become even more important. I would address this issue with your mother delicately, as she could always simply revoke the Power of Attorney if she desired to do so, and upsetting her might yield that result. Are there any documents reflecting that the money was a loan and not a gift? Has the grandchild treated the transaction as a loan by indicating a promise to repay the amount? Perhaps you could offer to help your mother with some basic organizing of her estate, including the preparation of a more formal loan agreement. Some trail is better than no trail, and if left unaddressed, I think you'll find that the presumption is going to be that the transaction was a gift.

Mr. Thomas has given you terrific advice. If she has been diagnosed, she may have lacked capacity to make a gift in the first place and as her Agent, you may have a duty to undo it. Here, it is family so one treads lightly. As Mr. Thomas said, I would talk to your Mother about it and then "help" her by formalizing the loan and following up on it when payments are not made. Depending on the age of this grandchild, you may have realistic concerns about the money disappearing. You should follow up with her doctor to and make sure that the POA is durable so when the doctor tells you she lacks capacity, you can step in and handle her affairs for her. It is a delicate and difficult shift in the relationship but clearly one that needs to be taken to protect her. Often the "upset" is embarrassment of not recalling doing such a thing. If you feel you need more Tennessee law guidance, use the .com to find an attorney in your area. In addition to that, contact your local bar association for referral to an attorney who specializes in this. Often, but not always, the attorney will do an initial consultation free of charge. You will then be in a better position to determine what to do next. Best of luck to you!

The first question is really the last. Since you didn't take the action as her agent, you have no responsibility to collect the money. Now, if you are the trustee of her trust or the personal representative named in her will, then you might have a duty at her death to pursue all claims. If your mother intended to loan the money, did she indicate on the check itself or any place else that it was a loan not a gift, that it was to be repaid, how much she loaned, and if any interest was to be charged? If not, and she really intended it as a gift, then she may be able to document it after the fact in a letter specifically referring to these facts. For example, she might say something like: "On ____, I wrote check #1234 in the amount of $XXXX to you as a personal loan. This was not a gift. I fully expect this loan to be repaid and have advised my daughter to ensure this is done. The loan is interest free, but it needs to be repaid in a reasonable manner, meaning you need to begin making payments of at least $YYY per month as of [the first day of the first month following the date of my death] [specified date]." If your mother is willing to do this and you have bank or other records showing the funds went ot the grandchild, you might well have a legal basis to pursue collection. I'm not licensed in Tennessee and this is not intended as legal advice, just some thoughts on what might be possible. I encourage you to confer with a TN attorney who can explain the state law and outline your options. Good luck.

If it truly was a "loan" and not a gift or elder financial abuse, as her financial fiduciary, you should ensure that a loan document is signed and that it is secured with a personal property assignment at the very least. Tell Grandma that you just want to be sure that she isn't enabling her grandchild to act irresponsibly and that you believe she will need that money paid back to help with her expenses in the future. She will eventually get over her unhappy feelings about the situation.