I am the POA for a lady that has dementia and had to be placed in a nursing home. I found she had loaned out money. What can I do about this?

That's interesting, I never had any issues and since it wasn't earned income I can't imagine that increasing wages would be so simple, considering no taxes or social security, I also don't want to have to pay all the added labor burden for a deadbeat that would walk away from debt.

It never ceases to amaze me how much the IRS and State don't address as it comes up. You would think that at some point they would notify me that I need to handle unpaid employee loans differently, even my CPA hasn't said anything. Granted it has been a few years and maybe now they would. But now I wouldn't be lending an employee money.

Thank you for the information.

Tacy - Was it a loan or a gift or something else? I’m going to guess that the paperwork Yankee found was drawn up not by an atty but by the lady & borrowers. It may not meet basic standards for a loan with some sort of terms / conditions on repayment, and some sort of collateral for paying it from and not notarized. The atty letters are to determine that & have them provide a response & documentation to either agree with DPOA / the lady’s attorney that it’s a debt that owed, or disagree and that’s its something else like was a gift or for services rendered.

Iron fist in a Velvet glove or a veiled threat type of action by sending them W-9 & I-9. Yeah your rite, the i-9 could be excluded but it’s an added item to get their drivers licenses or passport info to have to send off for use by collections if that route is taken. They are both requests to be done, not mandated to be done. Your not sending them a subpoena. I’d bet they are thrown off totally when they get the first letter and the 2nd with the tax & I9 forms enclosed really get them taken aback. & it may get them to re-evaluate the situation and repay the debt. Voila! glove or veil worked!

As an aside on this, my first time as Executor was total surprise. It was an “aunt” of my dads. Actually 2nd wife of a cousin. She had appearance of $ & assets but reality was old marriages & debts with no neat probate done for any. FUN! Nephew was DPOA & got biz loans & other items for years prior. She & her attorney actually kept majority of her financials from him as she was competent. She did a codicil to her will few months before death naming me as Executrix & specifically excluding him as Executor & changed beneficiary of life insurance from him to instead be her named Estate. Before this, she called in his oldest loan & he was always with excuses on repayment which is why she did changes according to the atty, she was beyond peeved. She bought into a CCRC abt 4 mo. before her unexpected death & used up most of her actual cash (this is what she wanted loan repaid for). Accounts he was POD on were used for CCRC buy-in, so zeroed out & closed (so no alarms set off on this by him). Probate opened, I got appointed with dependent administration. Nephew was taken aback, livid actually and threatened to contest will, where was all the $$, I’m supposed to get her property, etc. He insisted that it wasn’t loans but actually payments to him or his biz for services. Atty sent him a letter with w-2s stating that it appeared there would be amended tax returns filed with IRS to reflect 1099-C Misc paid, so please fill out & return. Not another peep from him on contesting anything after that.

The implied threat of a 1099 is used a lot by debt collections to get folks to pay on debt. If you pay a penny, it gets debt clock reset for when Statute of limitations starts. But only the original creditor can issue the 1099, which most of those in debt don’t know. But as a implied veiled threat it might can do what you’d like to have happen, which is to repay a debt.