Dear Moneyist,

I was granted power of attorney while my mother was alive. During that time, I put some of my mother’s money into stocks. I put her money into a stock account in my name and took a $40,000 loss. Do I have to replace that money to give to siblings now that our mom passed away? My mom left a will.

Sister in California

Dear Sister,

Yes, you need to replace it, and you need to speak up sooner rather than later. Power of attorney is a role for a friend or family member to manage the finances of a person who has become incapacitated. You had the legal authority to act on your mother’s behalf, but investing your mother’s money in your name is a clear breach of your duties. It’s not clear whether you lost the entire investment or whether you originally invested $100,000 or even $500,000.

If there is money left, you will likely have to liquidate those shares and make up the losses from your own funds and/or inheritance. A person who has power of attorney has a fiduciary duty to act in the best interests of the individual and only make investments with his/her permission. Transferring these into your name adds another problematic layer and, in a worst-case scenario, could be regarded as theft by your siblings and/or your mother’s estate attorney.

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Raymond Schultheis, a CPA based in Webster, N.Y., says this is an unauthorized investment that will raise serious questions. “This doesn’t sound like an investment for mom as much as a negligent diversion of funds or, to be nice, a loan to the daughter,” he says. (It would be a stretch to recast this as a loan.) Schultheis suggests that you decline any appointment as executor of your mother’s will and leave that to one of your siblings.

It will be much better for you to bring this issue to your family’s attention rather than wait for your mother’s estate attorney to spot the missing money, and ask where it went and why you invested it under your name. Was your plan to return the capital investment if you made a profit? You may need to prepare for such questions. The upside: You are aware that you acted inappropriately and appear willing to make financial amends to your family.

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