Find out if a Power of Attorney can change a will or not…

What Is Power of Attorney?

Power of attorney is when you sign someone the authority to make legally binding decisions on your behalf. This can mean managing financial assets, making choices regarding medical care, signing contracts, and other commitments. A power of attorney can access confidential materials and their decisions are as binding as if you had made them yourself.

Most of the time power of attorney is a limited grant of authority. That is to say, you will give someone power of attorney to do specific things or to act within a specific scope. For example, the IRS ordinarily would not accept taxes filed by a third party; you must file your taxes yourself.

However, assigning power of attorney to your tax preparer gives that person the authority to file your taxes as though you had done so yourself. This is a common practice and lets the tax preparer see a client’s confidential IRS and bank records, as well as file taxes on the client’s behalf. Such power, however, doesn’t allow them to sign contracts in your name or sell your car.

Their authority is limited to reviewing your finances and filing documents with the IRS. In some cases, you may assign what’s known as a general power of attorney. This is one of three types of durable power of attorney (the other two are special power of attorney and healthcare or medical power of attorney). With a general power of attorney, the person can make just about any decisions at all on your behalf while the power of attorney assignment remains valid.

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People will often make a general assignment to a trusted family member or long-time friend if they are going to be unreachable or incapacitated.

Power of Attorney Cannot Change a Will?

The only legal requirement is that you be of sound mind when you make your dispositions, meaning that you are legally competent to make decisions and that the will must be written down. In most, if not all, states a will doesn’t need to be written by an attorney, notarized, or witnessed. There are no specific forms that a will has to take. While all of these things can help make your wishes more likely to be enforced and enforceable, they aren’t necessary. So long as a will is valid, a power of attorney cannot change it or rewrite it.

This is not within their scope of authority even if the grantee specifically says otherwise in their power of attorney assignment. Any will be written by a power of attorney is invalid on its face. If a will is invalid, a power of attorney can challenge it and show cause as to why it should not be enforced, in whole or in part. As a general rule, to challenge a will you must show that the individual was not in their right mind, competent to make their own decisions, or otherwise in a position to take legally binding action.

As an extreme example, someone with a gun to their head would be mentally competent to amend their will, but those changes still would be invalid. This would be known as “duress.”

However, this would be rare, since in most cases someone needs to be dead before anyone can challenge the validity of that person’s will. In most states, power of attorney ends once the grantee dies. At that point the individual’s legal rights transfer to their estate. The executor of the estate takes over and manages all the deceased’s affairs from there.

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The result is that power of attorney cannot change a will while the grantee is alive, because they do not have the authority to do so, and cannot change an estate once the grantee has died because their role as power of attorney ends with the grantee’s death.

But Power of Attorney Can Still Affect an Estate?

However, it’s important to understand that someone with general power of attorney can still change the circumstances surrounding a will. Specifically, they can make changes to your estate, essentially, before it becomes your estate. While it has limitations, a general power of attorney is a sweeping grant of authority. They can make significant financial decisions on your behalf, which means that they can often restructure your finances according to their own best judgment.

This can functionally invalidate sections of your will if a power of attorney dissolves or changes assets that you had assigned to various heirs.

For instance, say you write a will that gives all of your investments to Elle and all of your cash holdings to Josh.

You then make Josh your power of attorney. During your last years, Josh liquidates all of your investments, saying that he wants the cash to take care of you and pay for any expenses. Whatever his intentions, Josh has rearranged your estate in function if not in form. He will now get everything and Elle nothing because all of your assets are in cash and there are no investments left for Elle to inherit.

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This does not always require bad faith and unfair dealing, although that can happen, too. Someone with your power of attorney may restructure your assets out of a sincere belief in your best interests, not realizing that they may blow up your estate planning in the process. As a result, if you include a general power of attorney as part of your elder care plan it is essential to discuss your estate wishes with them in advance.

Limits on Agents

The laws of each state govern powers of attorney, and the state laws can vary in their requirements and limitations.

However, most states have adopted the Uniform Power of Attorney Act (UPOAA) of 2006 and therefore have some uniform language.

For example, the UPOAA stipulates that POAs go into effect as soon as they are signed. The act also states that the POA ends when the principal passes away.

If you live in a state that follows the UPOAA, then any other state that also follows it will accept and acknowledge its guidelines.

You must check your state law before drawing up a POA or agreeing to act as an agent for a POA.

Power of Attorney Cannot Change a Will

The only legal requirement for writing a last will is that you are of sound mind to make decisions and that the will is documented in written form.

In most states, a will does not have to be prepared by an attorney, notarized, or witnessed. As long as a will is valid according to the laws of your state, a Power of Attorney (POA) cannot change its terms or rewrite it in any way. A will that is written or revised by a POA is considered invalid. In most states, the POA ends upon the principal’s death.

At that time, the principal’s legal rights transfer to their estate.

Power of Attorney Can Change an Estate

Someone with POA cannot change a will, they can change the circumstances surrounding a will. For example, someone with general powers could make decisions that significantly change your financial situation.

These steps could negatively impact the assets you have designated for your heirs.

Here’s an example. Let’s say that you state in your will that you leave all of your investments to your son and all of your cash holdings to your daughter, who is the heir. You then designate your daughter with POA.

Then, over the last year or two of your life, your daughter liquidates all of your investments, claiming she needs the cash to care for you and pay your expenses. Whether her intentions were in bad faith or not, your daughter has now effectively left your son with no inheritance.

How to Prevent Abuse from an Agent

Fortunately, there are ways to protect yourself and your estate from abuse by your POA agent. The most crucial step is to name someone you know and trust as your agent. Then, speak with this person about your wishes so that there can be no mistake or misinterpretation of how you want those wishes to be followed.

Here are additional steps to consider:

Name co-agents. You can name as many co-agents as you like and be specific as to the powers each one has.

For example, you could name two of your children as co-agents or a trusted friend and one of your children.

Name a third party for oversight. You can ask that your agent provide a written summary of all financial actions to another trusted individual, such as your lawyer or a family member.

Let others know who your agent is. Inform your financial institution and other family members when you have given someone a POA. That way, they can be on the lookout for unusual financial activity.

Limit the powers. Be specific in your POA documentation as to what your agent can and cannot do.

For instance, you could authorize your agent to pay your bills and manage your bank accounts but not change the beneficiaries of your life insurance. Life situations change, and so do relationships.

You can revoke a power of attorney at any time, and you don’t need to provide a reason if you decide to make the change to a new one. In conclusion, a POA is essential in estate and financial planning. When you appoint a trusted person to serve as your agent, it can give you peace of mind that your financial affairs or medical decisions will be handled according to your wishes.

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Someone with your POA cannot change your will in any way, but they can make decisions that affect your estate.

SAVE YOURSELF FROM FRAUD. BEAWARE.

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