Many people are accustomed to the concept of delegating someone to handle your finances, make health care decisions, and undertake administrative tasks on their behalf through a power of attorney (POA). The legal parlance in a POA can sometimes be ambiguous and cause misinterpretations in differing situations. A significant query is what happens to a POA after death? Is it still valid? This article answers all your queries and describes how the events pan out after the principal’s death.
What If The Principal Had a Will?
A will name the executor who may not necessarily be the agent in the POA. After the principal dies, the agent ceases to execute any activities on behalf of the principal.
The executor assumes the obligation of enacting the principal’s will and makes any financial, legal, and other wishes delineated in the will. The estate will move into probate, and the executor will manage the principal’s affairs through the probate process.
How to Get Power of Attorney after Death?
Both federal and state laws regulate the procedure of obtaining a POA. The legal purview of POA restricts obtaining A POA to only when the principal is alive and of sound mind. Importantly the principal must be acting of their own free will.
Does a Power of Attorney End at Death?
For all types of powers of attorney, they become invalid when the principal dies. A POA confers authority to the agent to enact decisions on behalf of the principal, but upon the principal’s death, they lose the power to make the decisions. It is illegal to use a POA after the agent’s death.
Note: For non-durable POAs become invalid when the principal is incapacitated. It is important to explicitly state the type of POA you are signing into effect.
The POA can also become invalid if it is a non-durable POA when the principal becomes mentally incapacitated. Also, when the principal is still competent, they can revoke the POA, or the court can invalidate it if the attorney-in-fact contravenes the agreement.
Does a Durable Power of Attorney Expire After Death?
Like all other POAs, a durable power of attorney expires after death. However, the POA is still valid when the principal is incapacitated, and the agent will maintain the legal authority to act on behalf of the client’s best interests.
The Executor of Will vs. POA Agent
The will’s executor assumes liability for managing the donor or principal’s estate until they distribute the estate among the heirs listed. To succinctly put it, a POA agent manages the client’s affairs while the principal is alive. In contrast, a will executor administrates the principal’s estate after the principal passes on.
Note: The principal can name the POA agent as the executor. In such a case, the POA agent will continue to enact some legal and financial obligations that facilitate the transfer of the estate to the heir(s) through the probate process.
After the principal passes on, the POA agent will not make any legal or financial transactions for the principal. Also, the attorney-in-fact is not responsible for pending debt unless it’s a co-signed loan.
What If The Principal Didn’t Have A Will?
Whether the principal had a will or not, the estate moves into probate before transfer. If the principal had no will, the court would transfer ownership of the assets through the probate laws rather than the principal’s wishes which are non-existent. The court will name an administrator to manage the estate without a will. You can apply to be the administrator, and the court will determine your suitability.
Tip: Write your will when you are of sound mind and fill it with your attorney. In your will, name a trustworthy executor who will not defraud your heirs.
The POA after Death
A power of attorney ceases to be valid after the principal’s demise. The attorney-in-fact will cease managing the client’s affairs unless the principal also named them the executor.
Warning: Using a POA after the death of the principal is illegal. All decisions a POA agent initiates after the principal’s death are illegitimate.
Banks are the first financial institutions to freeze the principal’s funds when the principal dies, and you cannot make any financial transaction if you have the POA. To continue managing a client’s affairs, apply to be the administrator of the estate.
The Exceptions to the Usual Rule
The only exception to the probate process is a living trust. A living trust names a successor trustee who takes over the estate. Still, the POA is invalid, albeit superseding the probate process. Some clients prefer to use a living trust over a will as their preferred estate planning method. It is a personal choice to decide on either method.
The Other Options
Probate is necessary for transferring ownership of your parent’s assets under their sole name. The exception is other assets not included in the probate estate, i.e., a joint bank account. If your parent named you as a co-owner of the bank account, your rights of survivorship would automatically pass on the funds to you. You won’t be liable to pay your parent’s debts unless it is a co-signed loan.
A special power of attorney confers specific authority to manage legal, financial, or healthcare decisions. Like all other types of Powers of attorney, they become invalid when the principal dies.
Yes, the principal can name anyone they wish to be a beneficiary in a will. It is common practice to confer monetary compensation to the POA agent for managing the principal’s affairs while alive.
A POA is legally binding, while next of kin is a relationship status. While you are alive, the POA supersedes the next of kin’s decision for your life. However, after death, the court will consider the next of kin as an estate administrator if there is no will. A POA agent will have no say in managing the principal’s affairs unless named executor.
Death invalidates a power of attorney. After death, an executor takes charge and managers the principal’s affairs, like settling debts and distributing assets to the heirs. It is essential to have a will to ensure you cater to your loved one’s needs after you are gone. When preparing your POA, bear in mind it is only valid as long as you are alive. Concurrently prepare a will and name the executor as well.