Power of Attorney After Death
As the use of a power of attorney becomes more popular, one of the common ways people try to avoid probate is by continuing to act under the designation after the decedent’s death.
For example, Alex signs a power of attorney naming his son, Jacob, as his agent. During the life of his father, Jacob transfers and withdraws money from his dad’s bank accounts to pay Alex’s bills since he is no longer able to do so himself. Upon his father’s passing, Jacob transfers $100,000.00 from his dad’s bank accounts to his own personal account. This is a very common and big mistake.
There is No Power of Attorney After Death
For those who are wondering if their power of attorney remains in effect after the deceased has died, or for those who are victims of questionable asset transfers after death, be warned or rest assured that there is no such thing as a power of attorney after death. The law is clear in that a power of attorney terminates at the point of death. What this means is that if the decedent died on June 13, 2016, at 8:12 AM, you are no longer their agent as of that date and time.
While avoiding probate sounds tempting, a transfer of assets after death without opening an estate, is wrongful, and in some circumstances can be considered fraudulent. Assets with no named beneficiary, such as cash, stocks, and retirement plans, become part of the decedent’s estate upon their death. Estate assets can also include real estate and business or partnership interests. However, jointly held assets pass to the survivor. Similarly, title to real estate held by a married couple or as joint tenants, passes to the survivor. There is no need to transfer ownership or commence an estate, title vests in the survivor automatically by law. Where the assets are not jointly held or have no beneficiary payable at death, they pass to the decedent’s estate. The only way to rightfully claim ownership is to probate the will or open an administration proceeding (if there is no will). Do-it-yourself methods are forbidden.
Pitfalls of Using a Power of Attorney During and After Death
There are several drawbacks to be aware of when considering using a power of attorney to transfer assets during the life of the principal. The first is capacity. Does the principal have the capacity to sign the document? Essentially, this means that the person is able to understand what he or she is signing and the consequences of signing such document. If the person no longer has the capacity to sign a legal document, whether it because of physical or mental restraints, they cannot effectively and legally give someone a power of attorney to act on their behalf. Where capacity is lacking or in question, the only alternative is to establish a guardianship over the person. With proper early set estate planning, you can eliminate the need for a guardianship, which is costly and time consuming, by executing the form while capacity is intact. Guardianship proceedings and probate typically result from lack of estate planning.
Second, your powers may be limited. For example, if you are only authorized to conduct banking transactions on behalf of the principal, you cannot sell their home to pay nursing home debts, or prevent foreclosure. To expand your powers, a new document will have to be executed, or if the principal no longer has the capacity, a guardianship over the person must be established.
Finally, no self dealing. Transactions that have no legitimate purpose other than to further your self-interest are unlawful. For example, if the principal gave you access to her bank account so you can help pay her monthly bills, you cannot transfer the balance during her life or upon death to your personal bank account and claim complete ownership to the funds. Such transfers are closely scrutinized by the courts and are considered void. If the court notices anything suspicious, the judge will disregard the transfer and return the assets back to the principal or the principal’s estate.
A power of attorney has the potential to be an extremely useful tool for an individual, but safety measures need to be taken to make sure parties do not exceed their power. Such forms are designed to make life easier for people, at a modest cost. It allows you to designate an agent to act on your behalf in case you are unable to. Some significant overreaching problems exist with such a legal document, however. The ethics risks of these forms are not new. Many of the potential associated risks can be minimized with careful drafting.
At Mishiyeva Law, PLLC, we have NYC estate and probate lawyers who can prepare legally enforceable estate planning documents or help you defend against a fraudulent transfer. Call us at (646) 233-0826.
Attorney Advertising. This page is designed to provide general information. It is not intended to be legal advice. It can not and should not be substituted for proper legal representation. You should consult an attorney for legal advice regarding your rights as every case is unique and requires in depth analysis and preparation. Do not submit confidential information through this website. Contact initiated through this website does not create an attorney-client relationship. We make no warranty or guarantee of the accuracy or reliability of information contained herein.