Lodeza Blog

A Payable on Death (POD) account allows you to designate a beneficiary who will inherit the funds upon your death, bypassing probate. This raises the question: can someone with power of attorney (POA) alter or control a POD account? The answer is generally no, but there are nuances depending on the type of POA and the specific state laws.

Understanding Power of Attorney and POD Accounts

A POA grants legal authority to an agent (the person appointed) to act on behalf of the principal (the person granting the authority). There are two primary types: durable and non-durable. A durable POA remains effective even if the principal becomes incapacitated. A non-durable POA terminates if the principal loses mental capacity. A POD account, on the other hand, is a simple way to transfer assets directly to a named beneficiary upon the account holder’s death.

Can a Power of Attorney Change Beneficiaries on a POD Account?

Generally, a power of attorney cannot change the beneficiary of a POD account. This is because the POD designation supersedes the POA’s authority. The POD account is designed to transfer ownership directly upon death, outside of the will or probate process. The POA’s control ends when the principal dies.

Power of Attorney and POD Account Interaction

However, there are some limited exceptions. If the POA document explicitly grants the agent the power to change beneficiaries on POD accounts, then it might be permissible. This is rare and depends heavily on state law. Additionally, if the POA is used to fund the POD account initially, the agent might indirectly influence the beneficiary by choosing which assets are used.

What Actions Can a Power of Attorney Take Regarding a POD Account?

While a POA typically cannot change a beneficiary, they can often manage the account during the principal’s lifetime. This may include:

• Depositing funds
• Withdrawing funds for the principal’s benefit
• Paying bills from the account
• Managing investments within the account

Power of Attorney Managing a POD Account

It’s crucial to remember that any actions taken by the POA must be in the best interest of the principal. Misusing the POA for personal gain is a serious legal offense.

What Happens to a POD Account After the Principal’s Death?

Upon the death of the account holder, the named beneficiary inherits the funds directly. They typically only need to provide proof of death and their own identification to claim the assets. This streamlined process avoids the lengthy and often costly probate process.

Seeking Legal Advice

Navigating the complexities of POA and POD accounts can be challenging. It is strongly recommended to consult with an estate planning attorney. They can provide personalized advice based on your specific circumstances and state laws, ensuring your wishes are carried out correctly. Similar to navigating can a power of attorney change a beneficiary, the rules surrounding POD accounts require careful consideration.

Conclusion

While a power of attorney generally cannot change the beneficiary of a POD account, there are specific situations where exceptions may apply. Understanding these nuances and seeking expert legal advice is essential to ensure your estate plan is properly executed. Consulting with an estate planning attorney is the best way to ensure your POD account and POA documents align with your wishes and comply with applicable laws.

FAQ

1. What is the main purpose of a POD account? To avoid probate and allow for the direct transfer of assets to a beneficiary upon death.

2. What are the different types of POA? The main types are durable and non-durable, with a durable POA remaining in effect even if the principal becomes incapacitated.

3. Can I change the beneficiary of my POD account? Yes, you can usually change the beneficiary at any time before your death.

4. What if my POA tries to change the beneficiary of my POD account without my consent? This is likely a breach of their fiduciary duty and you should seek legal counsel.

5. What documents do I need to claim a POD account after the death of the account holder? Typically, you will need a death certificate and your own identification.

6. Is a POA required to manage a POD account? No, the account holder can manage the account themselves until they are no longer able.

7. What are the potential consequences of misusing a POA? Misusing a POA can result in legal penalties and financial liability.