The Real Power and Limits of a POA
When someone appoints you as their Power of Attorney for Property Agent (POA), it is a significant responsibility. It means they trust you to step into their financial life if they can’t manage it themselves. This could mean paying bills, accessing accounts, signing documents, or managing their overall day‑to‑day financial affairs. You’re the person who helps ensure their financial life continues to function when they’re ill, injured, or otherwise unable to handle things on their own.
But once your loved one passes away, that neatly signed Power of Attorney doesn’t carry the weight most people expect. When you try to close or distribute their account, and give the teller that signed POA, they will likely say, “That’s nice… but this document doesn’t give you the authority to do that.” A POA is only effective while the person who creates the document is alive; after death, it is no longer effective, and the bank won’t honor it.
In many cases, unless the account is jointly owned or held in a trust, you’ll have to deal with probate. This process is a potentially slow, paperwork‑heavy detour you now have to navigate to access an account. A situation that should have taken days could now take months.
A Practical Fix
Often, adding a beneficiary or payable on death (POD)/transfer on death (TOD) designation to an account can help assets transfer more efficiently, depending on the account type and overall estate plan. Without a beneficiary or POD/TOD designation, probate may be necessary to release assets, particularly if applicable small estate settlement thresholds are exceeded.
Adding a beneficiary may seem like a small task, but it directs where to transfer assets after someone passes. Without a beneficiary or POD/TOD designation, financial institutions may be required to involve the courts, even if you were the POA during the person’s lifetime.
A short meeting with your loved one and their attorney or advisor can confirm each account is set up correctly and avoid unnecessary probate, a simple step that prevents much frustration later.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
Jonathan M. Lipshutz
Financial Advisor
CFP®, CTFA®