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In estate planning, few questions are as important as who will inherit your assets. While a Power of Attorney (POA) gives someone the authority to act on your behalf, it does not automatically grant the ability to change your estate beneficiaries. Understanding the limits of this legal tool is essential to protecting your legacy and ensuring your wishes are honored.
At The Law Offices of Clifford M. Cohen, we provide trusted estate planning services for families and individuals throughout Washington DC and Maryland. Below, we break down everything you need to know about how a POA relates to your estate beneficiaries.
A Power of Attorney is a legal document that allows you (the principal) to designate another person (the agent or attorney-in-fact) to make decisions on your behalf. These decisions can involve financial matters, legal affairs, or medical care, depending on how the POA is structured.
This document is often used when someone becomes incapacitated or needs help managing their affairs. However, granting someone this authority does not give them unlimited control, especially when it comes to making changes to your estate plan.
An agent acting under a POA has a fiduciary duty to act in the best interests of the principal. This includes making responsible financial decisions, handling transactions, and following any specific instructions outlined in the POA document.
Agents must act within the limits of the authority granted to them. In many cases, this authority does not extend to altering beneficiary designations, which are typically considered personal decisions that require clear, direct consent from the principal.
Beneficiaries are the individuals or organizations named to receive assets from your estate, trust, or financial accounts. These designations are often made through a will, trust document, or directly through policies such as life insurance and retirement accounts.
In some cases, an agent may attempt to update or modify beneficiary designations on behalf of the principal. This could occur if the agent believes changes align with the principal’s wishes or if the POA document explicitly grants that authority.
However, such actions are legally sensitive and may raise concerns, especially if family members or other beneficiaries disagree with the changes.
In most states, including Washington DC, and Maryland, an agent cannot change beneficiary designations unless the POA document specifically grants this authority. Even when the power is granted, courts may closely scrutinize these actions to ensure they were done in good faith and in line with the principal’s intentions.
Changing beneficiaries without proper authorization may be considered a breach of fiduciary duty and could lead to legal challenges.
A general POA grants broad powers but ends if the principal becomes incapacitated. A durable POA remains effective even after incapacity and is more commonly used in estate planning.
A medical POA allows the agent to make healthcare decisions, while a financial POA deals with financial matters. In Maryland, the medical power of attorney is provided through a document known as the Advance Medical Directive that also provides the opportunity to explicitly state one’s wishes if they become terminally ill.
Springing POA vs. Direct Power
A springing POA only becomes effective under certain conditions, such as a finding by the attending physician that one is no longer capable of making decisions for themselves. A direct power of attorney gives the named agent the authority to act immediately without the need for a physician’s determination. Regardless of which type of POA is used, the limitations on making beneficiary changes remain unless directly authorized.
Some of the most commonly disputed situations involve agents attempting to change beneficiaries on retirement accounts or life insurance policies. These accounts usually have named beneficiaries, and making changes without proper authority can result in serious legal issues.
If an agent attempts to make unauthorized changes or act against the principal’s best interests, it could be considered fraud or abuse of power. These actions may be reversed in court and may also lead to civil or criminal liability.
Family members or interested parties can challenge the actions of an agent if they believe misconduct or overreach occurred. Courts may investigate and potentially void any changes made without proper authority.
One of the most effective ways to protect your estate is by clearly stating what your agent can and cannot do. You can specifically prohibit changes to your beneficiaries or require court approval for such actions. A well-crafted POA document removes ambiguity and helps prevent future disputes.
Life changes—so should your estate plan. Reviewing your documents every few years ensures that your designated agents, beneficiaries, and wishes still reflect your current circumstances. At The Law Offices of Clifford M. Cohen, we encourage all clients to update their estate plans regularly to keep them legally sound and relevant.
At The Law Offices of Clifford M. Cohen, we have over 30 years of experience helping clients throughout Washington DC and Maryland protect their assets and provide for their loved ones. Our estate planning services include creating durable powers of attorney, wills, trusts, and comprehensive plans tailored to your unique needs.
Whether you need guidance on appointing a trusted agent or want to safeguard your beneficiary designations, our team provides clear answers and trusted legal support.
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