Power of attorney is an important legal planning tool. It is commonly used for estate planning, medical management, financial management and much more. It’s also a flexible tool. You have the right to change or revoke a power of attorney at absolutely any time. Moreover, changing or revoking a power of attorney is extremely simple (by design). What follows is a general description of how to make that change, not legal advice, which should be sought from an attorney familiar with relevant laws in your state. Consider working with a financial advisor as you put together or modify your estate plan.
Power of Attorney, Defined
A power of attorney, also known as a letter of attorney, is a legal document that you sign to authorize another person to act on your behalf. The person who is giving his or her power is known as the principal, the grantor or the donor. The person taking on the power is known as the agent or the attorney-in-fact.
The grantor can choose which rights to give the agent. For instance, if you have a disease that may leave you incapacitated, you can give medical power attorney to an agent to make decisions about treatment when you become unable to do so. Grantors could also give the agent the right to make financial decisions for them, including over their investment accounts. For example, if you are going on a six-month trip around the world, you may grant POA to someone to help you run your rental properties.
If you need someone to represent you and discuss your tax problems with the IRS, you can complete IRS Form 2848. This form is the power of attorney and Declaration of Representative form. Since tax information is considered private information, you’ll need to formally give another person permission to address your personal tax issues.
How to Change a Power of Attorney
There are usually five key steps in changing a power of attorney.
Notify the person currently holding power of attorney
If you would like to make changes, make sure to notify your existing power of attorney right away. This is particularly urgent if you are reducing or eliminating their authority. You would like them to stop taking action right away, or to know that these changes are coming so that they don’t make future plans. You will also have the chance to discuss your needs, and how best to tailor any changes that you’re making.
Put the change in writing
You can only change or revoke a power of attorney in writing. As we discuss elsewhere few, if any, states require a specific form for power of attorney. These forms are helpful, and you may find it valuable to pull one from a state or local website. You can also draft a simple letter to your power of attorney, as any written notice will meet the law’s requirements. In either case, be certain to clearly spell out the changes you are making. This holds true whether you are modifying the scope of your current assignment or ending it altogether.
Technically, assigning a new power of attorney to a third party will automatically cancel any existing and overlapping assignments. Do not rely on this. Even if you are assigning a new power of attorney, be sure to modify or cancel any existing assignments as well.
Include all required language
This is where a form can also come in handy. Most states have specific requirements for what language a change or revocation must include. Typically this involves your name, the name of your power of attorney, the date on which the change or revocation takes effect, and sometimes the date on which the previous power of attorney took effect.
That said, should you be unsure of the requirements of your particular state, most (if not all) states will also enforce a blanket revocation. This would involve: Your name, the name of the recipient, the date on which the revocation takes effect, and language that you are revoking any and all existing power of attorney assignments. Essentially, most states will recognize language along the lines of “As of July 1, I, Michael Smith, revoke any and all existing power of attorney assignment held by Jane Doe.”
Notarize and if necessary record
In general you should notarize your document. This might be the only part of the process that costs any money. For modification this is an absolute requirement. To change your power of attorney, you must have the document notarized in the same way that you must notarize the document assigning power of attorney in the first place. Some states require you to notarize the document rescinding power of attorney, and it is always best practice. However, as a general rule, many, if not most, states will allow you to to cancel someone’s power of attorney through simple written notice.
Essentially, while you must tick several boxes to give this power away, the state wants to make it easy for you to take this authority back. It is absolutely important get the form properly filled out and notarized, but make sure to send that initial email anyway. It will usually have the force of law. If you recorded power of attorney with any local office or registrar, you must also record the document modifying or revoking the power of attorney.
Notify all concerned parties
As a final step, you should notify anyone who would have reason to know about your power of attorney relationship. Specifically, reach out to anyone who might regularly work with your power of attorney, or who should otherwise know that this grant of authority has ended or changed. While this step is not legally necessary, it might save considerable time and confusion down the line.
The Bottom Line
Changing or ending a power of attorney is a simple process but nevertheless can be an important part of estate planning. You must do so by notifying the individual in writing, potentially with a formal notarization, that their writ of authority has ended or changed. While it is generally not required that you use specific forms, they can be quite helpful.
Tips on Estate Planning
- Details really, really matter when you write out a power of attorney form. Whether you are creating one from scratch, modifying the relationship, or ending it altogether, it’s important to get this step right.
- A power of attorney can help you with many important plans. They’re not alone. Good financial advice can also help you prepare for what’s ahead, and SmartAsset’s matching tool can help you find an advisor near you.
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