Understanding the Role of Power of Attorney After Death

There is no power of attorney after death. Power of attorney is what’s known as a principal/agent relationship. This means that the individual who holds power of attorney serves as the agent for the individual who assigned it to them, the principal. The role is based entirely on this relationship. When the principal dies, the relationship ends and so does the power of attorney. Here’s what you need to know. You can also consult with a financial advisor to help you make the right decisions for your situation.

What Is a Power of Attorney?

Power of attorney refers to the authority someone has to act on your behalf regarding legal and financial transactions. For the duration and scope of this assignment, this person will act with your full authority. This means, for example, that he or she can sign contracts, sell property, conduct business or authorize financial transactions as though you did it yourself.

The term “power of attorney” refers to both the document that you use to assign this authority and the individual who assumes it. The individual is also referred to as your agent.

There are a few limits on someone who acts as your power of attorney. Most importantly, they cannot contradict you directly. Unless you have been declared legally incompetent, you always have the authority to revoke someone’s power of attorney and they cannot directly disobey your instructions. That said, they are free to undo choices you have made unless you have clearly told them to do otherwise. There are also a few areas where they do not have authority. For example, a power of attorney cannot enroll you in the military or steal from you.

Types of Power of Attorney

People use a power of attorney for many different purposes. It’s common to assign someone power of attorney to conduct a specific type of business. For example, many clients will give their accountants power of attorney for the purposes of filing their taxes. Other people will use the power of attorney when they are physically unable to conduct their own business. For example, many soldiers may assign someone power of attorney to manage their financial affairs while they’re on deployment.

It is also very common to assign someone power of attorney while you are incapacitated. This lets someone handle your financial and legal needs if you are physically or mentally unable to make those decisions for yourself.

There are many different types of power of attorney based on how you set the terms of this assignment. A few of the most common examples include:

General Power of Attorney: In this case, you have assigned someone power of attorney with no specific scope or limits. This person can conduct almost all legal and financial transactions on your behalf with the same authority as you, personally.
Durable Power of Attorney: This is a form of power of attorney that continues indefinitely, including if you are incapacitated. It only ends when you specifically revoke it.
Limited Power of Attorney: This grant of authority only applies to certain circumstances or actions. For example, you may assign someone power of attorney for the purposes of conducting a specific piece of business or managing a certain issue.
Springing Power of Attorney: This is a form of power of attorney that only applies when certain conditions are met. The most common form of this is to name a power of attorney who will step in if you are incapacitated, with that authority ending when you are able to make decisions again.

Power of Attorney After Death

Power of attorney does not survive the death of the principal. Once you have died, your power of attorney has no authority whatsoever. The agent cannot make decisions or take actions on your behalf and to knowingly do so would be generally considered a form of fraud.

The reason for this is the nature of power of attorney. This authority is based on the relationship between you (the principal) and your power of attorney (the agent). You invest your agent with a measure of your authority, letting this person act on your behalf and make the decisions that you have a legal right to.

But when you’re dead, you no longer have any authority. Since you no longer have the legal right to make any decisions, neither does your agent. At the same time, the relationship itself has ended since you no longer exist to have a relationship with. There is only your estate, which is managed by your executor (if you left a will) or your administrator (if you did not).

Alternatives to Power of Attorney After Death

Power of attorney is someone who has the authority to make decisions on your behalf and manage your assets, subject to your instructions and wishes. Once you die, this job transfers to whoever holds the role of executor or administrator of your estate. They will manage assets, make payments and make decisions based on the combination of their own judgment, the terms of your will and the inheritance laws of your local jurisdiction.

As a result, the best way to manage power of attorney after your own death is to name an executor to your estate. Write a will with clear terms and a named executor. They will take over making decisions in conjunction with the probate court. This executor can be the person who held your power of attorney in life, although it’s generally wise not to have them involved with the process of writing the will in order to avoid conflicts of interest.

The Bottom Line

Power of attorney is what’s known as a principal-agent relationship. This means that the authority is based entirely on the relationship between you and your power of attorney. Once you are dead this relationship no longer exists, which means the power of attorney no longer exists either.

Power of Attorney Tips

No matter who makes your decisions in the future, you can still make the best possible choices today. Working with a financial advisor can unlock a resource to help you properly prepare your estate and manage all of your financial needs for whatever may come. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Power of attorney is a complicated and very important issue when it comes to estate and financial planning.