What is Power of Attorney?
Before coming to the validity of power of attorney after death, let’s first discuss about what actually is power of attorney.
A power of attorney (POA) is a legal document allowing an individual to give authority to another individual to act on their behalf. The person who is assigning the authority is referred to as the ‘principal’ or the ‘donor’ and the person who has been given the authority is the ‘agent’ or the ‘attorney-in-fact’ or the ‘donee’.
There are various types of powers of attorney and they could differ from each other based on a number of factors such as: purpose of the POA, duration of the POA, extent of authority given through the POA, etc.
Validity of Power of Attorney After Death
Unfortunately, if the principal dies, a power of attorney ceases to exist. The purpose of a POA is for the agent to act on behalf of the principal when the principal is unable to carry out their own legal matters. However, once the principal dies, the agent loses this authority as they can no longer make any decisions on behalf of the deceased principal.
When is a Power of Attorney Terminated?
By law, a power of attorney is terminated in the following circumstances:
- When the principal dies
- When the principal becomes incapacitated only in the case of a durable power of attorney
- When the principal has revoked the power of attorney
- When the power of attorney provides that it is to be terminated after the occurrence of an event or after a specified date
- When the purpose of the power of attorney has been accomplished
- When the principal specifically revokes the authority given to one or more of the agents
- When the agent dies, becomes incapacitated, or resigns, and the power of attorney has not provided for an alternative agent to act under the power of attorney
As a result, in the event that any of the above, the agent will not be able to exercise any powers on behalf of the principal. Additionally, in the case of the last point, unless the POA has assigned someone else to take over in case of death, incapacitation or resignation of the agent, then too the POA is terminated.
What Happens After Death of the Principal?
Upon the death of the principal, the power of attorney is no longer valid and instead the will is executed. Instead of the agent, now the executor of the will is responsible for carrying out the demands of the principal through the will. As a result, unless the agent has also been named as the executor of the will, they lose all power to make decisions on behalf of the principal. In case the principal has not assigned an executor for their will, then someone is assigned as the executor by the court.
What if there is no Will?
Once the principal dies, it is likely that they may have some affairs that are unattended to that need to be looked at. They also might possess some assets that need to be redistributed. After death, any POA if existing comes to an end and this process is handled by the principal’s will. However what if the principal didn’t leave a will?
In case the principal dies without a will, the assets of that person will still need to go through the probation process. This means that the assets need to undergo examination and need to be verified. Thereafter, they can be transferred to the heirs of the principal according to the relevant laws of the State to which they belong.
What is the Difference Between Power of Attorney and a Will?
It is clear by now that after death, a power of attorney comes to an end and instead, a will is used for any further actions for or on behalf of the principal. So What is the difference between the two documents?
The first, as has been mentioned multiple times, is the difference between times of execution. A power of attorney is used when the principal is alive but is unable to be present to make decisions on their own behalf. As a result, they appoint an agent to act on behalf of them. On the other hand, a will only comes into effect after the death of the principal. Now, the power shifts from the agent to the executor of the will (who may or may not be the same person)
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A power of attorney is used when the principal is unable to attend to their own affairs and assigns an agent to make decisions relating to finances, property matters, tax payments, other legal procedures, etc. on their behalf. A will however, is used by the principal to express their wishes on how they want their affairs to be dealt with upon their death.
A power of attorney is an extremely important document that allows you the satisfaction of knowing that your finances and other legal matters are being taken care of in the event of your physical absence. However, the validity of a power of attorney after death is terminated. Therefore, in order to ensure that even upon your death, all your assets are properly distributed and matters currently dealt with, it is highly advisable to make a will.