A power of attorney (POA) grants an appointed agent the legal authority to act on behalf of the principal. The principal can revoke this authority at any time, provided they are mentally competent. If the principal is incapacitated and the agent is suspected of misconduct, family members can petition the court to override the POA and appoint a legal guardian or conservator to protect the principal’s interests.
If you want to create an estate plan, a financial advisor can work with you to manage and distribute assets, and safeguard your interests.
How Does Power of Attorney Work?
A POA is a legal document that allows one person to make decisions on behalf of another. The person granting the authority (the principal) chooses a trusted individual (the agent or attorney-in-fact) to handle specific matters, which can range from financial decisions to healthcare choices.
POAs come in several forms, including durable, medical and financial. A durable POA remains valid even if the principal becomes incapacitated, while other types may have specific limitations or expire under certain conditions. The POA document clearly outlines what powers the agent can exercise, whether it’s managing bank accounts, selling property or making medical decisions.
Some POAs take effect immediately upon signing, while others, known as springing POAs, activate only when specific conditions are met, such as the principal’s incapacity. The document remains valid until the principal’s death, unless it’s revoked earlier or contains an expiration date.
Who Can Revoke a Power of Attorney?
Several parties have the power to revoke or challenge a POA under specific conditions. These include the principal, the courts, family members and the appointed agent, each with distinct procedures and limitations for intervention.
- The principal: The principal who created the POA maintains the primary right to revoke it at any time, provided they are mentally competent. To revoke a POA, the principal must create a written revocation document, sign it and notify their agent and any institutions that previously accepted the POA.
- The courts: Courts possess the authority to revoke or override a POA when presented with evidence of agent misconduct or abuse. A judge can remove the current agent, appoint a new one or terminate the POA entirely if they determine the agent has acted against the principal’s interests or failed to fulfill their fiduciary duties.
- Family members and interested parties: While family members cannot directly revoke a POA, they can petition the court to review and potentially terminate it. These interested parties must present evidence showing the agent’s misconduct, such as financial exploitation, neglect or actions that contradict the principal’s wishes.
- The agent: An agent can effectively end their role in a POA by formally resigning their position. The resignation should be submitted in writing to the principal or, if the principal is incapacitated, to any co-agents, successor agents or the principal’s guardian.
Reasons to Revoke a Power of Attorney
Several situations may lead to revoking a POA arrangement. Understanding these circumstances helps principals and their families make informed decisions about POA management. Here are six to keep in mind:
- Changes in agent relationship: When trust breaks down between the principal and their appointed agent, it often signals time for a change. This might occur due to strained personal relationships, physical distance that makes managing affairs difficult or simply growing apart over time.
- Agent misconduct or mismanagement: Financial mismanagement, unauthorized transactions or decisions that conflict with the principal’s wishes can prompt POA revocation. Signs of self-dealing, where agents prioritize their interests over the principal’s, represent serious breaches that warrant immediate action.
- Principal’s improved health: Sometimes, principals recover from illnesses or conditions that initially necessitated a POA. When individuals regain their ability to manage their affairs independently, they may choose to end the POA arrangement and resume direct control of their decisions.
- Life changes and relocations: Major life events like marriage, divorce or moving to a different state might require POA modifications. These transitions can affect the practical aspects of the arrangement or introduce new legal requirements that make the current POA unsuitable.
- Agent’s inability to serve: An agent might become unable to fulfill their duties due to health issues, personal commitments or other obligations. In such cases, the principal may need to revoke the current POA and appoint a new agent who can better handle the responsibilities.
- Outdated or inadequate terms: As financial situations evolve and laws change, existing POA documents might no longer serve their intended purpose effectively. Revoking and replacing an outdated POA helps maintain proper protection of the principal’s interests under current circumstances.
Steps to Revoke a Power of Attorney
Revoking a POA involves specific steps, with some variations depending on who initiates the revocation-whether it's the principal, family members petitioning the court or an agent resigning from their role. Here's a step-by-step guide to help you get started.
1. Determine Eligibility to Revoke
Remember, the principal can revoke a POA at any time as long as they are mentally competent. Family members and others can petition the courts to revoke a POA if there is evidence of misconduct by the agent. Additionally, an agent wishing to step down may resign, but they must follow certain protocols to ensure their resignation is formalized.
2. Create a Written Revocation Document
The process generally requires a formal document to revoke the POA. The principal should write and sign a revocation letter, explicitly stating the POA's end and naming the agent who no longer holds authority. Courts may draft a revocation order if the revocation results from legal proceedings. It is generally necessary to sign the revocation in front of a notary.
3. Notify the Agent and Institutions
If the principal initiates revocation, they must notify the agent directly and provide a copy of the revocation document. Additionally, any institutions that recognized the POA, such as banks or healthcare providers, should be informed to prevent further use of the revoked authority.
When a court revokes a POA, the judge's order is generally sent to the agent and, if necessary, to relevant institutions.
When an agent resigns, they must notify the principal (or a successor agent, if the principal is incapacitated) in writing. This ensures that other responsible parties are aware of their intent to step down.
4. Update Records and Documentation
After notifying all parties, the principal should keep a copy of the revocation and any confirmation of receipt from the agent and institutions. For court-ordered revocations, a copy of the judge's ruling should be saved as proof.
5. Consult an Attorney if Needed
In complex situations, such as cases involving incapacitated principals or contested revocations, consulting a legal professional can help ensure compliance with local laws and procedural requirements.
Bottom Line
A POA arrangement offers flexibility and support but requires clear guidelines for revocation if circumstances change. Whether initiated by the principal, a court or even the agent, revoking a POA follows specific steps to protect the principal’s interests and adjust for new needs or concerns. Understanding these procedures ensures that authority is appropriately managed and can be transferred or ended as needed.
Tips for Estate Planning
- A financial advisor can offer you valuable guidance when drafting a POA so that you can align it with your specific needs and circumstances. 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.
- While it may be tempting to save some money and plan your estate by yourself, you should still be careful with these DIY estate planning pitfalls.
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