A power of attorney in the hands of a disgruntled spouse can have disastrous results. A POA allows the agent -- the person granted the power -- full ability and authority to enter into any transaction on behalf of the principal -- the individual who granted her the power. She can use the POA to sell or otherwise transfer ownership of assets pre-divorce. She can also use it to gain sensitive information regarding accounts, assets and debts for use in a divorce. She can contract for debts in the principal’s name.
In 10 states, the date of divorce automatically revokes powers of attorney granted from one spouse to another. These states include Wisconsin, Alabama, Texas, California, Pennsylvania, Colorado, Missouri, Illinois, Minnesota and Indiana. However, powers of attorney remain in full force and effect pending the divorce and until it is final, unless they're revoked. Some states, such as Texas, allow a power of attorney to continue past the date of divorce if it contains language superseding the event. The principal must state specifically that he intends the power of attorney to remain in effect, even if the parties divorce.
In the remaining 40 states that don't automatically revoke POAs in the event of divorce, a divorced agent spouse can continue using the POA until the principal takes steps to revoke it. A revocation is a signed and written statement that identifies the principal and the agent to whom he gave power. It states clearly that the principal wants to revoke the power of attorney and attests that he is of sound mind at the time he makes the revocation.
Even in states where divorce automatically revokes POAs, the institutions with which the agent spouse has the right to interact might not be aware that a divorce has occurred. If she presents the POA and attempts a transaction, they may not know that the POA is no longer valid. It’s usually a good idea to officially revoke the POA anyway, even if the divorce does it for you. Take copies of the revocation to each such institution, advising them of the new status quo. Institutions are within their legal rights to honor a power of attorney if they have not received notice that it is revoked. A principal can revoke his power of attorney at any time, even prior to divorce and in states that automatically revoke them at the time of divorce.
A power of attorney does not authorize the agent spouse’s signature on divorce documents on behalf of the principal spouse. Even if the principal does not revoke the power of attorney, she can’t use that power to sign a marital settlement agreement or any other divorce paperwork for him, because she herself is part of the divorce litigation.
Divorce generally does not have any impact on a power of attorney the principal may have granted to someone other than his spouse. The power of attorney is a legal agreement between the principal and his agent, and it is not dependent on his marital status.