Can You Use Power of Attorney When a Person Is Alive?

By Tom Speranza, J.D.

Can You Use Power of Attorney When a Person Is Alive?

By Tom Speranza, J.D.

A power of attorney is a legal contract in which someone, known as the principal, grants another person, called the agent or attorney-in-fact, the power to make decisions for the principal about financial and property matters. Standard powers of attorney expire when the principal becomes mentally incapacitated, but a durable power of attorney continues to grant the agent powers after the principal becomes mentally incapacitated.

Woman and elderly woman looking at a clipboard together

A power of attorney is valid while the principal is alive; in fact, it is only valid and usable during the principal's lifetime. The principal can revoke the power of attorney at any time while he or she is alive, but if the principal doesn't revoke it, the power of attorney terminates automatically when the principal dies. The assets the agent managed under the power of attorney (bank accounts, real estate, insurance policies, etc.) usually then become part of the principal's estate.

Scope of Authority

A power of attorney can be as broad or as narrow as the principal desires. In other words, the attorney-in-fact can receive blanket authority to manage the principal's financial or legal affairs, or the principal can grant very limited powers: for example, the power to manage and maintain a vacation home or to care for and make decisions about a family pet while the principal travels.

In most cases, the principal appoints the agent to make decisions about all of his or her individually owned assets, such as financial accounts, real estate, and businesses, if the principal becomes incapacitated. For assets jointly owned with the principal's spouse (a primary residence, for example), a power of attorney usually isn't necessary. The spouse already has the legal right to make decisions about joint assets if something happens to the principal.

Durability

Principals often create powers of attorney to ensure that someone they trust has authority over their assets if and when they become mentally incapacitated or otherwise unable to handle their financial affairs (for example, because of an illness such as dementia). Typically, the document provides that the attorney-in-fact has no power over the principal's assets until the principal becomes incapacitated.

A power of attorney that continues to be legally effective during the principal's incapacitation is a durable power of attorney. However, like other powers of attorney, it still terminates when the principal dies.

After the Principal's Death

A power of attorney terminates automatically when the principal dies. At this time, the attorney-in-fact's power to manage the principal's affairs ends. From that point forward, an executor often handles the principal's assets and financial decisions in accordance with the principal's last will and testament.

When a principal with a will passes away, the document determines how the executor or personal representative should handle the assets and debts of that person, called the testator. The testator names the executor in the will to take the various actions required by law and under the will. These usually include:

  • Filing the will in court
  • Inventorying the testator's assets
  • Paying the testator's funeral expenses and other debts and taxes, including monthly bills such as mortgage payments and utilities
  • Distributing the remaining assets to the heirs named in the will
  • Filing a financial accounting of the testator's actions

Although the same person can serve as both an attorney-in-fact and executor, there is no requirement to appoint a single person to serve in those capacities and no automatic process under the law for one position to transition into the other.

The executor's power under the will begins with his or her formal appointment in the probate process.

An online legal service provider can help you grant an enforceable power of attorney to manage and protect your assets.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.

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