Can a Power of Attorney Change Beneficiaries on Bank Accounts?

By Andrine Redsteer

An individual who has been given authority via a power of attorney, also known as an "agent," may sometimes change beneficiaries on bank accounts. Although state law varies, this type of authority may only be granted in specific circumstances. When an agent wields authority she does not actually have --such as changing beneficiaries -- it may be considered an abuse of her power.

General or Limited Powers

The creator of a power of attorney for finances -- known as a "principal" -- gives an agent the authority to conduct certain financial transactions on the principal's behalf. The powers granted via a power of attorney may be limited or general. In this sense, a power of attorney document is quite flexible, and a principal may choose to give an agent broad authority to "step into his shoes." This means the agent may conduct -- on the principal's behalf -- the same types of financial transactions as the principal. For example, if a power of attorney document is general, the agent may have the authority to buy and sell real estate and stock and make withdrawals from bank accounts. Conversely, a principal may create a power of attorney that is limited such that the agent may only pay specific bills or make deposits.

Changing Beneficiary Designations

Some power of attorney documents may be drawn so broadly as to give an agent the power to change beneficiaries on life insurance policies, bank accounts and retirement policies. However, the agent has a fiduciary duty to act in good faith. In other words, the agent is required to use her power to the principal's benefit. Moreover, if an agent changes beneficiary designations to benefit herself in some way, the original beneficiaries may be able to sue her for fraud or breach of fiduciary duty.

Ready to appoint a power of attorney? Get Started Now

Varying State Law

Because power of attorney documents have become more popular, some states are imposing requirements regarding express language. For example, Colorado requires a power of attorney document to expressly state that the agent may change beneficiary designations; if this language is not included, the agent does not have authority to do so. Moreover, if an interested person believes an agent is abusing her power, he may file a complaint with a court.

Automatic Beneficiary Designations

Some states, such as Florida, prohibit agents from changing beneficiary designations on accounts that automatically pass to named beneficiaries -- such as joint accounts and payable-on-death accounts -- unless the power of attorney document expressly grants this power. Depending on the state, an agent may be liable for damages if she changes automatic beneficiary designations.

Ready to appoint a power of attorney? Get Started Now
Can I Change an IRA Owner With Power of Attorney?


Related articles

Can a Person Give or Turn Over Her Power of Attorney to Someone Else?

Although a power of attorney involves two persons, it is not a contract and can be unilaterally revoked. The person making the document, termed the principal, uses the power of attorney to name an agent to act for her. A competent principal is free to revoke that authority at any time and confer it on another agent. The person named as agent can also decline to serve but cannot give or transfer her authority under the power of attorney to another.

Can a Pension Beneficiary Be Changed With a Power of Attorney?

A power of attorney is a legal document that allows you to grant someone else the right to act on your behalf. The person you authorize to act on your behalf is called your agent. State law regulates powers of attorney. While an agent can have the authority to change pension beneficiaries with a power of attorney, the exact language needed within the document varies by state.

Can I Refinance With Power of Attorney?

When you are named as a financial agent under a general power of attorney, you have the right to undertake any action the principal could undertake herself. This includes applying for bank loans on her behalf or refinancing the loans she already holds.

Power of Attorney

Related articles

Does a Power of Attorney Have the Right to Change a Living Trust?

Estate planning often involves creating a living trust and granting someone a power of attorney. A living trust is an ...

Can Someone With the Power of Attorney Change Someone Else's Will Before He Is Dead?

A power of attorney grants an agent, sometimes called an "attorney-in-fact," the authority to act on behalf of the ...

Does Power of Attorney Become an Executor of the Will Automatically?

A power of attorney grants an individual, known as an agent or "attorney-in-fact," the power to act on behalf of the ...

Why Does a Power of Attorney Not Transfer to a Trustee?

A power of attorney and a trust document are similar in that they both convey to an individual the authority to manage ...

Browse by category
Ready to Begin? GET STARTED