It’s a good idea to keep all of your estate planning documents updated, but your financial power of attorney is one document that should be reexamined more frequently than others. Revisiting your financial power of attorney will help ensure that the agent you’ve appointed is still the person you’d want managing your affairs if you no longer can. If you want to appoint another agent, revoke the power of attorney as required by your state’s law while you’re able to. At the same time, if you have been named as someone else’s agent in a power of attorney, but want to resign from that role, take steps to make your resignation official. Failure to do so could be a costly mistake.
An Unfortunate True Story
Stauffer v. IRS, a case recently decided by the First Circuit Court of Appeals, illustrates one of the unfortunate consequences of failing to revoke or resign from power of attorney. In that case, Carlton Stauffer named his son, Hoff, as his agent under a financial power of attorney. Hoff was empowered to act on his father’s behalf to manage his financial affairs. Later a dispute arose between father and son which led Hoff to tell Carlton that he was no longer willing to act as his agent. Carlton drafted several revocations but never sent them to Hoff. In turn, Hoff never validly renounced his role as his father’s agent.
After several years, the two men reconciled, and when Carlton died, Hoff, acting as the personal representative for his estate, filed six years of his father’s tax returns. For one of the earlier tax returns, Hoff claimed there had been an overpayment of $137,403, and on behalf of the estate, sought $97,364 as a refund. The IRS asserted that the claim for a refund was too late, as the statute of limitations had run. Hoff appealed the decision, but the Eighth Circuit Court of Appeals held that Hoff, representing his father’s estate, could not receive the refund because Hoff had been authorized to act on his father’s behalf under the power of attorney, which had never been validly revoked by Carlton or renounced. Hoff’s failure to act within the time period reduced the size of Carlton’s estate by nearly $100,000.
Make Sure Your Story Has a Different Ending
If you have made someone your agent under a power of attorney, but have changed your mind, ask your estate planning attorney to help you revoke the appointment, which involves the following steps:
- Within your revocation, assert that you are of sound mind, and specify in writing that you would like to revoke the power of attorney.
- Make sure the revocation specifically identifies the power of attorney you wish to revoke by sharing your name, the date it was signed, and the full name of the person you named as your agent.
- Sign and date the revocation document in front of a notary public.
- Send the revocation document to your old agent and to any institution, organization, or agency that has a copy of the power of attorney you are revoking by certified mail.
Warning: If you fail to notify an institution, agency, or person to which you have provided the power of attorney document about the revocation, and they are unaware that you have revoked it, they will be legally protected if they enter into any transactions with the person you had named as your agent, i.e., they won’t be liable for any losses that result, and you could be held liable for the acts of your agent.
- If the power of attorney was recorded in your county, send the revocation to the relevant county office so it can be recorded as well.
- Create a new power of attorney naming a new agent. This will ensure that you are properly taken care of.
- Send your new power of attorney designating a new agent to any relevant institutions, agencies, or people by certified mail. Keep all of your records.
If you have been named as someone’s agent under a power of attorney, but you don’t want the role, ask an estate planning attorney to help you carry out a “renunciation” under your state’s law, which may require the following actions:
- Check the language of the power of attorney to determine whether it spells out steps for resigning as an agent. If it does, carry out those steps.
- If the power of attorney does not include instructions for resigning from the role of agent, provide written notice of your resignation to the person who named you as the agent.
- Draft a revocation letter specifying your name, the name of the principal who made you an agent, the date the power of attorney was signed, your intention to resign, and the date your resignation will be effective.
- Sign and date your resignation before a notary public.
- Send your written resignation to the principal by certified mail.
- Send your resignation to any institutions, organizations, or agencies that have been given copies of the power of attorney by certified mail, return receipt requested. Keep all of your records.
We Can Help
It is important to name someone you trust to act on your behalf in case you one day become unable to make financial or medical decisions for yourself. But you should revisit your powers of attorney frequently to make sure that the person you have named as your agent is still the person you want to make those important decisions. You also need to revoke a previous power of attorney and create a new one if you have gotten married or divorced, moved to another state, or have lost the power of attorney document. In any of these situations, a legal revocation can prevent loss and heartache. Those who have been named as an agent under a power of attorney but are no longer able to act in that role must resign in the manner specified by the power of attorney document or state law. Contact us today so we can make sure your story has a happy ending.
You can use the link below to schedule a call with Gabriel Katzner, or just call us at 855.528.9637 to learn more about how best to plan today to protect those most important to you