Power of attorney ends with the individual’s death

Every now and then, a misunderstanding about estate law occurs, often with the best possible intentions.

From time to time we hear of an individual who signs on to wield durable power of attorney for a loved one — which we call the principal. When that principal is unable to make financial decisions for himself or herself, the person with the power of attorney — which we call the agent — steps in and makes those decisions on the principal’s behalf.

Besides being a legality, power of attorney is a very personal thing, rooted in deep knowledge of one another. The principal knows the designated agent is a person who is competent and trustworthy and who cares for the loved one. The agent knows what the principal wants. This is the person who pays the bills, manages the accounts, and looks out for the principal’s interests. It is a fiduciary relationship.

There is a catch

But here’s the catch. The power of attorney ends the instant the principal dies. The agent can no longer pay the bills and taxes, update the drivers’ license, or make any decision on the principal’s behalf.

The moment the principal dies, these decisions are passed to the estate, and the administrator or executor put in charge. (Note: this could be the same person, but acting in a different capacity now.)

You can easily understand why power of attorney is limited n this way. When the principal dies, there is often a scramble to assert inheritance rights. Often this is very informal, as when a son or daughter claims the silverware or lawnmower.

The administrator or executor is installed precisely to maintain order through this period, so that a proper passing of the estate occurs.

Should the agent designated under the power of attorney agent taking on this responsibility, family members and others will wonder if their interests are being respected. Agents under power of attorney have wide latitude to make financial decisions. Estate and probate administration, by contrast, must give every possible appearance of fairness and impartiality.