How to modify a power of attorney
Power of attorney is an important legal planning tool. It is commonly used for estate planning, medical management, financial management, and more. It is also a flexible tool. You have the right to modify or revoke a proxy at any time. In addition, modifying or revoking a power of attorney is extremely simple (by design). The following is a general description of how to make this change, and not legal advice, which should be sought from an attorney familiar with the relevant laws in your state. Consider working with a financial advisor when developing or modifying your estate plan.
Power of attorney, definition
A power of attorney, also known as a power of attorney letter, is a legal document that you sign to authorize another person to act on your behalf. The person who gives his power is called the principal, the principal or the donor. The person who takes power is known as the agent or attorney.
The grantor can choose the rights he grants to the agent. For example, if you have an illness that can make you disabled, you can give an agent a medical power of attorney to make treatment decisions when you become unable to do so. Licensors could also give the agent the right to make financial decisions for them, including over their investment accounts. For example, if you are going on a six month trip around the world, you can grant someone a power of attorney to help you manage your rental properties.
If you need someone to represent you and discuss your tax issues with the IRS, you can complete IRS Form 2848. This form is the Representative Declaration and Power of Attorney form. Since tax information is considered private information, you will need to formally authorize another person to handle your personal tax issues.
How to modify a power of attorney
There are generally five key steps to amending a power of attorney.
Notify the person currently holding the power of attorney
If you want to make any changes, be sure to immediately notify your existing power of attorney. This is especially urgent if you reduce or eliminate their authority. You would want them to stop acting right away, or to know that these changes are coming so that they don’t plan for the future. You will also have the opportunity to discuss your needs and how best to accommodate the changes you make.
Put the change in writing
You can only modify or revoke a power of attorney in writing. As we discuss elsewhere, few, if any, states require a specific form of power of attorney. These forms are useful, and you may find it helpful to grab one from a state or local website. You can also write a simple letter to your power of attorney, as any written notice will meet the legal requirements. In either case, be sure to clearly state the changes you are making. This is true whether you change the scope of your current mission or complete it completely.
Technically, granting a new proxy to a third party will automatically void all existing and overlapping assignments. Don’t rely on it. Even if you assign a new power of attorney, be sure to change or revoke any existing assignment as well.
Include all required languages
This is where a form can also come in handy. Most states have specific requirements as to what language a change or revocation must include. This is usually your name, the name of your power of attorney, the date the change or revocation takes effect and sometimes the date the previous power of attorney took effect.
That said, if you are unsure of the requirements of your particular state, most (if not all) states will also apply a general revocation. This would involve: your name, the name of the recipient, the date on which the revocation takes effect and the language in which you revoke all existing power of attorney assignments. In essence, most states will recognize language like “Effective July 1, I, Michael Smith, revoke any existing power of attorney held by Jane Doe.”
Authenticate and if necessary register
Usually, you need to legalize your document. This may be the only part of the process that costs money. For modification, this is an absolute requirement. To change your power of attorney, you must have the document legalized in the same way that you must first legalize the document granting the power of attorney. Some states require you to notarize the document canceling the power of attorney, and this is still the best practice. However, as a general rule, many states, if not most, will allow you to cancel someone’s power of attorney by simply giving written notice.
Essentially, while you have to tick several boxes to cede that power, the state wants to make it easy for you to take that power back. It is absolutely important that the form is properly filled out and notarized, but make sure to send that initial email anyway. It will generally have the force of law. If you have registered a power of attorney with a local office or registrar, you must also register the document amending or revoking the power of attorney.
Notify all parties involved
As a final step, you should inform anyone who has reason to know about your power of attorney relationship. Specifically, contact anyone who may work with your proxy on a regular basis or who otherwise should know that this grant of authority has ended or has changed. Although this step is not legally necessary, it can save you considerable time and avoid confusion.
The bottom line
Changing or terminating a power of attorney is a straightforward process, but can still be an important part of estate planning. You must do this by notifying the person in writing, possibly with an official notarization, that their mandate has ended or has changed. Although it is not usually mandatory to use specific forms, they can be very useful.
Advice on estate planning
The details are really important when writing a proxy form. Whether you’re creating one from scratch, changing the relationship, or ending it, it’s important to do this step right.
A power of attorney can help you with many important projects. They are not alone. Good financial advice can also help you prepare for what’s to come, and the SmartAsset matchmaking tool can help you find an advisor near you.
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The article How to Edit a Power of Attorney first appeared on the SmartAsset blog.