Rescinding a POA Agreement
Written by Geoff Kreller, CRCM, CERP
Creating a Power of Attorney (POA) relationship should not be considered lightly; while it provides your agent with the ability and authority to act on your behalf, your agent may abuse this privilege for financial gain at your expense. POAs serve a very important purpose in enabling management of your day-to-day transactions, especially when you are physically or mentally unable to regularly conduct those activities. However, POAs can easily become a gateway to misappropriation, financial fraud, and elder abuse.
It’s important to recognize that a family member or close friend with these powers will almost always have to contend with an apparent or actual conflict of interest when representing your financial interests. Other family members may be hostile toward your choice of agent, even though they are just fulfilling your requests and wishes. Crucially, it takes a significant amount of time and energy to exercise and document a POA agreement’s rescission, even if you suspect your financial agent has not acted appropriately.
Several events will automatically end an agent’s authority under a POA, including your death, when a specific expiration date is articulated in the POA agreement, or when the specific task considered in the agreement is completed (such as the sale or transfer of an asset). If the completion of a specific task ends the agreement, the document is typically referred to as a “Limited Power of Attorney” or “LPOA”.
It’s already difficult for a financial institution to validate the legitimacy of a POA; it is much more challenging for financial institutions to recognize that you revoked your general POA agreement voluntarily and that you conducted that action with sound mind.
If the institution has validated the original POA, they may act as if it is still valid until they received written instructions to the contrary. If you do need to revoke an existing POA, here are some best practices to effect that termination.
Have a physical and mental evaluation to show you are clearly of sound mind and body to initiate a revocation.
Place the revocation in writing with an effective date of the termination; have the document witnessed and notarized.
Immediately send a copy of the revocation and your medical evaluation (or indicate that it can be provided on request) to each of your financial institutions – banks, credit card companies, finance companies, and investment firms – and request that the institution confirms whether a POA was on record and (if so) that the agent’s authorization is now revoked.
If a POA was previously on file, review your statement activity (perhaps for a 12 month period) and evaluate significant transfers conducted by your agent. ACH transactions may show the destination bank and/or recipient in the description; check images will show who the check was made payable and where the check was deposited.
If you identify other institutions where funds may have been diverted, follow the steps above.
Review any changes made to the beneficiaries and payable-on-death (POD) designations for each account.
Review your TransUnion, Equifax, and Experian credit reports; identify recent inquiries on your record and new accounts that have been opened and repeat the steps noted above for each institution identified.
Place a credit freeze on your TransUnion, Equifax, and Experian credit files to prevent additional credit accounts from being opened in your name.
Rescinding an existing POA agreement is difficult, but it may be necessary to protect your financial assets and the interests of your estate and beneficiaries. If you need support in rescinding a POA agreement (or just need someone to talk with), feel free to contact us at contact@naqf.org.
