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Changing Beneficiary Designation using Power of Attorney

Changing Beneficiary Designation using Power of Attorney

Q: My mother recently passed away. She had two children, myself and my sister. Prior to her death, she had named my sister as agent under her power of attorney. My mother’s will treats both of us equally. I found out that a month before her death my sister used the power of attorney to change the beneficiary on my mother’s bank account to just herself. Was she allowed to do this?

A:  The general rule is that the agent under the power of attorney must act in the utmost good faith and undivided loyalty toward the principal. With this is the requirement that the agent exercise her authority in the best interest of the principal. Even if the power of attorney has the authority to make gifts, an agent may not make a gift to herself of the money or property of the principal. Such a gift carries with it a presumption of impropriety.  The agent under the power of attorney cannot use the gifting power to alter the principal’s testamentary intent. In your situation, this means that if your mother’s will lists you and your sister as equal beneficiaries, then any actions by the agent in naming beneficiaries on accounts must reflect this intent.  Your sister cannot change your mother’s testamentary plan using the power of attorney to make herself as the sole beneficiary on her bank account.

Fortunately, the Surrogate’s Court Procedures Act provides a mechanism for recovery of assets. These proceedings are called “discovery and turnover proceedings” and are designed to bring assets back to the estate that have been improperly transferred. As the petitioner, you would will be required to prove that the bank account was improperly acquired by your sister using the power of attorney. Your sister will then bear the burden of proving that the bank account was acquired properly. If sufficient evidence is provided, the court will order your sister to turnover the balance in the bank account to the estate to be shared equally according to your mother’s will.

If you suspect that your sister abused her authority under the power of attorney to benefit herself you should immediately contact an attorney experienced in estate litigation matters. You have to act quickly to protect your interests.

 

-- Nancy Burner, Esq and Kera Reed, Esq.

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