Revoking a Financial Power of Attorney: Know Your Rights

Understanding Financial Powers of Attorney

A financial power of attorney (POA) is a legal document that grants someone else (called an "agent" or "attorney-in-fact") the authority to act on your behalf for financial matters. This agent can handle everything from paying bills and managing investments to filing taxes and selling property.

The person granting the POA is called the "principal." As the principal, you decide how much power to give the agent and may revoke the POA at any time if you become dissatisfied with the arrangement.

Financial POAs are important tools, especially as we age, allowing our finances to be properly managed if we become incapacitated. However, they involve a huge amount of trust in your appointed agent. That's why it's crucial to understand your rights for revoking the POA if needed.

Common Reasons to Revoke a Financial POA

There are several situations where you may want to revoke a financial POA:

• The agent has breached their fiduciary duty by mismanaging your finances or acting in their own interests instead of yours
• The agent has become incapacitated themselves and can no longer carry out their responsibilities
• Your relationship with the agent has deteriorated, and you no longer trust them
• You've had a change in marital status (e.g. divorce) and need to revoke the ex-spouse's POA
• You want to re-assign POA responsibilities to someone else you now trust more

Overall, revoking may be advisable if you believe the current agent cannot be trusted to properly handle your financial affairs any longer.

The Revocation Process: Key Steps

Revoking a financial POA follows a specific legal process:

1. Draft a Revocation Document: This must state your intent to revoke the existing POA in clear, unambiguous language. Some states provide standard revocation forms.

2. Notify the Agent: Send the revocation notice to the agent via certified mail with return receipt requested. Keep a copy for your records.

3. Notify Third Parties: Institutions like banks or investment firms that the agent had authority over should also receive notice of the revocation.

4. Execute a New POA (Optional): If desired, you can put a new POA in place to avoid a lapse in financial management. However, this is separate from the revocation itself.

5. Follow Your State's Requirements: Some states require having the revocation notarized, filed with the county, published in a newspaper, etc. Check your local laws.

The revocation legally takes effect once the agent receives valid notification from you. However, third parties are not obligated to recognize it until they are also notified.

Special Cases and Considerations

In a few situations, revoking a POA may be more complicated:

Durable vs. Non-Durable POA: Most POAs nowadays are "durable," remaining in effect even if the principal becomes mentally incapacitated. For a durable POA, you must have legal capacity at the time of revocation.

Springing POA: A "springing" POA only takes effect upon your incapacitation. If it has been activated, you may not be able to revoke it yourself.

Financial Abuse: If you suspect the agent of financially exploiting you, immediate action is required. Consulting an attorney, adult protective services or law enforcement may be advisable.

Dementia/Incapacitation: If you have diminished mental capacity, you may need a competency ruling to legally revoke the POA. Family may have to pursue guardianship/conservatorship instead.

In general, act quickly if you want to revoke to avoid assets being transferred or misused before the agent loses authority.

Protecting Yourself During Revocation

Even after you've properly revoked a financial POA, there are important steps to safeguard your assets and finances:

• Review all recent financial transactions, accounts, and documentation looking for unauthorized activity
• Change passwords, PINs, and other account access information
• Put a freeze on your credit reports to prevent new accounts being opened
• Notify financial institutions not to accept further instructions from the former agent
• Consult a professional (attorney, accountant, etc.) to assess the need for further actions

It's also wise to secure any physical assets like vehicles, real estate deeds, and valuable personal property. The former agent should return any such items in their possession.

While revoking the POA legally strips the agent of authority, taking these protective measures ensures they cannot continue acting on your behalf through other means.

Alternatives to Outright Revocation

In some cases, revoking the POA entirely may be an overreaction or bad idea due to the circumstances. If you have concerns about the agent's conduct but don't want to terminate their authority completely, alternatives include:

• Adding a co-agent who must approve transactions over a certain dollar value
• Limiting the POA to certain accounts or types of transactions only
• Seeking a court order providing oversight on the agent's activities
• Adding specific instructions or restrictions within the POA document itself

An attorney can help evaluate which option best balances your needs for protection with keeping the POA operational. A limited or monitored POA may be preferable to completely revoking one in some cases.

Choosing a New, Trustworthy Agent

If you do execute a new POA after revoking the previous one, take great care in selecting the new agent. Honesty, trustworthiness, financial competency and putting your interests first should be priorities.

A family member may seem the natural choice, but sometimes an impartial third party like a bank trust officer, attorney or licensed fiduciary may be better equipped to properly carry out financial POA duties.

Carefully vet and interview potential candidates. Specify the scope of responsibilities in writing, and ensure they fully understand their legal obligations to you as principal. With diligence, you can find a qualified agent you have full faith in this time.

Wrapping Up - Next Steps

Revoking a financial power of attorney is a serious matter with numerous legal and practical considerations. However, you have the right to do so if you no longer wish for the designated agent to act on your behalf.

The keys are to follow your state's requirements precisely, act quickly to limit financial exposure, and take measures to regain full control and oversight of your assets and accounts. With proper counsel, you can navigate this process smoothly.

If you need help locating an elder law attorney or further guidance on revoking a POA, contact [Your State's Protection & Advocacy Organization] which provides free legal services. You can also check [The National Academy of Elder Law Attorneys] to find a qualified professional in your area.

Revoking a power of attorney is an important decision - but sometimes a necessary one. By being well-informed and proactive, you can protect your interests and have peace of mind moving forward.