UncategorizedWhat Happens When the Power of Attorney Principal Dies?

Power of Attorney (POA) is a legal power given to a person (or more than one person) to become an agent on your behalf. POA may be permanent or temporary, depending on the circumstances. It may also be used on specific decision-making or all big decision-making when a person is unable to do so alone.

The question many real estate lawyers get following the passing of a loved one is, “What happens when the Power of Attorney principal dies?” The principal is the person who granted the authority of the agent to have POA.

The short answer is, POA ends, and the probate process begins for the distribution of assets to beneficiaries. The long answer is a little more in-depth.

Why Does POA End and Why is it Important for Brokers to Know This?

There can be no POA following the death of the principal, because there cannot be an agency if the Principal is not alive. Also, in the U.S., you must be living to “own” property. If you are not living, the property belongs to your estate or Trust. This means there is no longer any ownership over the property or practices about which the agent can make decisions.

A broker dealing with a child of an elderly homeowner, for example, might be speaking to the agent with POA during a sale. If the homeowner passes before the sale is finalized, the agent has no authority to sign conveyancing documents.. The only exception is if the agent has also been named Successor Trustee. If the property must transfer out of an estate, being an executor allows for the transfer, but only after property estate documentation has been provided.

It’s important for brokers to double-check that an agent has the authority to sign paperwork during a real estate sale before contracts are signed. There are a few things to know about POA agreements, including:

  • POA can be rescinded by the principal or terminate before it is used
  • If POA is rescinded, the new Agent must process the sale for the principal
  • Placing the property in a trust prior to sale is a good contingency plan

With and Without a Will

When we pass on, some of us have legal wills, and others don’t. In either case, POA ends with the death of a principal. The difference between the two cases is that a principal with a will has already selected an executor. Their property will then be distributed based on their personal wishes, but only within the context of probate or on an Affidavit of Heirship, if appropriate.

Without a will, POA still ends, but all property is distributed based on state law. An administrator or executor is appointed by the court to help in the settling of the estate.
There is a chance that an agent could become an executor if there is no will, no surviving spouse, and no children. The court may determine the previous POA agent as the most suitable candidate for the job, but this isn’t a sure thing.

There’s a lot to wade through here. If you are working with elderly owners, make sure you are working with an experienced real estate attorney who can help simplify the complexities of a POA for your clients.

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