As we started the discussion with the California power of attorney on our home page, we went further and discussed the durable power of attorney. Based on some common questions, we want to touch upon the question of what happens when the principal signer of a POA dies. What becomes of the document? The agent? Are there any things the agent is supposed to take care of after the principal’s death?
Here’s What Happens
Upon the date of the principal’s death, any power of attorney is immediately terminated. It is common for people to mistake a power of attorney for a trust that survives death. In California, there are several different types of powers of attorney you can draft. However, most people choose to create a general durable power of attorney.
A general durable power of attorney revokes the authority of all powers of attorney created beforehand. However, several exceptions include allowing safety deposit box access, depositing funds, withdrawing funds, and writing checks. The principal must create a statement of intent to appoint an agent. The agent of the general durable power of attorney will remain in authority until the principal is deceased.
The general durable will also include all specific powers granted to the agent. These powers may include the ability to convey personal and real property, release and execute mortgages, transfer and endorse motor vehicle titles, and execute security agreements like deeds of trust.
Other powers that may be specified in a general durable POA are the ability to endorse and receive checks, withdraw and deposit checks, have safety deposit box access, and endorse, transfer, and convey business interests. The agent may also change the beneficiary designation and ownership of qualified retirement plans, 401Ks and annuities, appoint ancillary agents, prepare, file, and sign tax returns.
General durable powers of attorney in California contain clauses for document reliability, document reliance, information release, and ancillary agent appointment. A power of attorney will also dictate the agent’s fiduciary eligibility, compensation, liability, enforcement of authority, revocation, and amendment. This document must be dated, signed, and notarized.
POA vs. Revocable Living Trust
Like a durable power of attorney, a revocable living trust is established while the grantor is still alive. However, unlike a power of attorney, a living trust does survive the grantor’s death. After signing a Declaration of Trust, the grantor can designate themselves as trustees, allowing them to transfer assets into the trust to retain control over said assets. The grantor may also designate another party as the trustee, and the grantor is allowed to cancel the trust at any time. A living trust also allows the grantor to name a successor trustee. Upon the grantor’s death, the successor trustee will be given authority over all assets in the trust. The successor trustee must then transfer these assets to the beneficiaries designated in the trust or manage property allocated to beneficiaries who are minors.
It should be noted that a general durable power of attorney in California cannot be replaced with a living trust because a power of attorney immediately expires upon the principal’s death.
There are other limitations to a power of attorney. For instance, it cannot direct the allocation of an estate to the principal’s beneficiaries. Furthermore, a general durable power of attorney does not grant the agent authority to make healthcare decisions for the principal. Healthcare decision authority in California is covered by an advance healthcare directive, another type of attorney power.