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Tuesday, June 29, 2010

Can a power of attorney change a beneficiary designation?


I was asked this question yesterday when speaking to a group of Sunlife financial advisors, and in fact I'm asked it pretty often. The question is whether an attorney acting under an Enduring Power of Attorney can change an existing beneficiary designation on behalf of the person he or she represents. For example, if Haley is acting as attorney for her Dad, and Dad has a RRIF that designates his two children as the beneficiaries, can Haley change that?

Beneficiary designations are found on RRIFs, RRSPs, LIRAs, segregated funds, pensions, insurance policies and other instruments.

The answer is "no", the attorney cannot legally change an existing beneficiary designation. It doesn't matter if the attorney agrees with the designation or not; it's not the attorney's money or the attorney's decision.

It's possible that an investment that has a designated beneficiary might mature, and the attorney has to take steps to re-invest it on behalf of the person he or she represents. In this case, the attorney's job is to continue the designation that had been made before. Deciding not to continue the designation is the same as deliberately changing it.

26 comments:

  1. Does it mean the grantor can make change to a beneficiary designation even after a POA has been invoked? Does it depend on the grantor's mental capability?

    What if the grantor is changing the beneficiary to the attorney? What if the new beneficiary designation is arranged by the attorney and the grantor simply puts his signature down, e.g. a beneficiary designation form?

    ReplyDelete
    Replies
    1. A designation can legally be changed by the grantor even after a POA has been invoked, but of course that depends on the specific situations. In some cases a POA is in place just to help someone out. However, a change that is to the benefit of the person acting as POA would be suspicious to my mind, especially if there is (as is likely the case) diminished capacity of the grantor.

      It does sometimes happen that an attorney will arrange a change of designation to his or her advantage and the grantor simply signs it. Not every person acting under a POA is honest. If this happens, it's elder financial abuse, not to mention fraud and possibly theft.

      The tough part is proving what's going on the grantor's mind.

      Lynne

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  2. What if the beneficiary is now deceased and it is now only the siblings as the last of family? If both siblings are enduring Power of Attorneys, can they not change beneficiary designation? Rather than it go into the estate so the Gov't can have their portion of the estate?

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  3. If the designated beneficiary of all accounts is now deceased, can power of attorney change the designation, being a sibling and only family left. Rather than everything going fore probation on the estate?

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    Replies
    1. Nope. The person acting under a POA never has the legal authority to change a beneficiary designation. Ever.

      Lynne

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  4. does POA have authority to sell assets covered in the will such as a house? And if so, are the proceeds shared in the same proportion as the will dictated originally?

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    Replies
    1. The POA has authority to sell or otherwise deal with all assets owned by the person he's looking after. The POA must always be guided by the principle that he has to do what's best for the person he's looking after. It isn't good for that person if you mess up the plans made in his or her will. Therefore, the POA should only sell an item that is specifically mentioned in the will if he or she absolutely must do so in order to pay for the care and lifestyle of the person he's looking after.

      If the POA sells the house for no good financial reason, he may end up being sued by the beneficiary who would otherwise have received the house. If the sale was needed to cover the cost of care, it's too bad for the would-be beneficiary.

      It's one of those "can he" vs "should he" questions.

      Lynne

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  5. If there are two designated beneficiaries, both POA's joint and several, and one dies without a will designating any beneficiaries, can the remaining POA amend the beneficiaries (of their mother's insurance) to just the one sibling?

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  6. Re: a POA who is joint and several with his sister, and they are both beneficiaries on an insurance policy.

    Can the remaining sibling amend the beneficiaries to remove the deceased daughter? She had no estate, and no will directing the funds to her 2 children. Asking if it's possible, not if it's right. Funds are needed for mom's care and funeral.

    ReplyDelete
    Replies
    1. I think in your question the "sister" and the "daughter" are the same person? And whose life insurance policy is it if Mom is still alive? The facts are a bit scarce here, making it tough for me to give any coherent answer.

      In any event, no, POAs cannot change beneficiary designations.

      Lynne

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  7. If a stepmother is POA and or executor of my father and an insurance policy from 1987 was shown to me by my father, a couple weeks before he passed, stating me being beneficiary, I am his only child. When I went to claim the policy I was told I'm not the beneficiary. Can the wife, if she's the POA and or executor by law change the beneficiary?

    ReplyDelete
    Replies
    1. No, neither of those roles gives anyone power to change a beneficiary designation.

      Lynne

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  8. I keep being told I can't get information eg; the date of change of the beneficiary or who the beneficiary was changed to because of the privacy act. Is there a way of finding out this information without a court order?

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    Replies
    1. Are you an executor or estate administrator? If so, you have the right to all records relating to the finances of the estate you are looking after. If you are not the executor or administrator, I doubt you will get them no matter what.

      Lynne

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  9. Hi,

    Do I need a POA if I am the daughter of the deceased is the beneficiary on his medical insurance?

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  10. Hi,
    Do I need a POA even if I am the beneficiary of my father's insurance? That is what my insurance asked me..

    ReplyDelete
    Replies
    1. I believe the last two questions are both from the same person, though the facts are slightly different.

      You haven't said what you are trying to do. It makes no sense for them to ask you this question if your father has died and all you want to do is receive a benefit under his plan. Any POA in place ends when a person dies so it should make no difference if you had POA or not.

      That makes me wonder if the insurance company is questioning something that was done or changed while your father was alive. Are they wondering whether you changed the beneficiary designation? Unless you just happened to find an insurance company employee who is very mixed up about legal documents, there must be a bit more to their question.

      Lynne

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  11. Hi Lynne,

    Does an attorney have the power to add beneficiaries to the grantor's health & dental plan? I haven't been able to find a clear answer on this.

    Thanks,

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    Replies
    1. I haven't researched this question, but my general knowledge of the parameters of an attorney's job tells me no, he cannot. The cases are clear that an attorney cannot change beneficiaries on financial instruments such as RRSPs and I believe the same logic would apply to adding beneficiaries to other things. If I ever find out otherwise, I'll post it. If anyone else reading this knows a definitive answer, please let us know.

      Lynne

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  12. What if the client is forced to convert a RRSP to RRIF and the client is unable to sign for themselves. The Legal POA is the daughter and she wants to designate the spouse, which is how it was set up for the RRSP. Can we use the RRSP application for the beneficiary of the RRIF?

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    Replies
    1. Yes, the daughter can do that. The RRIF designation can be the same as the RRSP. This would be considered carrying on an existing beneficiary designation even though technically the RRIF is a new financial instrument.

      Lynne

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  13. I am the full Property and Medical POA for both my parents. Sadly, they have both succumbed to Dementia and are being taken care of in nursing homes. Two years ago, when my father landed in the hospital and mom was already showing signs of the illness, and after months of pleading for his help, my estranged brother finally stepped up. He would pick up groceries for mom and take care of the house. During this time he began to go through my Dads old things to start cleaning up the basement. Sadly in September of 2017 mom landed in the hospital and subsequently in a nursing home. Since this time he has been scavaging through the house and has either trashed, sold or taken things for himself. He has not advised me and up until recently I wasn't overly concerned. However,last week when I arrived to start cleaning things out to get the house for sale, I noticed that a valuable table was missing...he never bothered to see if I was interested. Then this week he proceeded to email me stating that he wants ALL the good furniture, all of my moms crystal and china and collector plates,etc. He also suggested that the proceeds of any sold items should be kept by the person who sold it. When I challenged him on his unreasonable demands and reminded that all proceeds need to go back into prepping the house for sale, let's just say I received an onslaught of threats and insults that would make your head spin. Seems he feels that he has made the ultimate sacrifices and that he is entitled to anything he wants from the house. All I want is to do right by my parents. This stuff doesn't technically belong to us as my parents are still alive. As I live further away, I only go to the house once every few weeks to pick up mail and do some purging. I'm extremely concerned that he will continue to remove things from the home. Do I have any legal recourse to stop him? Can I change the locks? Can I have him charged with theft if something goes missing? Your advice would be appreciated. Thank you.

    ReplyDelete
    Replies
    1. If you have POA for your parents you have both the right and the obligation to look after their property. Yes, you can change the locks. And yes you can charge him with theft. He has no right to take anything just because your parents are in care.

      When parents go into care, it is usual for their families to try to figure out what to do about a house full of things that are never going to be used again. As the POA, you should find their wills to understand if there are specific items that certain people are supposed to inherit. If there are, you should keep those items safe. As for the rest of the furniture and personal goods, you are walking a bit of a fine line. You can't act as if they have died and simply take their things. On the other hand, it is neither sensible nor economically feasible to store a houseful of goods for many years. The most reasonable thing to do is to try to divide household items as described in the will. If items are sold, that money must be put away in an account that is for your parents' benefit. Same with the house itself, if it is sold. the money is put away for your parents' care, accommodation, or improvement of life.

      You do have the legal standing to stop your brother from looting the house.

      Lynne

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    2. Thank you Lynn!

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  14. Any advice for the above question?

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