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.
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.
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?
ReplyDeleteWhat 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?
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.
DeleteIt 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
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?
ReplyDeleteIf 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?
ReplyDeleteNope. The person acting under a POA never has the legal authority to change a beneficiary designation. Ever.
DeleteLynne
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?
ReplyDeleteThe 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.
DeleteIf 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
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?
ReplyDeleteRe: a POA who is joint and several with his sister, and they are both beneficiaries on an insurance policy.
ReplyDeleteCan 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.
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.
DeleteIn any event, no, POAs cannot change beneficiary designations.
Lynne
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?
ReplyDeleteNo, neither of those roles gives anyone power to change a beneficiary designation.
DeleteLynne
Thank you
DeleteI 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?
ReplyDeleteAre 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.
DeleteLynne
Hi,
ReplyDeleteDo I need a POA if I am the daughter of the deceased is the beneficiary on his medical insurance?
Hi,
ReplyDeleteDo I need a POA even if I am the beneficiary of my father's insurance? That is what my insurance asked me..
I believe the last two questions are both from the same person, though the facts are slightly different.
DeleteYou 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
Hi Lynne,
ReplyDeleteDoes 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,
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.
DeleteLynne
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?
ReplyDeleteYes, 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.
DeleteLynne
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