Who can override a Power of Attorney?

Power of attorney override

POA and Estate Planning

Knowing the kind of power of attorney to give is important, knowing who can override a power of attorney is next important. A power of attorney is an important legal document that anyone in estate planning will use at some point. It allows a real estate owner to delegate his powers, entrust them to the able hands of a trusted agent or advisor, and free his hand

Situations often arise where the supposed trusted agent or advisor fails to act on behalf of the person who executed the power of attorney and abuses his powers. There arise need to override the power of attorney. In this article, we shall detail how to override a power of attorney and importantly, who can do so?

What is a POA:

A power of attorney is a legal document where an entity called “the principal” authorizes another entity called “the attorney’ to act on his behalf or in his stead over his real estate or financial transactions.

A power of attorney is important as sometimes, a principal may become unable to perform his functions over his real estate by reason of absence, declining health or in case of an injury or disability, mental capacity among others. It is important he delegates his powers to take decision or action in the hands of a trusted advisor.

Even if your power of attorney form grants broad powers, your Agent cannot:

  • Change or alter your will.
  • Use power of attorney after the death of the principal to make decisions (unless they’re executors of your will)
  • Transfer power of attorney to another person

Can a power of attorney transfer money to themselves:

Yes, attorneys can transfer money to themselves on the basis of the power of Attorney. The powers granted to an attorney may often include powers to take a percentage of money accruing to an estate as a commission or fees for running an estate.

Obtaining power of attorney without consent:

Only a mentally competent individual can legally appoint a power of attorney agent for themselves. However, a person can purport to act as an agent on behalf of a principal without the principal’s consent. The acts of such an agent can become valid and binding on the principal. But, this happens when the principal ratifies the conduct, that is, when the principal approves the prior act of the agent.

Principal

A principal is the individual or entity that donates the power of attorney and authorizes an agent to act on his behalf. In other words, he is the “donor” of a POA.

Attorney:

The attorney is the “the agent” or “the attorney-in-fact” or “the donee” of a power of attorney. The attorney is the designated individual or entity legally authorized to act on behalf of the principal.

The law mandates the agent to act in the best interest of the principal. The law imposes a fiduciary relationship between him and the principal and requires that he remains accountable to the principal.

Two types of Power of Attorney:

To determine who can override a power of attorney, we need to note the different types of power of attorney. They are:

General or Limited Power of Attorney:

The principal must be a person of sound mind and mental capacity. The POA grants extensive or specific powers to the attorney. In GPOA, the attorney has unlimited powers, subject only to the supervision or overriding powers of the principal. The attorney can perform most functions, including:

  • buying assets, interests, or policies;
  • receiving gifting from trusts;
  • settling or compromising financial or legal claims;
  • managing your business operations; and
  • handling real estate transactions.

In contrast, in a limited power of attorney, the powers of the attorney is simply to perform specified tasks such as signing of documents etc.

Durable or Non-Durable Power of Attorney:

The power of attorney permits the attorney to perform certain functions that the principal cannot perform by reason of disability or mental incapacity. The power of attorney remains while the disability exists or the principal dies. Powers given under such a power of attorney include the signing of documents, managing financial and real estate transactions and advisory role on healthcare decisions.

In addition to these two types, there is a special power of attorney relating to medical care known as a Medical POA. An aged principal prepares such POA as an advance directive entrusting a trusted advisor to control decisions over their end of life treatment.

How to Override a Power of Attorney:

It depends on the type of Power of Attorney involved. Generally, the principal is the person with perpetual powers to revoke or override a power of attorney. The principal can revoke or amend general power of attorney anytime. A DPOA is stricter to override.  Note that you require a court action to override or contest a DPOA.

The reason is simple: the law presumes that a donor of a general power of attorney is mentally competent. Therefore, the principal has the will and responsibility to change his agent or terminate any or all his attorney anytime he wants.

Two steps to revoke or amend a power of attorney are these:

  • Preparing a notice of revocation of power of attorney and serving it on the attorney. You may need to notarize the document.
  • Writing revoked on the POA, Signing and adding a date/time the revocation will start.

Note that you should deliver any of the above processes on the attorney for it to take effect.

However, there are situations where a principal neglects or refuses to change an agent, or the principal is mentally or physically unable to express his desire to revoke the POA or to remove the appointed agent. Anyone who has an interest in the real estate can override a power of attorney, especially a DPOA, or cause it to be revoked. However, it requires a strict legal process.

You may take the following steps to override a power of attorney:

  1. Speak with the agent: You should directly contact the agent orally and later in writing, requesting the agent to resign. On your request, the attorney may accede to being relieved of his duties and step down. Where the attorney refuses and there are no alternative agents named in the power of attorney, you may need to hire a legal expert to ensure that the proper court process is followed.
  2. The DPOA can then be revoked upon an order of court terminating the relationship. Procedures to take note of include:
  3. Discovering the grounds for challenging the validity of a DPOA
  4. Statement of complaints or abuses of powers by the DPOA These grounds include that the agent is being negligent or abusive. To prove this, the person suing should produce evidence such as receipts of things the agent purchased for the agent’s personal use with the owner’s money. Also, you could show that the real estate has fallen into disrepair under the control of the agent.
  5. Filing of a petition against the attorney in the appropriate state court within the jurisdiction of the principal’s residence.
  6. Testify and produce documents in proof or subpoena witness, where required.
  7. Attend court and receive a ruling from the court on the matter.

CONCLUSION:

As shown, the Principal can override a Power of Attorney anytime in his lifetime. However, a person who has an interest in the real estate can apply to court to change an attorney. Such person can do so where the Principal neglects or refuse to do so, or has become mentally or physically unable to express his desire for the POA to be put to an end.

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