Q: Does a Power of Attorney ever lapse? What happens if I change my mind and want to take the Power of Attorney back? Can the Power of Attorney refuse to return the authority?
A: Lots of good stuff in this question. Powers of Attorney (POAs) are some of the most common estate planning documents available. I would also argue that they are some of the most misunderstood of the estate planning documents.
As most of you know, a POA is a document that authorizes another person(s) to act on behalf of the maker. The person designated in a POA is known as the Attorney-in-Fact (AIF).
The authority granted to the AIF is usually contained in the document itself. However, some POAs grant all the authority granted to a POA within the Indiana Code. Usually, the authority granted to an AIF is broad although it can be limited.
The most common type of POA, and the one that most people have in place, is a general durable POA. A general durable POA usually grants a great deal of authority and survives a person’s disability (the durable part). On the other hand, a limited or special POA, as the name suggests, grants less authority and addresses a specific need or transaction.
Durable POAs don’t usually exist for a set amount of time. Limited or special POAs can have a date or a time frame at the end of which they terminate. All POAs terminate at the death of the principal. The one power that can survive after the death of the principal is the authority to dispose of the principal’s remains.
A POA can be terminated at any time by the principal. The termination should be in writing and can be accomplished by revoking the existing POA within the terms of the new POA or by execution of a revocation.
In either case, you should notify the removed AIF that they no longer have the authority to act under the revoked POA. It also might be a good idea to notify any entities (such as banks) that may have a copy of the revoked POA that it is no longer valid. The revocation can also be recorded with the county recorder’s office.
An AIF serves at the pleasure of the maker and can be removed at any time assuming that the maker is competent. It is a violation of law for an AIF to knowingly continue to exercise authority after they have been removed.
Finally, although a durable POA doesn’t generally lapse, sometimes third parties are reluctant to accept older documents. In that case, usually an affidavit affirming that the document is still in valid and the AIF has the authority to act under it is enough.