Can a power of attorney change a beneficiary on a life insurance policy?

Protecting your assets with the right documents will help guarantee that your rightful beneficiaries will have money to live on when you die.

People experience many changes during their lives, including marriages, the birth of children, divorces and deaths.

It is a good idea to make sure that your power of attorney documents for financial issues clearly states your wishes and the power you will give to your representative, long before their services are needed.

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What a General Power of Attorney Does vs a Limited Power of Attorney.

The general power of attorney gives the designated person legal rights to make broad financial decisions for you, if you have become unable to make them for yourself.

This can be due to physical or mental incapacity. The general power of attorney (POA) will allow them to act on your behalf until you revoke it. This includes changing beneficiaries on life insurance policies.

A limited POA gives your representative powers relating to only certain issues, which are spelled out in the legal document.

If you want to make sure that your representative has the right to change life insurance beneficiaries, make sure it is specified in the POA document. The reverse is also true.

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When a Power of Attorney Cannot Change a Beneficiary

General POAs allow the representative to change the beneficiary. A limited POA allows the person to change the beneficiary if it is specified in the document.

The only time the POA is prohibited from changing the beneficiary is when the life insurance policy designates an irrevocable beneficiary. This may be set up voluntarily or it may be court-ordered, like in divorce settlements.

The custodial parent needs continued support in case the other parent dies prematurely. The only way the beneficiary can be changed is if the beneficiary signs a document agreeing to it.

Rights of Power of Attorneys

Most companies require that the policy owner sign the beneficiary designation form.

For your representative to sign the form for you or make changes to the contract, you need to assign them this right.

Many states now require financial companies to accept these documents, even if they differ from their own forms. The POA cannot designate himself/herself as beneficiary of the contract unless the documents giving them POA specifically state this.

When your representative signs beneficiary forms, they must be accompanied by POA legal documents. POA privileges last as long as you live unless you stop them.

Important Things to Consider When Using a Power of Attorney for Life Insurance

Upon your death, the POA loses all rights to act for you. They cannot at that time decide who gets your life insurance proceeds or any other asset for that matter.

If upon your death, there is no beneficiary designated, the POA can do nothing. The insurance company may pay the benefits to your estate. The proceeds are usually, in this case, distributed based on your will.

With no will, an executor is appointed to distribute assets.

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Steps to Take if Power of Attorney Exists Allowing Beneficiary Changes

If you have the POA and it allows for changing of a life insurance policy beneficiary, you need to write to the insurance company, explaining who you are, that you have POA and that you wish to change the beneficiary.

Explain the reasons why the change is being made, with as much detail as possible. You will have to show proof of your POA status. Include this with the letter.

Ask the company to send you the appropriate forms or find out how to get them online.

You will need to have specific information like beneficiary names, social security numbers, birth dates and addresses.

Obviously, you will need to know what portion goes to each person as well. Gathering this information while the policy owner is able to provide it is a good strategy.

Once everything is complete, submit the paperwork to the insurance company for their review. They may request additional information. This is why having specific information on hand before the owner becomes unable to provide it is advisable.

Recent Developments with Power of Attorney Beneficiary Changes

Remember to keep your POA documentation updated. You may outlive your POA representative. State laws are cracking down on the many abuses taking place with beneficiary changes.

Financial institutions are setting more requirements for those using POA because, they are getting sued for releasing proceeds to the wrong parties, based on POA documents.

Many states have strict requirements for financial companies when accepting POA documents as legitimate. Many require witnesses for granting these powers.

If rules and regulations are not accurately followed, the whole document can be invalid.

The main things to remember about changing life insurance beneficiaries, as a representative with POA, is to make sure everything is spelled out in detail in the documents.

Keep all documents up-to-date and follow the state laws and the procedures of the insurance company.

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