This Wisdom of the Crowd, compiled from responses posted on the Financial Services eGroups,* addresses Power of Attorney (POA) Issues Arising From the Changing of Beneficiary Selections, Other Policy Terms, and Competency Considerations.
*(Permission was received from ACC members quoted below prior to publishing their eGroup Comments in this Wisdom of the Crowd Resource)
Question: I represent a financial services and life insurance company. I have a situation in which a principal/policyholder, a Pennsylvania (PA) resident, has signed a durable power of attorney giving two of his three children broad powers to manage his affairs, investments, insurance policies, and other rights. The policyholder has not given any indication that he has revoked the Power of Attorney (POA), and his children have attested that the POA is still in force.
We recently received a request from the policyholder to remove his three children as the beneficiaries of his policy and to replace them with his grandchildren, and to change the policy address. These actions were completed per the policyholder's request.
We subsequently received a request from his children that hold the POA to change the address back to what it was before the policyholder's request.
We are concerned that doing so will result in a continuous back-and-forth of changes, which creates legal risks on our part for following the respective instructions. To further complicate matters, we have received a letter from a physician indicating that he is treating the policyholder for dementia, but there is no evidence that the policyholder has been declared incompetent by a court.
If anyone has ever dealt with a similar issue, or can recommend a good Pennsylvania attorney to help navigate this, it would be greatly appreciated.
Wisdom of the Crowd:
Response #1: We are also a life and annuity insurer. I would first determine when the POA is effective—whether upon disability of the principal/policyholder or immediately. If immediately, I would then research PA case law to see what rights the policyholder has once a POA is executed and effective. Procedurally, we would not have made the initial change of address or change in beneficiaries if we had knowledge of the POA. We would have contacted the agent, which it sounds like you have now done, to confirm the existence of the POA. If the principal/policyholder insists that he or she has power to manage his or her own affairs, then we would have told the agent and policyholder that we need to have them resolve the situation. This situation may be headed to an interpleader.1
Response #2: I also work for a life insurer and regularly review POA issues. As the prior answer mentioned, I would first check to see if this is a durable POA. If it is, you need to look to PA law, but typically the principal/policyholder and attorney-in-fact (AIF) have concurrent powers where a POA exists. Most states have safe harbor provisions where you can request a certification from the AIF that the POA is still in force, and has not been limited or revoked, etc. The certification protects the person relying on the POA. Hence, you have two options: to get the certification and follow the directions of the AIF, but risk future inconsistent directions from the policyholder (assuming concurrent authority); or, contact the principal/policyholder, inform him of the changes, and ask if he intends for the POA to remain in force. If he replies "no", then I would not honor the requests from the AIF, and would tell the AIF that they need to seek a court ordered guardianship if they believe he is not competent to handle his affairs.2Response #3: As the prior comment recommends, I would determine if the POA is currently applicable, i.e., does it require a doctor's certification of incapacity to give the agents their powers.I used to draft POA's. You will need to read the POA closely when there is a question of dementia, and the treating doctor declaring the policyholder capable/incapable of handling his affairs. That section would need to be followed if applicable.More importantly, there is the option of the principal/policyholder revoking the POA. Every POA that I have drafted had the option to revoke the POA. If that were to occur, that may solve your problem. If revoked by the principal/policyholder, it is up to the agents to take whatever legal action they deem necessary. At that point you are only dealing with the policyholder because he will have no agents. But the burden to take legal action would then be on the agents.The complication is that the policyholder might not be capable of revoking the POA. Then you may have to look to the language of the POA to see if the doctor needs to sign a declaration of competency or incompetency. If there is an applicable clause saying your firm can rely on the doctor's certification of competency, then you may have some basis to act on the revocation. That is, you would go by the policyholder's selection of beneficiaries.3
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1Anonymous (December 14, 2016)
2Anonymous (December 15, 2016)
3Thomas Bischof, Chief Legal Officer, Bagby Wealth Management (December 15, 2016)
Region:
United States
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