Can Power of Attorney Change Beneficiaries on a Bank Account?

As an agent under a power of attorney, you may have wondered if you can change beneficiaries on a bank account on behalf of the principal.

When a person—called the principal—designates someone to act on their behalf, they create a power of attorney (POA), which is a legal document giving a specific person—their agent—the right to undertake certain transactions for them. Powers of attorney are either financial or healthcare POAs. With financial POAs, the agent can do only what the POA document allows them to do.

Learn what's required to change beneficiaries and how making the change is relatively easy.

Can a POA Change Beneficiaries?

A POA instrument gives the agent only the powers listed in it. When a POA is a general POA, if there's nothing in it, giving the agent the right to change bank account beneficiaries, the agent cannot do so.

Even if the agent can deposit checks in the bank, changing beneficiaries of a bank account is a special power which the POA instrument must specifically list. Without it, an agent doesn't have the right to change beneficiaries, even if they think the principal would want it or if the agent believes updating the beneficiaries is necessary.

If the POA document permits the agent to change bank account beneficiaries, the agent may do so, so long as the agent doesn't name themselves or do anything else to breach their fiduciary duty. Breaches of fiduciary duty include instances where the agent makes the principal's former spouse a beneficiary if that's not something the principal would want.

How to Change Bank Account Beneficiaries

Changing a beneficiary is relatively easy if the POA allows it. The steps involved in changing beneficiaries are:

1. Reviewing the POA document. See if the document specifically states that you can change beneficiaries for the principal. If you're not sure, check with an attorney. If the document clearly grants that power, you can change beneficiaries for the principal.

2. Using fiduciary powers wisely and carefully. Make sure the change in beneficiaries is something the principal would want. If your principal is not of sound mind and cannot tell you what they want, so long as you have a durable power of attorney, you can continue as agent. If you know what the principal would want—for example, if things change and the current beneficiary acts in a manner that the principal would find abhorrent, you can change the beneficiary so long as you properly exercise your fiduciary duty in naming a new one. Appointing yourself as beneficiary violates your fiduciary duties to the principal.

3. Checking with an attorney to ensure the new beneficiary is acceptable. Keep in mind that some people cannot be beneficiaries for specific legal reasons. Contact an attorney to ensure that you're able to appoint a specific person as a beneficiary.

4. Going to the bank with your POA document, ID, and whatever the bank requires. The bank will scrutinize your powers under the POA, and it may have their legal department review the POA to make sure you're not exceeding your authority. This could take a few days.

5. Filling out the forms the bank requires once the bank approves your authority. Each bank will have its own forms for you to fill out, so make sure you provide the information so the bank can add the new beneficiary.

What if the POA Doesn't Allow Change of Beneficiaries?

If the POA doesn't allow you to change beneficiaries on a bank account, and the principal is still lucid, the principal can revoke the POA and create a new POA, listing the specific power for you to change beneficiaries. The principal should have an attorney help them revoke the prior POA, and send the new POA and written revocation to people and companies, such as banks, who need to know of the change.

If the principal is not lucid, the principal cannot change the POA, and you'll need to consider another alternative, such as guardianship. If you become the principal's guardian, ask the court for permission to change beneficiaries and for any other powers you believe you should have, keeping in mind that as a guardian, you still must act as a fiduciary.

A POA can change beneficiaries if the POA instrument allows it. Make sure you're changing a beneficiary or adding one for a legitimate reason. Once you have a POA that allows you to change beneficiaries, changing beneficiaries is relatively simple and something you can do yourself.