The validity of a power of attorney remains until the principal dies. Once the principal dies, the power dies with that person.
By Ilyce Glink and Samuel J. Tamkin
A few comments and questions from this week’s email inbox.
Comment: In a recent column, you wrote that the power of attorney for financial matters and healthcare carry through death. But in fact, powers of attorney for financial matters and health care are only valid until the person dies. So, the executors and trustees are the only ones with access.
A power of attorney is only good while the principal is alive.
Response: You’re correct. We should have been clearer in our column. A power of attorney is good so long as the person that signed the power of attorney is alive. Upon that person’s death, the power of attorney is no longer valid. If there is a will, the executor listed would take over. If not, the would-be heirs would need to petition the court to name an executor of the estate.
You should sign a will, a power of attorney for health care matters and a power of attorney for financial matters as part of your estate plan. The validity of a power of attorney for health care and financial matters is only good as long as you are alive. Once you die, your will takes over.
Comment: You recently had a column with reader’s comments. This prompts me with two stories for you.
A utility bill might be a lien on the property
I am an attorney. A client recently sold a building, and, as we approached the closing, the sale had a bump because there was an old utility bill outstanding from before he bought the property 10 years ago. In this local municipality, utility bills are like real estate taxes, they are a lien on the property and even have priority over a mortgage.
He was furious – he said it should have been paid prior to the closing (he was right). When I asked him who his attorney was – he said he relied upon the bank’s attorney. I told him the bank’s attorney is not his attorney!
His attorney was probably from out of town, and didn’t realize the municipality’s subtle utility expense status. There was a title insurance policy, but it was only a lender’s policy and only benefited the lender. He could have been paid for an owner’s policy for a small premium, which would have protected him, but “why pay for such an expense when it is just a gimmick?”
Title insurance is a must
Title insurance is not a gimmick. You are not buying a newspaper. You’re making a sizable investment, so protect yourself. I do only the occasional closing, but when I personally buy real estate, I get an owner’s title insurance. It is a little expensive where I live (and states should review these companies), but they provide a necessary expense. Don’t be cheap!!
Second story, about 40 year ago, a bankruptcy trustee conducted a trustee’s auction. There was a vigorous auction and one party was the winner. After taking care of a couple of procedural matters, the bankruptcy trustee went up to the successful bidder to discuss execution of documents for a closing within an acceptable period of time.
The bidder, to the trustee’s surprise, said he was willing to pay the cash price there and then – and took out a wad of Confederate dollars! The Trustee, with some fast footwork, was able to get the second highest bidder to step in.
That Trustee made sure that all future auctions were published with a required payment in “U.S. Dollars.”
Response: Thanks for sharing some of the highlights of your career. (We couldn’t make this stuff up.) And, you’re absolutely right about title insurance. Owner’s policies are worthwhile, but in some states it is more expensive than it needs to be. We always recommend that homebuyers obtain an owner’s title insurance policy when they buy a home.
On the cash at closing, thank you for that story. That adds to what we wrote about a couple of weeks ago with most closing and settlement agents only taking wire transfer funds for purchases of homes or, in other cases, bank checks. These days with currency regulations, we don’t know of any settlement or closing agents that take cash for the purchase of a home. Thanks for your letters.
©2021 by Ilyce Glink and Samuel J. Tamkin