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The principal or the court can override a power of attorney.
A power of attorney is a legal document executed by the principal, authorizing an agent to act on the principal’s behalf in certain transactions. A principal with capacity can override a power of attorney by revoking it, through an instrument of revocation or another power of attorney which expressly revokes the previous power of attorney. The court can also override a power of attorney in case of the principal’s incapacity.
In New York, under Mental Hygiene Law (MHL) § 81.29(d), the court can modify, amend, or revoke a power of attorney when the principal is incapacitated and the court finds that the power of attorney was made when the principal was incapacitated or the agent breached his fiduciary duties.
Other reasons a power of attorney can be terminated are: expiration of period, death of the principal or agent, completion of a particular transaction, and resignation of agent.
Revocation by Principal
When the principal still has capacity, the principal can override a power of attorney by either executing an instrument of revocation or a new power of attorney expressly revoking the previous power of attorney. The instrument of revocation must be executed with all the formalities required of a power of attorney, which requires two witnesses and an acknowledgement with the notary public.
This revocation must be given to the agent and other third parties who relied on the previous power of attorney to ensure that these third parties would not honor the previous power of attorney after revocation. Otherwise, without notice, such revocation will not be effective as to those third parties.
When giving the revocation instrument to the old agent in the previous power of attorney, it is advisable for the principal to request from the previous agent the original copy of the power of attorney. This prevents the former agent from continuing to use the power of attorney to transact on behalf of the principal. Once received, the principal should destroy the previous power of attorney to ensure it will not be used again.
It is important to note that the revocation by the principal can only be done when the principal has capacity. When the principal loses capacity, only court intervention can override a power of attorney.
Court Intervention
When the principal loses capacity (i.e., the principal has dementia or other mind-altering disease), the principal then cannot revoke the previously-executed power of attorney. In this case, only the court can override the power of attorney.
In New York, under MHL § 81.29(d), the court can only override a power of attorney in two instances:
- the power of attorney was executed when the principal did not have capacity; or
- the agent breached his fiduciary duties.
Usually, the request to override the power of attorney is made in the same petition requesting for guardianship over the property of the principal (who is the incapacitated person).
Other Ways to Override a Power of Attorney
There are other ways to override or terminate a power of attorney, such as
- expiration of a period
- death of the principal or agent
- completion of a transaction
- resignation of the agent
Expiration of a Period or Completion of a Transaction
Some powers of attorney are limited to a time period or completion of a transaction. For time periods, this usually happens when the principal will be out of the country and needs someone to manage his property while he is gone. In this case, the principal executes a power of attorney with a limited duration. When the end of the period arrives, the power of attorney expires on that date without need of any action from the principal. With respect to completion of a particular transaction, some powers of attorney are limited to the agent acting only for one matter, for example, the sale of real property particularly described in the POA. When the sale of the real property is completed by the agent, the power of attorney terminates because the sole purpose the power of attorney was executed has already been fulfilled.
Death of the Principal or Agent
Another way to terminate a power of attorney is the death of the principal or agent. When the principal dies, the principal cannot commit any action anymore. Since the agent is only acting on behalf of the principal, the agent can only do what the principal can do. Since the principal cannot do anything if the principal is dead, the agent cannot do anything under the power of attorney as well.
When the agent, on the other hand, dies, the power of attorney ceases to be effective, unless there is a successor or substitute agent named in the power of attorney. The power granted in a power of attorney is imbued with trust and confidence and very person to the relationship of the principal and agent. When the agent dies, the agent cannot transfer the power he received in the power of attorney to someone else. The agent’s power is not transferable to his estate. Only the principal can grant power in a power of attorney. For this reason, the death of an agent terminates the power of attorney document, unless there is a successor or substitute agent named by the principal in the POA.
Resignation of the Agent
The same principle applies in the resignation of the agent. When the agent resigns, the agent cannot transfer the power given to the agent by the principal to someone else. For this reason, the resignation of the agent terminates the principal-agent relationship in the power of attorney.
In all cases above, notice must be given to third parties who relied on the POA regarding the termination of the POA in order for such termination to be effective. Otherwise, third parties cannot be held liable for damages arising from the termination of a POA without notice of it.
Overriding a power of attorney, especially when the principal is incapacitated, requires the expertise of a guardianship attorney. Should you need assistance on these matters, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].
About the Author
Albert Goodwin Esq. is a licenced New York attorney with over 17 years of courtroom experience. His extensive knowledge and expertise make him well-qualified to write authoritative articles on a wide range of legal topics. He can be reached at 212-233-1233 or [email protected].
