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Is it permissible to allow the AIF to add themselves as POD beneficiary?

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Question: 
We have a joint account, both parties have given their daughter a DPOA. The mother is now deceased, the father is now incapacitated, the daughter is requesting to remove the mother's name, change the account to be in the father's name only and add herself as POD. We do not allow the AIF to add their name to the principal's account as a joint owner, but we do allow a new account to be opened for the principal by the AIF. I know that close scrutiny should be given to any account activity by the AIF that would result in conferring a benefit directly or indirectly to the AIF. It appears to me that if we comply with the daughter's request, the AIF would be benefiting. Can you please let me know if it is permissible to allow the AIF to add themselves as POD beneficiary?
Answer: 

There are two issues: whether the account can be restyted in the name of the father is the first.This will depend upon how the account was owned. Was it owned between the mother and father as tenants in common or as joint tenants with right of survivorship? If it was owned as joint tenants with right of survivorship, the father is now the sole owner. If it was owned as tenants in common, the deceased mother's estate now owns her share and the father owns only his share.

The second issue relates to the authority of an AIF to name herself POD beneficiary on an account owned by the principal. This will depend upon state law (not just statutes, but also court cases, if there are any) in your jurisdiction. The basic issue is whether the POA gives the AIF the authority to make a gift from the principal's assets, because that is the gist of this action -- the daughter is attempting to indirectly give herself a gift by making herself the POD beneficiary on the account. Scrutinize the actual POA and find out what your state law says about this subject. In many jurisdictions, it would not be allowed unless the power to make such a gift is clear and unequivocal.

First published on BankersOnline.com 10/14/02

First published on 10/14/2002

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