Power of Attorney

• A power of attorney is a document used by an individual, called the principal, to grant another person, called the agent, the authority to conduct certain financial transactions on the principal’s behalf. Often, the agent’s authority under a power of attorney continues even if the principal becomes incapacitated. However, a power of attorney automatically ends when the principal dies.
  
  At this point, estate laws take over, and the right to cash a bond owned by the principal belongs either to the designated beneficiary of the bond or to the personal representative of the decedent’s estate.
  
  

Beneficiary

• If the principal has designated a beneficiary for the bond, it is a non-probate asset and is payable directly to the beneficiary. Generally, a beneficiary must present a certified copy of the deceased’s death certificate, along with appropriate identification for himself, when cashing a bond.
  
  

Estate

• If the bond does not have a designated beneficiary, it becomes part of the owner’s probate estate. The probate court will appoint a personal representative for the estate who will be in charge of distributing the bond, along with the decedent’s other probate assets, to the appropriate survivors. If the decedent has a valid will, the bond will be distributed as instructed in the will. If there is no valid will, state laws determine who inherits the bond.
  
  

Liability

• If you know the principal has died and you continue to use power of attorney, you can be penalized. Those harmed by your actions can sue to recover their actual damages and in some cases, the court may also award attorney’s fees and punitive damages.
  
  

Considerations

• The language contained in the power of attorney as well as the laws of the state in which the principal resides define your powers as agent. Consult a lawyer to learn exactly what authority you have.