POA and distribution options

[wsp]

Guess this is a moral dilemma as much as a legal one...

participant is in ill health. relative claims to have POA to handle participants financial affairs and asks about withdrawing funds to pay for care. client has been in contact with participant since intial inquiry and participant was unaware that the request was made. participant was somewhat disturbed to hear that 401k was intending to be tapped as his goal was to recover and spend his own money. Must the plan honor the POA if participant gave verbal disapproval?

Intent of request by individual with POA was to distribute balance in two pieces..cash to pay for short term care and rollover of remaining balance to IRA in participant's name with beneficiary being same beneficiary as with the plan (not the person who has POA). So I don't question the motives....just not sure what to do since we know it's not the participants desire.

What do we do? Recommend to participant that the POA to be amended to not include the plan? Honor the POA? Stick head in sand and sing "Ob la di" until the participant passes away and issue is resolved? Seems to me that none of those are truly beneficial to anyone.

[Guest mjb]

a principal (employee) can revoke a POA at any time by notifying the agent in writing that the POA has been revoked. This disqualifies any election made by the agent.

[masteff]

Our outside counsel took the position that the participant had to be sufficiently incapcitated before the POA could take action on the part's behalf. Generally we required a note from the attending physician to that effect. Whereas your client has had contact w/ the part and the part seems capable of taking action for him/herself, I'd say 'sorry'. To me the logic is the POA is in place in case of worse case scenario (ie part can't act for him/herself) and not before.

[Guest T. Byram]

These are legal questions for which qualifed legal counsel should be sought. Yes, some POA documents require the principal's incapacition in order to become effective. However, others are expressly effective immedlately (or upon some other occurrence). I quick legal opinion will be relatively inexpensive (and perhaps even free), while litigation for not honoring a valid document (or not honoring the principal's oral directions) can be expensive.