Allowing PoA to Change Beneficiaries

Submitted by Dave Haynie on Wed, 2014-07-02 16:14

Wife and I updated the IRA power of attorney forms at our broker. We checked yes on the list of powers typically given (trading, removing money, etc.), but left unchecked the power to change beneficiaries. My understanding is that allowing someone other than the IRA owner to change beneficiaries could affect using the stretch provisions or ??. Is my understanding/memory correct?

Background: first beneficiaries are the spouses, contingent is trust for named children in specific percentages due to spend thrift concerns.

Thanks



Submitted by mk foss on Wed, 2014-07-02 18:53

My durable power of attorney allows the attorney-in-fact to change beneficiaries but not to name himself as a beneficiary or for a larger portion. The prohibition on the ability to change beneficiaries is to prevent the power holder to assign everything to themself. It has nothing to do with the stretch provisions.

Submitted by Dave Haynie on Wed, 2014-07-02 21:27

My form, linked here, in section 3 has explicitly listed two powers dealing with changing beneficiaries separate from all other powers.  This is why I thought that there may be an IRA impact, whether it’s the stretch or some other factor, other than protecting the owner from the obvious concerns.  Just seemed like I read this in some of Slott’s literature or else where, but couldn’t find it. 

Submitted by Alan - IRA critic on Wed, 2014-07-02 23:42

Any change of beneficiary will affect the stretch only due to the different ages of the beneficiary added.  With the Fidelity POA form, the principal has a choice to choose whether the attorney in fact can change beneficiaries including adding himself, can change without adding himself or does not have any authority at all with respect to beneficiaries. Of course, if the beneficiary is changed to someone older, then the RMDs after death will be higher since they are based on a shorter life expectancy. If a trust is beneficiary and the attorney in fact adds an older beneficiary, it will change the stretch for all beneficiaries of the trust since only the oldest trust beneficiary affects the stretch provided.

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