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We've written on this blog before about how a general durable power of attorney can end up far weaker than the person who signed it ever intended. A Seventh Circuit decision handed down this summer is a clear illustration of that problem, and it cost one family roughly $1.2 million. The case turns on Wisconsin law, but the underlying rule- that certain high-stakes powers require express, specific authorization rather than general language- shows up in some form in most states' power of attorney statutes and cases, so the lesson travels well beyond Wisconsin.
The Case
Havlik v. University of Chicago involved Edward Lyon, a physician at the University of Chicago who participated in two ERISA-governed retirement plans from 1960 to 1996. Like most married participants, his default benefit was a joint and survivor annuity with his wife, Valerie, meaning Valerie was entitled to lifetime payments after Edward's death unless Edward properly waived that right with Valerie's informed, notarized consent. Federal law requires consent to be explicit, in writing, and witnessed; a spouse's rights to a survivor benefit aren't something a participant can quietly sign away alone.
In 2014, Valerie signed a Wisconsin statutory power of attorney naming her son-in-law as her agent. The document was substantial; it gave him general authority across a wide range of subjects and specifically authorized him to change beneficiary designations on her accounts. Five years later, shortly before Edward's death, he submitted paperwork naming trusts for the couple's 36 grandchildren as primary beneficiaries, removing Valerie entirely. The required spousal consent was signed by the son-in-law, acting under the power of attorney.
The account custodian's recordkeeper initially rejected the form for what appeared to be a missing signature. It wasn't until January 2022, after both Edward and Valerie had died, that the family learned the real problem: the power of attorney authorized the son-in-law to change beneficiaries, but it never expressly authorized him to waive Valerie's right to the survivor annuity itself. Under Wisconsin's power of attorney statute, those are treated as two distinct things, and the second requires an explicit grant of authority. Without it, the consent was invalid, the 2019 change failed, and the original 1998 beneficiary designation controlled instead, sending the money in a very different direction than the family intended.
The children and trustees of the trust sued to enforce Edward’s November 2019 beneficiary designation. The court entered summary judgment against them, and they appealed.
The Seventh Circuit affirmed summary judgment against the family on every claim: the benefits claim, the breach-of-fiduciary-duty claim against the university, and the negligence claim against the plan's recordkeeper. By the time anyone realized the document had a gap, both principals were gone and there was no one left who could fix it.
Why the Statute Draws This Line
It's worth understanding why Wisconsin law separates "general authority to change a beneficiary" from "authority to waive a spousal survivor annuity," because the reasoning isn't just technical hairsplitting. Changing a beneficiary designation is common, low-stakes in the sense that it's easily revisited, and often uncontroversial. Waiving a spouse's statutory right to a stream of retirement income for life is a fundamentally bigger, less reversible decision, one Congress specifically protected with strict spousal consent rules under ERISA. Requiring an unmistakable, specific grant of authority before an agent can take that particular action is a deliberate safeguard against exactly this kind of ambiguity, not an accident of drafting.
The Result and Consequence
The plans therefore remained governed by the 1998 beneficiary designation, which split the value between Valerie (during her lifetime) and the Edward S. Lyon Trust. After Valerie died, the court described the result as: the governing 1998 designation would split the accounts between Edward’s trust and, following Valerie’s death, her estate. Both Edward’s trust and the proceeds of Valerie’s estate would then pass in equal shares to their 12 children. So the consequences were both likely tax and legal disadvantages. The legal disadvantages include the requirement that Valerie's share be probated (if it has not already been). If Edward's trust were terminated after his passing, his share might require probate; some cases hold that a terminated trust may not be "resurrected" by the trustee to avoid probate of later-discovered assets, and the Uniform Trust Code seems to provide that.
But the more substantial consequences are likely to be tax consequences. Because the $1.2 million went to the couple’s 12 adult children rather than to trusts for their 36 grandchildren, more of the money was likely taxed at higher rates. The children were already earning income, so inherited retirement distributions stacked on top of wages and other earnings and were taxed at their higher marginal brackets. Dividing the same amount among 36 grandchildren would have spread the income across many more people, often in lower brackets, and allowed more flexible timing. The failed designation therefore meant fewer taxpayers, larger shares, faster tax recognition, and a heavier income-tax bill than the family intended.
What This Means for Your Plan
This case is a direct, expensive illustration of a point we've made before: an older power of attorney, even a comprehensive-looking one, can be quietly obsolete for the exact purpose someone assumes it covers. A few takeaways worth acting on:
- "General authority" and "specific authority" are not the same thing, and your document needs to say so explicitly for the highest-stakes powers. If your power of attorney gives your agent broad authority to manage accounts or change beneficiaries, that is not the same as authorizing them to waive a spouse's survivor annuity rights, consent to a trust amendment, or take other actions your state's law treats as requiring express, specific language. A document can look thorough and still miss the one line that mattered.
- This is a reason to have your power of attorney reviewed, not just executed. Valerie's document was drafted with great care; it included special instructions, a general grant, and specific language regarding beneficiary changes. It still didn't cover this. That's not a sign of careless drafting so much as a sign of how easy it is for a gap like this to hide inside an otherwise solid document, especially as the law around powers of attorney continues to evolve.
- Retirement plan beneficiary designations deserve their own conversation, separate from your broader estate plan. This family's underlying goal, leaving retirement assets to grandchildren's trusts rather than passing everything to the surviving spouse and then to the children, is a legitimate and common estate-planning objective. The problem wasn't the goal; it was that the mechanism used to execute it. The agent's signature on the change form was useless because the power of attorney lacked the specific authorization required by law.
- Timing worked against this family in an unusually cruel way. The custodian's rejection notice went to a stale address. By the time anyone learned what had actually gone wrong, both spouses had died, and the error was unfixable. You should follow up to verify that beneficiary changes have been processed. If you're ever notified that a beneficiary form or waiver was rejected, treat it as urgent, not a paperwork inconvenience to be handled later.
The Takeaway
A power of attorney is one of the most common, and often the most important lifetime planning document in an estate plan. This case is a reminder that "comprehensive" and "sufficient" aren't the same thing. If your power of attorney was drafted more than a few years ago, or even if it was drafted recently, but you're not certain it contains the specific, express grants your state requires for high-stakes actions like waiving spousal rights, amending a trust, or making gifts, it's worth having it reviewed now, while you (and your spouse both) have the capacity to sign an updated one. The family in this case didn't lose because of disloyalty, bad faith, or bad intentions. They lost it over language that simply wasn't there.
Havlik v. University of Chicago, No. 25-2821 (7th Cir. July 20, 2026).
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