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A partner died and the partnership became a new firm: is the old POA valid?

April 2025 examBroker ComplianceQuestion 3 of 80

John and Fred Smith each had a 25% ownership share of a general partnership, JJF, with their father, Jack Smith, owning the other 50%. Three weeks ago, JJF had sent ABC Customhouse Brokers (ABC) a copy of the bill of lading, a commercial invoice, and a packing list for their incoming shipment. JJF, a longtime client of ABC, had executed a new customs power of attorney (POA) signed by Jack Smith one month ago. However, John Smith advised ABC that his father, Jack Smith, died last week, with JJF changing by operation of law into Smith & Smith, a new partnership that inherited JJF’s legal rights and responsibilities. ABC states that they cannot proceed with the customs clearance on Smith & Smith’s behalf without a newly executed POA. Which regulation explains why the existing POA is no longer valid ?

How to get there

19 CFR 141.39(b): Change in partnersWhen a new firm is formed by a change in membership, no power of attorney filed by the antecedent firm shall thereafter be recognized for any Customs purpose.

Jack Smith's death changed the membership, and JJF became a new partnership, Smith & Smith, by operation of law. The POA Jack signed for JJF a month ago belongs to the antecedent firm and can't be used. Smith & Smith must give ABC a new one. The answer is B.

Why the other choices are wrong

A) 19 CFR 141.34: duration. A partnership's POA is limited to 2 years from execution. The month-old POA is well within 2 years, so time isn't the problem; the change in partners is.
C) 19 CFR 111.23(b): how long a broker keeps records (POAs until revoked, then 5 years). It's about retention, not validity.
D) 19 CFR 111.30(b): a broker partnership or corporation reporting changes in its own organization to CBP within 10 days. Here the client changed, not the broker.
Tip
Partnership POAs: list all partners, run no longer than 2 years (§ 141.34), and die when membership changes (§ 141.39(b)). Any partner may sign for the firm.

Sources: 19 CFR 141.39, 141.34, 111.23(b), 111.30(b) (eCFR).

CBP answer key: Answer B · 19 CFR 141.39(b)Source: CBP past exams ↗