It’s likely that you have a power of attorney stuck away in a folder from your last visit to the estate planning attorney. How old do you think it is? Do you even remember who you named in the document? Perhaps it is time to dust off that power of attorney and see if it needs to be updated.
Powers of attorney are legal documents that create an agency relationship with the person who will act on your behalf. Your agent is named to act on your behalf under the terms and conditions you define. Powers of attorney are revokable and are normally not used until you are incapacitated. There are two types of powers of attorney – a financial and a healthcare power of attorney. You can name different agents to perform the financial and healthcare duties. You can also name more than one agent to act together or independently from each other.
Here are some common reasons to consider updating your power of attorney:
1 – Do you need to change your agents? Are the people you named in your power of attorney still the appropriate choices? Did one of them move away from you, making it more difficult for them to perform the duties as your agent? Maybe your agent has passed away and there is no one else named to succeed them.
2 – How old is your power of attorney? If your financial power of attorney is more than 10 years old, it may be considered “stale” by the financial services industry. That means it may not be honored because of its age. Financial institutions such as banks and insurance companies often will not honor older powers of attorney unless a separate affidavit is signed by an agent attesting that the document is still valid.
3 – Are there changes in the nature of your finances that require an updated power of attorney? For example, on-line banking and financial transactions require usernames and passwords. Does your power of attorney allow your agent access to these on-line accounts?
4 – Are your instructions for end-of-life care covered in the advance directive? End of life instructions are often included with your health care power of attorney. These powers of attorney with an advance directive replace the stand-alone Living Will. Make sure your wishes for care in the event of a terminal condition or permanently unconscious state are expressed accurately.
5 – Does your power of attorney have asset protection or Medicaid planning provisions? These powers authorize your agent to engage in planning that will help you qualify for Medicaid benefits to pay for nursing home care. They could include the authority to transfer ownership of investments, savings, your home or other assets into your spouse’s name or into another person’s name for asset protection purposes.
6 – Have you moved from another state? Your old powers of attorney will mention the state law where you formerly resided. Although the document may be honored if you use it in Pennsylvania, there may be significant differences in the state law that make it advisable to have new powers of attorney drafted.
Of course, there may be other reasons why your power of attorney is outdated. If you have a power of attorney that is more than 10 years old, it may be time to visit your estate planning attorney.