A power of attorney may need updating for several different reasons. These include changes in the law or life circumstances.
A power of attorney is an estate planning document that identifies someone to act on your behalf to manage and make financial decisions. A durable power of attorney applies to everything from bank accounts to real estate or legal matters. As the principal, you use the durable power of attorney to appoint an “attorney-in-fact” or “agent” to act in your place should you be unable to do so due to incapacitation or illness, for example.
Without a power of attorney, it’s possible a court may intervene to appoint a guardian should you be unable to make decisions or speak for yourself. This is a costly, lengthy, stressful — and avoidable — process for your loved ones.
This is why we recommend that if you have an existing power of attorney, that it be reviewed for accuracy every three to five years. Here are some of the ways a power of attorney may be outdated and in need of change:
- Legislation at both the national and state level can impact what must be included in a power of attorney. Without these changes,
- banks and other financial institutions may not accept a power of attorney document that does not conform with current law such as certain provisions set forth under the Uniform Power of Attorney Act. There are certain types of authority, such as the ability to amend trust documents or make gifts, that must be clearly included in a power of attorney for your representative to act on your behalf.
- Did your relationship to the person you selected to represent you change in some way? Have they experienced changes that could impact their ability to serve? Marriages, births, deaths, long-distance moves and loved ones’ own health issues could mean it’s time to reselect who to name in your power of attorney. It’s also a good idea to ensure a back-up representative is selected and that both are willing and able to serve.
- If you’ve moved to another state since executing your power of attorney, it’s important to know that laws regarding power of attorney vary by jurisdiction. Some states will honor a power of attorney executed elsewhere, but you should verify or update the document as necessary.
All these circumstances should be considered when reviewing your powers of attorney documents to ensure you have the right people representing you and your wishes.