Power of attorney legislation has changed over the years, so make sure that yours are current.
An estate plan is far more than just a will. It includes legal documents that protect you while you are alive, if you are not able to make decisions on your own behalf. Everyone over the age of 18 should have medical and financial powers of attorney (POA) documents prepared. It’s not something we like to think about, but having these documents in place can make a difficult situation manageable for loved ones.
Forbes’s recent article, “Don't Let Your Power Of Attorney Become Powerless,” lists some actions to ensure that your documents are effective.
- Hire a qualified estate planning attorney. This will mean less expense and headaches for you in the future. Your attorney will be sure that any necessary legislative changes are incorporated into your POAs correctly.
- Ask your attorney about changes in the law. New laws mean necessary provisions must be incorporated in your POAs to keep them current. Without them, your documents won’t be accepted. For example, your financial POA must disclose certain provisions adopted by the Uniform Power of Attorney Act (UPOAA). The UPOAA was enacted in 2006 to help enforce the acceptance of POAs and to standardize provisions across the country. This is because banks will frequently reject POAs, if they think that in good faith, it may no longer be a valid document. Some authorities (called “hot powers”) will now only be accepted if they are clearly contained into your POA, such as the ability for your POA to amend trust documents, make gifts on your behalf, and designate or change beneficiaries.
- Review your estate planning documents regularly. Once in place, keep your POA current. If they’re out-of-date, they might be rejected when you need them. Review your document when you have a major life event or a change in your situation. Be certain that the people you designate to act on your behalf continue to be in line with your wishes.
Refrain from naming multiple people to act jointly. This requires individuals to coordinate and agree when acting on your behalf. It may result in unnecessary difficulties and delays in decision-making. However, name a backup in case your currently named POA is unable or unwilling to serve.
Don’t let your POAs become powerless. Review them every few years or whenever a major life event occurs, when you should review your estate plan. A qualified estate planning attorney will help ensure that your estate plan aligns with your current goals and that your POAs are still powerful.
Reference: Forbes (June 13, 2017) “Don't Let Your Power Of Attorney Become Powerless”