One way you can prepare for life’s changes and protect yourself and your loved ones is to ensure you have a comprehensive estate plan and that you have it reviewed regularly by an experienced attorney. Perhaps the most important tool in your estate planning package is your durable power of attorney. This legal document allows you to designate another person, called an agent or attorney-in-fact, to act for you, the principal, in matters such as managing bank accounts, selling properties, filing taxes and more. They are especially important for those who travel frequently, serve in the military, have a high-risk job or those who have a known medical condition that may lead to incapacity. However, scenarios such as a car accident, being stranded overseas and an unforeseen illness are just a few examples of why everyone should be prepared. If you become incapacitated for any reason, it’s too late to create or make changes to your durable power of attorney.
As a general rule, you should review your documents at least every three years or every time you experience a life-changing event. Here are a few reasons why you should keep your durable power of attorney up to date:
Changes in the Law May Weaken Your Documents or Undermine Your Wishes
Laws regarding durable power of attorney are constantly changing to afford more protection to the principal and to prevent fraud and abuse. In Michigan, for example, the law involving financial durable powers of attorney was updated in 2012 to include a requirement that agents must sign a document acknowledging their responsibilities and duties to the principal. Although documents created before laws such as this may remain generally valid, some provisions may not be accepted, which can create gaps and uncertainty for both principal and agent.
Financial Institutions and Medical Facilites May Decline Older Documents
Banks and hospitals can sometimes find themselves in the middle of disputes involving their clients or patients. They have a duty to protect their customers from fraud and abuse and can be held liable for granting unauthorized access to accounts or records. This is why most financial institutions and medical facilities often reject older documents, even if they appear legally valid. As mentioned above, the laws are always changing. For example, changes with HIPAA may not be reflected in older documents and may interfere with medical decisions. The newer your documents, the more assured the bank or hospital will be that they reflect the most current laws.
Relationships With Your Agents Evolve Over Time
Depending on your relationship with the agent named in your first document, you may want to reassess whether this person is still the best individual to serve your needs. One of the most common scenarios is for spouses to name each other as their respective agents. As time passes and both spouses age, they may not be the best option to handle one an-other’s demands, especially if one develops a medical condition.
Sometimes people name close friends or neighbors to act as agent. As we all know, our relationships can change over time. Perhaps your agent moves across the country and having them remain as your representative isn’t the most convenient option. Or maybe you both have forged other relationships and you are no longer close—it may be time to name a new agent who better understands your needs and wishes.
Life Changing Events Can Alter Your Needs
While the previous reasons speak to the general passage of time, if you encounter a major life-changing event, you may want to have your durable power of attorney reviewed more urgently to ensure your needs will be met in the event of your incapacity. This includes any change in your marital status, health changes, financial circumstances, and relocation. For example, a recent medical diagnosis may make your agent’s duties more urgent and imminent. If you’ve switched to a higher-paying job, received an inheritance, or experienced any other event that has dramatically changed your financial situation, you may want to switch to an agent with more financial competence. Finally, if you’re one of the many Americans that relocated out of state recently, you may need to make sure your new state accepts out-of-state power of attorney documents.
Sitting down with an experienced attorney will give you peace of mind in knowing that your wishes will be fulfilled in the event you cannot be there to make decisions. Further, establishing a consistent relationship with an attorney will ensure that someone knows your specific needs and will be able to address changes more efficiently. Remember, if your loved ones or your agent are the ones discovering the problem with your document, it may be too late for you to have a say in how to fix it.