First of all, let’s review what a Power of Attorney is: a tool that gives legal authority to another person (called the Agent or Attorney-in-Fact) to make property, financial, and other legal decisions for the Principal (the person who signs the Power of Attorney). The Power of Attorney is useful for when you go on long trips (such as an extended deployment if you are in the military) or if you know you will have a long hospital stay. A Durable Power of Attorney means it will remain in effect upon your incapacity, as opposed to a General Power of Attorney which terminates upon your incapacity.
So, when is the last time you reviewed your Durable Power of Attorney? In our trust review meetings with clients, we find many people give a great deal of thought to their trusts, particularly to the distribution of their property, and too few reconsider the terms of their Durable Powers of Attorney. This oversight can have serious consequences ranging from unduly burdening your family to your Durable Power of Attorney being rejected.
First, some Durable Powers of Attorney only become effective when you become incompetent. If and when that time comes, your family could be faced with having to obtain written statements from your doctors proving that you are incapable of handling your affairs. This burden occurs at a time when your family is already facing very difficult issues with respect to your care.
Second, you should reconsider whether the individuals appointed as your initial and successor attorney-in-fact are still appropriate. A child may move out of state or a spouse may no longer be able to serve as your attorney-in-fact. In this case, it may make sense to make changes in who you appoint as attorney-in-fact. This is especially important if you only named your spouse as your attorney-in-fact without a successor. In this event, your Durable Power of Attorney may be ineffective due to the lack of an attorney-in-fact.
Finally, if your Durable Power of Attorney was signed over five years ago, many financial institutions and healthcare providers may refuse to honor it. This practice is becoming more common and catches many people off-guard. Fortunately, this issue can be avoided with updating your Durable Power of Attorney.
Just remember, you should review your Durable Power of Attorney on a regular basis along with your trust to ensure it still covers your specific needs.
Parman & Easterday