A power of attorney is an essential part of a comprehensive estate plan. It is common to create your entire estate plan and only think about updating your will and trust as your thoughts on distributing your property may change. However, it is imperative to make sure that you keep other documents up to date as well. Specifically, it is crucial to update your power of attorney for finances regularly.
It is essential to keep your power of attorney fresh because many financial institutions will not accept older powers of attorney. That is against the law, of course, but it is often easier to keep your power of attorney up to date than to wrangle with the bank to get them to accept your ten-year-old power of attorney. You can, however, make sure that you have up-to-date powers of attorney at each financial institution you do business with by filling out each bank’s power of attorney forms. Using the bank’s forms should ensure that your agent under your power of attorney will not have any trouble accessing your accounts when you become incapacitated. In addition, it is crucial to make sure that the bank’s power of attorney form is filled out to match your existing power of attorney to avoid conflicts.
There are two types of power of attorney: springing and immediate. An immediate power of attorney goes into effect upon your signature, meaning your agent can use the document right away; they do not have to wait until you are incapacitated legally. A springing power of attorney means that it does not take effect until the requirements in the document are satisfied, which is usually someone or multiple people declaring that you no longer have capacity; however, this can be customized.
You may also create a very limited power of attorney for a specific purpose. This may include a power of attorney just for running a business, or selling real property. A power of attorney can be drafted for just about any specific purpose that you might need where you do not want to give someone general power of attorney over your affairs.
Even though many states offer a standard power of attorney form, there is not always a one-size-fits-all approach. What type of power of attorney you need and how frequently you need to update the document should be discussed with your estate planning attorney on an ongoing basis. Your needs will likely change over time, and you don’t want to get stuck with a stale or inappropriate power of attorney.