Although much of estate planning deals with what happens after one dies, it’s equally important for a person to have a plan for making critical financial or medical decisions if he or she is unable to make them for themselves. This article explains the need to review and update powers of attorney.
Your powers of attorney are probably stale:
Although much of estate planning deals with what happens after you die, it’s equally important to have a plan for making critical financial or medical decisions if you’re unable to make them for yourself.
Carefully designed financial and health care powers of attorney allow you to designate a trusted person to make financial and medical decisions on your behalf in the event an illness or injury renders you unconscious or otherwise incapacitated. They also allow you to provide your designee with guidance on making these decisions, including your preferences regarding the use of life-sustaining medical procedures.
Powers of attorney can provide peace of mind that your wishes will be carried out, but it’s important not to get lulled into a false sense of security. You should revisit these documents periodically in light of changing circumstances and consider executing new ones.
Possible reasons you may need a new power of attorney include the following:
- Your wishes have changed.
- The person you designated to act on your behalf has died or otherwise become unavailable.
- You’re no longer comfortable with the person you designated. (For example, perhaps you designated your spouse, but have since divorced.)
Even if your circumstances haven’t changed, it’s a good idea to execute new powers of attorney every few years. Why? Because a power of attorney is effective only if it’s honored, and — because of liability concerns — some financial institutions and health care providers may be reluctant to honor documents that are more than a few years old. If it has been three or more years since you created a power of attorney, this may be good time to contact your estate planning attorney to review your documents to ensure they reflect current circumstances and your wishes