After creating an estate plan, it is crucial to remember the importance of regular updates. Modifying your estate plan helps to ensure that the plan works in the best possible manner after you die. Life circumstances and relevant laws change as time goes on, and estate plans should reflect those changes. It is important to remember, however, that updating an estate plan does not just involve modifying a will or adding a revocable trust. It is equally as important that you update your power of attorney that governs your financial affairs.
4 Reasons to Update Your Power of Attorney
Why is it important to update your power of attorney when modifying your estate plan? The following are four reasons:
- The person that you originally named as your agent, or attorney-in-fact, may not be the person you would like to handle your affairs today. Until you revoke the old power of attorney, that person still has all of the rights and responsibilities that were in place on the day that it was signed.
- The older the power of attorney, the higher the likelihood that it may be rejected. Financial institutions sometimes reject older power of attorneys for being “stale.” Typically, the reason for the rejection is the institution’s concern for its own liability. While the financial institution may have no legal basis for rejecting the otherwise valid power of attorney, the delay and potential harm caused by a rejection can be avoided by keeping the document up to date.
- The power of attorney may be missing valuable provisions that were not at the forefront of your mind when it was first created. For example, as you age, it becomes increasingly important that a power of attorney be drafted, so that it can be used for long-term care planning and estate tax planning.
- The power of attorney may not incorporate your revocable trust. If you are updating your plan to add a trust, the power of attorney should be updated as well to ensure that the agent has certain powers relating to that document.
When you are ready to update your estate plan, we are here to help. To learn more, we encourage you to contact us today at (714) 282-7488.