When creating an estate plan, most people choose to execute a durable power of attorney (POA).
This document is important because it allows someone else to act on your behalf with regard to your financial affairs. While it is crucial to keep all of your estate planning documents current, the power of attorney must be updated on a regular basis to ensure that it can still be used when you need it. The document may be perfectly valid; however, from a practical standpoint, it could be rejected at the time when it is most needed.
5 Reasons to Update Your Power of Attorney Even When it Is Still Valid
What are some of the reasons why it is important to keep your power of attorney up to date? The following is an overview:
- Some banks and financial institutions refuse to honor an otherwise valid POA if it is too old. In some cases, the power of attorney may only be five years old and still face rejection or scrutiny.
- The law relating to estate planning, public benefits, and long-term care planning may have changed since you first executed your power of attorney. Even though the power of attorney itself may still be valid, it may not be as effective as it once was. Updating your estate plan can ensure that your POA is able to accomplish all of your goals when needed.
- Your current document may make reference to outdated exemption and credit amounts or laws because estate and gift tax laws are subject to frequent change.
- Your POA may be valid in your new home state as long as it was executed properly under the laws of the previous state. However, this does not mean that the bank or financial institution where you are trying to use it will recognize it. These institutions tend to reject documents even when they are valid if there is anything they find questionable, such as the document being executed out of state.
- Your document may be missing certain expressed powers. If the powers, such as gifting powers, are not specifically in the document, your agent may not have the necessary authority. This can be true even if the document otherwise contains a broad statement such as “all powers granted under the law.”
When you are ready to update your estate plan, we are here to help. Contact us today at (714) 282-7488 for more information.