Medical and financial powers of attorney are a critical aspect of effective estate planning, but did you know they must be kept up to date? It is recommended to have them reviewed every 2-3 years.
Several legislative changes over the years have given financial institutions and healthcare providers reasons to reject powers of attorney. As new laws are enacted, necessary provisions must be incorporated into your power of attorney, as failing to including certain language could mean your documents will not be accepted.
Notable issues include:
- Your medical power of attorney was executed prior to your state adopting the Uniform Health Care Decisions Act. In 1993, this federal law was approved to expand and solidify the authority of a medical power of attorney. It has since been enacted state by state. Key changes include decision-making power surrounding life-prolonging procedures, authorization for organ donation and approval for admission to health care facilities for treatment.
- Your medical power of attorney does not include Health Insurance Portability and Accountability Act (HIPAA) language. If your power of attorney was drafted prior to adoption of HIPAA laws, it will not include the necessary language authorizing access to your personal medical information.
- Your financial power of attorney does not include certain provisions adopted by the Uniform Power of Attorney Act. Financial institutions, particularly banks, often reject powers of attorney if they believe, in good faith, that the document may no longer be valid. Certain types of authority (including the ability for the holder of your power of attorney to amend trust documents, make gifts on your behalf, and designate or change beneficiaries) will only be accepted if they are clearly written into your document.
Major life events or changes in your situation are good trigger points for reviewing your documents. It is important that the people you designate to act on your behalf continue to be in line with your wishes over the years. Reasons to make a change could include separation or divorce from your spouse, or death, distance or incapacity of the person you have named.
In addition, be sure to consider naming a backup person who can take over if the currently named agent in your power of attorney is unable or unwilling to serve.
As your tastes, desires and wishes change with time, it is important to make sure your power of attorney reflects that and remains consistent with your goals and wishes. An estate planning lawyer can help ensure your documents are up to date and reflect your concerns.