In many ways, your estate plan is like a car. Any vehicle requires consistent maintenance: You must change the oil, rotate the tires, and replace the brakes. If you don’t keep up with the required care, you can expect your car to break down at the worst moment possible.
An estate plan works the same way. If you aren’t reviewing it periodically to check for leaks and bald tires, it may not hold up when you put it to the test. One of the most important maintenance steps you can take for your estate plan is reviewing your power of attorney.
Do You Have a Power of Attorney?
If you set up an estate plan, your lawyer likely explained what a power of attorney means, but before you make any moves, we want to make sure you remember all the details. A power of attorney is a document that names an individual to act on your behalf. The person named therein is your agent. This person can name backup agents to step in if your first choice is unable to serve for any reason.
By creating a power of attorney, you are granting your agent power to act as if they were you. A power of attorney can be immediate, meaning that your agent can act on your behalf as soon as you sign it, or it can be springing, meaning some prior condition must be met (usually you have to be incapacitated) before they can begin acting on your behalf
Rights Granted by a Power of Attorney
Most estate plans have two types of powers of attorney documents. The first is a financial power of attorney. This is also often referred to as a general durable power of attorney. The purpose of a financial power of attorney is to allow your agent to handle your monetary affairs. This document gives them permission to access your bank account, make your car payment, sign a contract for someone to take care of needed repairs on your house, and so on.
The second type of power of attorney is a healthcare power of attorney. In a healthcare power of attorney, you are granting your agent power to handle medical decisions, such as which doctor you should go to, what type of treatment plan to pursue, or whether you should participate in clinical trials. It can also give your agent authority to access your medical records. In some instances, a healthcare power of attorney also includes a living will, which allows you to give instructions regarding end-of-life care.
Why You Should Check Your Power of Attorney Today
Like worn-out brakes on a car going down a hill, an out-of-date power of attorney can send you down a path of disaster. If you haven’t updated your power of attorney recently, you may have agents who are no longer the right fit. Maybe you and one of your agents no longer have a close relationship. Maybe one of them has passed away. Maybe it’s been ten years and now one of your children is mature enough to handle it.
Having the wrong person as an agent is like handing your car keys over to someone you don’t want driving it. Reviewing your estate plan every year to make sure that your power of attorney has the right agents will keep the right person in the driver’s seat should you end up in need of help.
Pearson Bulter is here to handle your estate planning needs. Call us at (800) 265-2314 for a consultation. Our attorneys can answer your questions and help you plan for your future.