Preparing for the possible inability to make financial and healthcare decisions is an important part of estate planning. Having a power of attorney is an important component of this planning. However, certain complications must be dealt with.
A springing power of attorney is often utilized. These grant powers to the designated agents only when a specific event takes place, such as the principal becoming incapacitated. However, these may cause additional uncertainty during a difficult time because a physician may be reluctant to attest or go on record stating that the person has become incapacitated because of potential liability. Also, the principal may lapse in and out of this condition.
Dealing with banks and financial institutions is another issue. Power of attorney documents should be filed with the financial institution where the principal conducted their business, so that it may continue. However, it is important to determine early on whether that institution will honor that document.
Many banks or financial entities will not recognize that document if there is doubt whether the power of attorney was properly executed or if the named family members, friends or other agents are authorized to act. These institutions may prefer the use of their own power of attorney forms.
Also, powers of attorney do not have an expiration date but may appear outdated. A financial institution may question its validity if it appears old or if it does not address present circumstances.
An older power of attorney may no longer reflect a person's wishes or life circumstances, such as changing family members, financial situation, health or the person's wishes concerning their healthcare. These documents should be renewed at least every five years to assure they will effectively reflect the person's needs and intent.
An attorney can help draft this important part of an estate plan and provide options governing financial and heathcare wishes. They may also assure that the power of attorney is valid, effective and reflects these goals.