A financial Power of Attorney is an essential document in any estate plan. It enables you to appoint someone you trust to manage your finances and other legal matters in case you become unable to do so yourself. The person you name, called your attorney in fact, generally has broad powers to handle things like paying your bills, accessing your safe-deposit box, managing your investments, and even selling or mortgaging your house.
A “Durable” Power of Attorney remains in effect even if you become incompetent, which is when the document is most likely to be needed. Because it may be years before your Power of Attorney is used, you should review it every three to five years to make sure it remains current. Here are four reasons to consider having your Power of Attorney revised:
1. It is more than five years old. Unless the document states otherwise, a Power of Attorney technically remains valid indefinitely. Still, banks and other financial institutions may be skeptical if the document is more than five years old. Their skepticism may stem from a legitimate concern that the Power of Attorney has been revoked, or perhaps superseded by a newer version of the document.
2. It names the wrong people. Longtime partners and married couples often name each other as their attorneys in fact and another individual to act as a backup in case the other partner or spouse isn’t able to do the job. If your marital status has changed since you had your Power of Attorney prepared or your backup attorney in fact has fallen out of favor, it’s time to rethink who should be in charge of your finances if you can’t be.
3. It isn’t the Maryland Statutory Form. In 2010, the Maryland Legislature passed the Power of Attorney Act. In addition to placing new obligations on the attorney in fact, the law provides a statutory Power of Attorney form that the Maryland’s banks, insurance companies, and brokerage firms are legally obligated to accept. Anyone who refuses to honor a statutory power of attorney can be forced to pay the attorney’s fees spent to get a court order. Although other Power of Attorney forms are still valid in Maryland, having the statutory form will help to ensure that the document is immediately honored.
4. It doesn’t include provisions for your digital assets. Digital assets include things like the electronic data stored on your computer or smartphone, your Internet accounts like LinkedIn and Gmail, and your online pictures and documents. Without explicit authorization, no one can legally manage these assets for you if you become incapacitated. Some of these assets, like your PayPal or Amazon accounts, may have monetary value. Others, like your email account or personal blog page, could be of great sentimental importance. Even your voicemail account may be valuable if it includes messages from potential clients or expressions of support from loved ones during an illness.
Only a newer Power of Attorney will include provisions for your digital assets, and it may be wise to have yours updated for this reason alone. It is also important to make a list of your passwords and logon information. This should be kept it in a safe place so your attorney in fact can find it when the need arises.
Do you really need a Power of Attorney? Without one, it could be necessary for the court to appoint someone to become your legal guardian. A guardianship proceeding is an arduous and expensive process. In addition, the guardian would need to file annual accountings with the court to verify how your assets had been spent. Taking the time to have a Power of Attorney prepared—and to keep it current—is well worth the small effort required.