These are all good questions, as Powers of Attorney (POA) are some of the most commonly used estate planning documents and they are also some of the most misunderstood estate planning documents, says nwi.com in a recent article “Estate Planning: Do Powers of Attorney lapse?”
A POA is a document that authorizes another person to act on behalf of the person making or signing the document. The person named in a POA is also referred to as the Attorney-in-Fact, or AIF. The authority granted to the AIF is usually spelled out in the document itself. Some POAs grant a wide range of authority, while others are limited to a specific action. An estate planning attorney can create a POA that suits a person’s particular needs, which is far better than a generic document that may not be accepted because it is too broad.
Durable POAs don’t usually exist for a set period of time. There are also limited or special POAs that have a date or a time frame, and at the end of that time frame or upon that date, they terminate. It’s important to note that all POAs terminate upon the death of the maker or principal. The only power that can survive after the death of the maker is the authority to dispose of the maker’s remains, and that varies by state.
A POA can also be terminated at any time by the principal. This termination should be in writing, and it can be terminated by revoking the POA within the terms of a new POA, or by execution of a revocation. Either way, the person should notify the AIF that they no longer have the authority to act under the revoked POA, and any entity who may have a copy of the revoked POA should be notified that it is no longer valid. The revocation can also be recorded at the county recorder’s office. An estate planning attorney in your state will know what rules apply in your area.
The AIF serves because the principal has chosen them, and if that changes, they are removed from their responsibilities, as long as the principal is competent.
Estate planning attorneys are concerned less with the date of the POA, as they are with the simple fact that banks and other financial institutions are reluctant to accept POAs that were created many years ago. In that case, usually an affidavit affirming that the document is still valid, and the AIF has the authority to act under it is enough.
However, it is recommended that when you have your estate plan reviewed every three or four years, you also have your estate planning attorney update the Power of Attorney. This way there is less of a chance that a bank or other institution will balk at the document. The same goes for your health care proxy, also known as a Health Care Power of Attorney.
Reference: nwi.com (November 3, 2019) “Estate Planning: Do Powers of Attorney lapse?”
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Suggested Key Terms: Power of Attorney, Executor, Estate Planning, POA, Attorney-in-Fact, AIF, Health Care Power of Attorney, Affidavit