It’s a new year and you are tackling your to-do list with vigor. One thing that has been living on that list for a long time- establish an estate plan. Now is the time, you are getting this done.
However, you decide to find forms online and fill in the blanks yourself.
One of the forms you filled in was a Power of Attorney. You want to make sure that when you are no longer able to make financial decisions for yourself, that you have identified a trusted person to make those decisions on your behalf.
But what happens if you become incapacitated and your family needs to take your Power of Attorney to the bank to gain access to your accounts and they are denied?
Reasons your Power of Attorney (POA) may be rejected by the bank:
- It’s not ‘durable’: If a Power of Attorney is not a ‘durable‘ POA then it is only valid while the principal (the person who signed the document and is appointing someone else- their ‘agent’ to act on their behalf) is of sound mind.
‘Durable’ means the POA continues to be effective after the incapacitation of the principal.
BEWARE: People who find a POA form online do not realize the significance of it needing to be a ‘durable’ power of attorney. They tend to draft a POA that is not durable and end up with a useless document.
- It has not been activated: A springing POA names an agent in advance but does not grant them legal authority for decision making until the principal becomes incapacitated. The difficulty with this type of POA is that the principal must be incredibly careful when specifying what type of event will allow the agent’s powers to “spring” into effect. If it isn’t clear what kind of incapacitation triggers the POA, then the family may have to spend time going to court to determine if the principal meets the POA document’s conditions for incapacity and whether the agent is able to assume their duties. In most cases, the standard for triggering a springing POA requires certification from at least one doctor regarding the principal’s lack of capacity.
So is it worth it?
Our advice- think twice about trying to save money by drafting your own estate planning documents. An attempt at short term savings often turns into a greater expense and hassle in the long run.
Keep in mind that POA documents can be revised or revoked at any time as long as the principal is still legally competent. It’s a good idea to periodically review all of your legal documents, including POAs, wills and advance directives to ensure they are still effective and aligned with your wishes.
Are you or a loved one in need of power of attorney documents? Contact Alles Law today for a free consultation to discuss your personal situation or to hear more about our power of attorney services in Grand Rapids.