© 2022 Vickie R. Wilcox
“My estate planning documents are twenty years old, but nothing has changed. Do I REALLY need to update them?” We frequently receive calls with questions similar to this one.
Our recommendation is that you meet with your estate planning attorney at least every three years. At a minimum, financial powers of attorney should be updated every three years. In New Mexico, the powers of attorney don’t “expire”. They are valid until revoked or until the principal dies. (The principal is the person who signed it, to delegate to another person, the agent, the authority to handle financial matters for the principal). However, even though a document might be technically valid under state law, third parties might not accept the power of attorney if it is considered to be too old, dated, or stale (“expired”, if you will).
From our experience, three years seems to be a useful target date for updating this important document.
Consider this example, which is based on a situation that occurred in New Mexico: Mother had two children who got along surprising well. Mother had one large investment account, and owned no land. Mother signed a power of attorney naming Son as her agent to handle her financial affairs for her. Mother was diagnosed with Alzheimer’s disease and moved into an assisted living facility. Years passed, and Son paid Mother’s bills and handled her financial affairs using the power of attorney. At some point, the financial institution where Mother’s large investment account was located notified Son that it would no longer honor the financial power of attorney, as it was too old. No family member objected to how Son was handling Mother’s affairs, and no other problems arose, other than the financial institution’s review and concern over the date Mother signed the power of attorney.
Unfortunately, the family had to petition the court for a guardian and conservator to be appointed for Mother. Hearings, medical exams, two attorneys, and thousands of dollars later (and still no fighting among the family members), Son is now authorized by the court (and not only a dated financial power of attorney) to handle Mother’s financial affairs. (Mother did not have a trust agreement in place. Had there been a trust, this situation might also have been avoided.)
Had Mother met with a qualified estate planning attorney before she became too incapacitated to update her estate planning documents, this situation may have been avoided.
There are other reasons to review and consider updating your estate planning documents. Here are a few to consider:
Have there been changes in the laws that might affect your estate plan?
For example, if your health care power of attorney is old, it might not waive your privacy rights under HIPAA (the Health Insurance Portability and Accountability Act). If your documents do not properly address HIPAA restrictions, your loved ones (even a spouse) might not be able to speak with your doctors and medical providers about your medical status if you are unable to give verbal consent (for example, after a car accident).
There are changes in state and federal laws that sometimes also warrant an update, such as portability for estate tax planning, changes in rules against perpetuities, asset/creditor protection provisions, and so forth.
Do you need to update based on name changes, gender confirmation, or preferred pronouns?
Are the individuals you named as your financial and health care decision makers still the appropriate individuals to make these decisions? (COVID has resulted in some individuals realizing that the agents they named might not share the same medical philosophies, or they might not have the financial decision making skills necessary to serve in these important roles).
Is there someone you need to specifically exclude as a beneficiary or advisor/fiduciary? If your child were to die, would you want his or her ex-spouse to be able to act on behalf of your minor grandchild?
Are addresses current (including your own)? If you moved since you signed your estate planning documents, it is very important to have your estate planning documents reviewed by an attorney licensed to practice law in the state where you reside.
Have your wishes regarding your beneficiaries changed? Are charitable organizations still in good standing? Will the missions of the charities you named fulfill your charitable intentions?
Have your assets changed? You might make a bequest of a specific asset in your will or trust that you no longer own, and this could cause confusion and disagreements after your death. If your estate has increased, maybe a trust is more appropriate now and you should update your will.
Do your beneficiaries need more or less assistance with managing their inheritance than they did when you last signed your estate planning documents? If so you might need to update your estate plan to reflect your preferences as to how they will receive their inheritance.
When you review your older documents, is it really the case that nothing has changed?
Generally, estate plans are not stamped with a “best by” date. However, best practice is to review your estate plan with your attorney at least every three years (or earlier if circumstances warrant it).