Durable Powers of Attorney Require Vigilance
The alternative is to have a guardian appointed for you by the probate court when the need arises. That's not the end of the world, but it's time-consuming (several weeks at least), expensive (most people can't do it without a lawyer's help, and a lawyer must also be appointed to represent your interests), and then the guardian must report regularly to the court as long as the guardianship lasts. All of that can be avoided with a well-written durable power of attorney.
Fortunately, most people know all this by now. What they may not know is that powers of attorney have a shelf life. Most banks, insurance companies, investment firms and government agencies are reluctant to accept a power of attorney more than 10 years old. They worry that the authority granted may have become stale over that long a period and may no longer represent your wishes.
The other snag in relying on older powers of attorney is that they're often quite brief and cryptic; that is, they grant general authority for your agent to act for you, rather than comprehensively granting the specific kinds of authority your agent might need to act for you in all manner of situations and transactions. Most of the institutions I mentioned won't any longer accept a general statement of authority, but will insist on a specific reference to the kind of transaction your agent is trying to undertake. One important example is that if the power of attorney pre-dates the so-called HIPAA medical records privacy law enacted in 1996, most hospitals and physicians won't honor a request for your records if the power of attorney contains general authority language but doesn't specifically authorize access to medical information. That's why current powers of attorney now mention every conceivable purpose for which they might need to be used. This is one area of the law where the "kitchen sink" theory of draftsmanship is alive and well.
So, if you don't have a durable power of attorney at all, you need one. If you have an old one, check how old it is and consider also whether it seems broad enough to describe everything you would want an agent to do to handle your affairs if you couldn't handle those tasks yourself. Then, repeat the same exercise every 5 years at least. You have to make sure these important bases are covered before the need arises.
PS - I've focused here solely on legal and financial powers of attorney; however, the same considerations are pertinent to health care directives that designate agents to make health-related decisions for you in the event of incapacity or incompetence!
(Posted April 17, 2012)