You’ve successfully completed all of your important documents: your Last Will, Living Will, Power of Attorney and Trust. You’re feeling good and now you can rest easy until the end of your time, right? Maybe.
A lot can change between now and ten, twenty or forty years when your legal documents come into effect. You’ll likely have different properties and possibly be in different relationships and phases of life. Ensuring that your important documents are updated in accordance with life changes is vital to ensuring your wishes are carried out. Here are some considerations in regard to when important documents expire and how long you should keep them.
Last Will and Testament
Wills do NOT expire. However, the older your Will, the more likely it is that the family members you name as your beneficiaries are either deceased, leave the family due to divorce or become estranged – or were not in existence or adults when you signed this document.
It is simple to change a Will. This involves revoking the old Will, which can include stating in the new Will that you’re revoking the old one, or even physically destroying the previous version. Another best practice is to keep important family members or friends informed that you have a Will or an updated version, keep it in a safe place and let them know where they can easily find it. While you could also make them copies, courts and lawyers will need to see the original document upon your death.
Living Will and Healthcare Power of Attorney
A healthcare power of attorney allows a designated individual to be your health advocate and make medical decisions in your best interest if you are incapacitated. A Living Will declares to your family and medical providers that you do not want to be kept alive artificially in the event you are permanently unconscious or have a terminal illness.
Both of these documents remain in effect as long as you live, unless you revoke it in writing. This is usually done by making a new Living Will or Healthcare Power.
Medical providers will likely honor these documents no matter how old they are. Thus, it is very important to keep these updated to make sure you still want the named individuals to act on your behalf. People will often change these documents when they get married/divorced or when their children reach adulthood.
Just like with your Will, it’s important that your power of attorney is familiar with your wishes and has a copy of the legal document. Also, your primary care physician should likewise have a copy of these documents.
Financial Power of Attorney
Powers of attorney apply to more than healthcare. In the event of a permanent or temporary incapacity, your legal and financial affairs may need to tended to by an authorized person (agent) until you are back on your feet again. Financial powers of attorney expire upon death, but when they start depends upon the type of financial power of attorney you have.
A standard power of attorney is effective upon signing (with the understanding that it will not be used until you are in fact incapacitated). A springing power of attorney is effective upon your agent securing medical documentation that you are in fact incapacitated.
Technically financial powers of attorney do not expire until revoked (either by making a new one or tearing up an old one). However, because they give sweeping power to the agent, they are heavily scrutinized. It is not uncommon for a financial institution to “willy nilly” decide that the power is too old. It is best practice to keep a financial power of attorney dated within the last five (5) years.
Trust act similar to Wills in that they distribute property after death, without the need for Probate interference. However, a Living Trust can also allow someone to care of your money or property under certain terms while you’re still alive. Trust terms and expirations are usually determined by the trustor (the creator). Like Wills, it is important to make sure that your beneficiaries and Trustees are who you still want them to be.
Other financial documents
Generally, it’s good to hold onto your tax returns indefinitely, as well as other major financial records that document inheritances received. Then, a good practice is to save any document that verifies information on your tax return, like your 1099s and W-2s, bank statements, receipts, etc., for three to seven years. Regular bank statements and paystubs should be kept for one year.
It can be helpful to maintain a digital log/copy of your important documents in case something happens to the originals. By keeping and updating your important documents as you should you can finally enjoy that piece of mind.
Still have a question about keeping or updating your important documents? Contact me today to set up a time to chat.