There may be a time when we may be unable to handle our daily affairs. This can occur when we are older or after an unexpectant accident or illness when we are younger. In addition to making decisions on estate planning and probate, you should consider a power of attorney which can help address your needs if you are unable to make decisions.
New Jersey law governs power of attorney. A general power of attorney allows you, as the principal, to authorize another person to act on your behalf. That person is referred to as the agent or attorney-in-fact.
These powers must be specifically set forth in a document. A principal usually authorizes the agent to buy or sell things, manage their business, collect debts, invest money, cash checks, manage financial matters and sue on the principal’s behalf. Agents are often empowered to apply for Medicaid, Medicare, Social Security, or other public benefits.
Broad language giving an agent all powers to manage financial matters or make health care decisions is usually sufficient. A power of attorney may be important for a spouse to authorize nursing home or medical care for their other spouse or transferring property for Medicaid eligibility.
But specific language must identify authorization to make financial or other gifts on the principal’s behalf, the power to change a community property agreement and the power to designate insurance policy beneficiaries. An agent may not make or change a will.
Powers of attorney may take and remain in effect during times or events, such as incapacity, chosen by the principal. But a durable power of attorney is typically used to grant authority to an agent only if a principal cannot act on their own behalf or it may take effect immediately and continue in effect until the principal becomes incapacitated. Agents may make medical decisions under a durable power of attorney.
Court do not approve agents. It is important to select a competent and trusted agent who can be trusted to make decisions on your behalf. You can continue to make decisions on your behalf even after you execute a power of attorney unless a court rules that you are mentally incapacitated.
An attorney can provide guidance on what you should consider in a power of attorney. They may draft a document that it is legally valid, and help meets your needs.