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Power of Attorney: What Is It And Why Is It Important?


It is recommended to start estate planning as soon as you become a legal adult, at 18 years old. It is important to be prepared, even as a young adult because, unfortunately, unexpected situations can occur at any time. An essential component of estate planning is creating a power of attorney or POA. A power of attorney is a preparatory document which accounts for issues that may occur throughout a person’s life. For example, imagine a situation where someone was in a shocking accident and became incapacitated. Who would manage their money, bank accounts, and investments? Who would pay their bills and taxes or sell their house? Who would make decisions based on their medical needs and quality of life? Well, that is exactly where a power of attorney comes in and details who has the right to make decisions on behalf of another.

What is a Power of Attorney?

A power of attorney is a legal document that appoints another person to handle your affairs for you. The “principal” grants the power to another and the “agent” or “attorney-in-fact" is the person authorized to make decisions on your behalf. An agent can be any competent adult, including a family member, friend or your child who is at least 18 years old.

Types of Power of Attorney

There are a few varieties of power of attorney. A “springing” power of attorney is only effective at some time in the future, and becomes effective once a specific effect occurs, such as illness of the principal. A “durable” power of attorney means that it remains in effect even after the grantor is incapacitated, but it can be used prior to that, immediately upon signing. A “nondurable” power of attorney is used only for a specific type of transaction, such as the closing of a residential sale or while the principal is abroad.

What Does a Power of Attorney Do?

The principal, so long as they are competent, decides the scope of the agent’s authority. Therefore, you may create a power of attorney that allows your agent to make decisions only in specific circumstances. Your power of attorney can also outline your wishes regarding how your agent should handle certain matters. This takes the guesswork out for your agent and allows them simply to follow your instructions. This may include how much you want to sell your house for, and what kind of medical treatment you want to receive. You may also limit your power of attorney to certain matters. These affairs may include financial, business, health care and personal life matters. A power of attorney is also a revokable document meaning, if you are not incapacitated, you can revoke the document, update, and change it at any time. New Jersey banks also require a power of attorney to be frequently updated, allowing you to consistently make changes to your document.

When Should I Create a Power of Attorney?

It is in your best interest to create a power of attorney as early as possible. This is because a power of attorney is a proactive document and thus must be signed in advance of becoming incapacitated. NJ law requires that a person be of sound mind when signing a power of attorney. Case law has held this to mean the person signing must understand the nature and effect of their acts, at the creation of the power of attorney, to grant power to another person.

Why Should You Have a Power of Attorney?

A power of attorney is one of the most important documents that an aging person can have. Not only does it give peace of mind in worst-case situations it can also save you money. Unbeknownst to most people, in New Jersey, without a power of attorney, you cannot make legal decisions on behalf of your spouse or adult child, including if they become incapacitated. Rather, if you or a loved one becomes incapacitated without a power of attorney, the legal authority to make decisions on your behalf will be appointed by a judge via guardianship. Essentially, a court would choose who would control your affairs. Guardianship not only comes with lack of autonomy but also a greater expense.

Power of attorney is a means which keeps you in control of your decision in the event you can no longer make them for yourself. Unfortunately, serious illness and incapacity is a real risk, so it is beneficial for you to proactively avoid issues that arise when you can no longer manage your own affairs properly.

How Do I Create a Power of Attorney?

An attorney can assist you in properly setting up your power of attorney as it can be a detailed and specific process. Additionally, an attorney can assist you with tailoring your power of attorney to your specific needs as opposed to using a basic fill-in-the-blank form which may not effectively capture your individual wishes. A common fear with delegating an agent to make decisions on your behalf is that they will not follow your desires, or they will act in their own best interest instead of yours. Experienced attorneys can help you proactively avoid these discrepancies and protect against fraud, mistakes, or abuse of power.

The New Jersey attorneys at Scura, Wigfield, Heyer, Stevens & Cammarota, LLP can help. Our attorneys offer a complete range of elder law services and can assist with a variety of estate planning needs. Please call our office to schedule a free consultation. We will be happy to go over all your options and assist you with planning your future.










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