The power of attorney is a critical component in any estate plan. Although the power you grant an attorney-in-fact ends upon your death, different types of powers of attorney are tremendously beneficial while you are alive. It can be an extremely valuable tool should you become incapacitated or otherwise be unable to manage your affairs.
You do not relinquish control of matters addressed in the power of attorney until you choose or need to. Furthermore, the person you name as your attorney-in-fact must carry out your wishes. New Jersey’s Durable Power of Attorney Act holds your agent to a higher standard than that of other states. Your representative has a fiduciary obligation to you and can only take actions that benefit you. The law requires attorneys-in-fact to “act within the powers delegated by the power of attorney and solely for the benefit of the principal” rather than taking action that results in the enrichment of themselves.
For nearly 45 years, my firm — Adams, Cassese & Papp L.L.C. — has helped generations of families in Woodbridge, New Jersey, Sayreville, Perth Amboy, and Edison carefully craft powers of attorney. I answer legal questions and offer guidance in selecting the attorney-in-fact whom you charge with handling things when you are unable to do so yourself. I want families to find peace of mind through estate planning. Contact me today to get started.
A power of attorney is a document in which you (the principal) give another person (the attorney-in-fact) the authority to take financial actions on your behalf. Your attorney-in-fact can act in all lawful areas pursuant to your specifications and has a fiduciary obligation to you while making decisions.
The principal must have the capacity to fully comprehend the powers they are granting in the power of attorney when they sign the document. The power of attorney remains in effect until the principal either revokes it or dies. There are four types of powers of attorney:
General: A general power of attorney authorizes your attorney-in-fact to act on your behalf in any financial transaction.
Durable: A durable power of attorney takes immediate effect and continues should you become incapacitated or disabled.
Springing: A springing power of attorney “springs” into action, becoming effective only upon your incapacitation, incompetence, or disability.
Limited: A limited power of attorney grants someone the authority to act on your behalf in a specific action.
A power of attorney is important because it ensures that your financial affairs will be taken care of, even if you are unable to do so yourself. It can ensure that you are cared for should you become incapacitated and that your financial resources are distributed according to your wishes upon your death.
Choosing your attorney-in-fact is a serious decision. The person must be at least 18 years of age and have the mental capacity to handle your financial affairs. You may otherwise appoint anyone you want to serve as your attorney-in-fact, but there are few things you will want to consider:
First and foremost, your representative should be someone you trust. The integrity of your attorney-in-fact is more important than any educational or professional background.
People often name their spouse or a child as their attorney-in-fact because they are close to them and trust them to carry out the duties of the power of attorney correctly.
Although your attorney-in-fact need not live in the same town or state as you do, carrying out their duties might require that they do so locally, with regard to banking or real estate issues, for example.
Your attorney-in-fact is required by New Jersey law to maintain financial records and accounting for all transactions made on your behalf.
You can compensate your attorney-in-fact, but the terms of compensation must be included in the power of attorney to avoid any appearance of self-enrichment on the part of your agent.
You can appoint more than one attorney-in-fact to serve simultaneously, although more than two could prove problematic. It is prudent to appoint a successor should the designated attorney-in-fact be unable to carry out their responsibilities for any reason.
All states recognize powers of attorney, but the laws and rules may differ from state to state. An experienced estate planning attorney can help you navigate statutory differences when you grant powers of attorney if you anticipate that the authority may be used in other states. For example, if you own property in New Jersey and New York simultaneously.
Powers of attorney can be very simple and straightforward or extremely specific and complicated. Because you are placing your trust in someone else to manage your financial affairs if you are unable to for yourself, you should work with an experienced estate planning attorney in crafting your power of attorney. Your choice of attorney is as important as your choice of your attorney-in-fact.
When I work with clients on their estate plans, including their powers of attorney, I am forging a long-term relationship with them and with their loved ones. It is a responsibility and a privilege I have taken very seriously at Adams, Cassese & Papp L.L.C. for more than four decades.
If you live in Woodbridge, Sayreville, Perth Amboy, or Edison, New Jersey, and you want to create an entire estate plan or just a simple will or a power of attorney, it is never too early to begin. Planning things now will provide you and your family with peace of mind later. Contact my office today to get started!