A Power of Attorney is a document in which you appoint someone else to act on your behalf on matters that you specify. It can be made to start immediately, or upon mental incapacity.
A Power of Attorney is a legal instrument that allows another individual to hold legal authority over your assets or decisions. In other words, you can choose someone that is in control of some or all of your legal matters and assets.
The individual given power is known as an Agent or Attorney-in-Fact. In this type of legal document you are called the Principal.
Broadly speaking, there are two general types of powers of attorney, medical and financial. Both types of powers of attorney can have limited application and authority or can be drafted to be applied in a broad manner.
No matter the specific level of authority being granted in a power of attorney, creating such an instrument assigns at least some authority to another individual. Therefore, you need to take care to select a capable and trustworthy individual to be the agent
In some situations, the Agent can be given authority to make medical decisions for you; this is known as Medical Power of Attorney, and is a legal mechanism that empowers a designated person to make medical decisions for you should you be unable to make decisions due to lack of capacity. This is called a Power of Attorney for Health Care or a Living Will.
A General Power of Attorney can be used when an individual does not have capacity to make financial or legal decisions for themselves but that Power of Attorney must have a provision that says it survives incapacity of the Principal. This is known as a Durable provision.
Without a Durable provision, a Power of Attorney is not valid if the Principal becomes incapacitated. This is very important since this is the time that Powers of Attorney are usually needed most.
Also, certain powers, if they are not specifically set out in the document are considered not given to the agent. In New Jersey, one such power is that of gifting the Principal’s assets. If this power is not explicitly mentioned in the document, the Agent cannot give away the Principal’s assets. Gifting can be a very important tool for both long term care and tax planning.
One of the most important things to remember about Powers of Attorney is that they must have been executed prior to the Principal becoming incapacitated. Once a person becomes incapacitated they no longer have the ability to execute legal documents and guardianship must be sought to allow an agent authority to make legal and medical decisions for that person.
All Powers of Attorney are not created equally. Powers of Attorney serve different purposes and provide different levels of power and authority. As you contemplate creating a Power of Attorney, you need to have a clear understanding of the different levels of Power of Attorney authority.
For more information on this and other issues, contact D’Avanzo, Poserina & McHugh. They focus on Elder Law issues.
Robert Poserina and Andrea McHugh can help guide you through the legal issues of Medicare/nursing home planning, estate planning, wills, trusts, guardianships, powers of attorney, probate, estate administration, estate litigation and contested wills.
Located at 1029 Route 9 South in Cape May Court House, or log on to www.capemaycountyelderlaw.com.
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