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Estate Planning 101: Understanding Powers of Attorney

Last updated on: June 20, 2024

A Power of Attorney (POA) is a crucial document that allows you to designate a trusted individual, known as the attorney-in-fact, to step into your shoes and make decisions on your behalf. As the principal, you have the flexibility to tailor this authority, offering as much or as little power as you see fit to address your unique circumstances.

Understanding the nuances and ensuring that your Power of Attorney reflects your wishes can be complex. Engaging with a knowledgeable New Jersey estate planning attorney is invaluable. A skilled attorney can guide you through the process, helping you to establish a POA that aligns with your personal objectives and offers peace of mind.

Are you ready to secure your future and protect your interests? Contact The Matus Law Group today at (732) 785-4453 to create a Power of Attorney that’s right for you. Take the first step towards tailored legal support and guidance.

General Power of Attorney

A general power of attorney is the most wide-reaching grant of power available. The person that you designate can act in a variety of situations, including dealing with your financial matters. This POA is infrequently used as it is extremely broad, and many people do not want to give this much power to someone else.

This type of POA will be active as soon as the document is drafted and will stay in effect until the principal becomes incapacitated or passes away.

Durable Power of Attorney

Like a general POA, a durable POA will go into effect immediately. It is commonly used to make decisions regarding health care, but it can extend to other situations as well. The main difference between a general POA and a durable POA is that the durable POA will remain valid even after the principal becomes incapacitated or unable to handle their own affairs. It is often used in situations where an elderly individual develops dementia or another debilitating health problem.

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Limited Power of Attorney

A limited POA allows the principal to give away only certain rights to the attorney-in-fact. It will set out specific situations where the other individual will have powers of the principal. It can be as limited as you would like. In some cases, the principal may only grant another person powers as it pertains to particular real estate or other property. It can also be set up to only apply for a certain amount of time as well.

Springing Power of Attorney

This POA “springs” into action when the principal becomes incapacitated or debilitated. It will not apply immediately when written, unlike other types of POAs. You may need to have a doctor’s opinion to determine when someone is incapacitated. However, establishing incapacitation or debilitation can sometimes be difficult, which makes this POA tricky in some circumstances.

Risks and Protections

Estate planning in New Jersey encompasses various legal instruments, including the Power of Attorney (POA), a pivotal document permitting a chosen agent to act on your behalf. The POA holds significant value for those anticipating future incapacitation or for individuals who require immediate assistance with their financial affairs. Whether due to age, health issues, or temporary circumstances like military deployment, a POA ensures continuity in managing your financial obligations.

However, the breadth of authority granted through a POA does not come without risks. Potential abuses range from unauthorized financial transactions to complete forgeries of the document. Therefore, it is of utmost importance to not only choose a trustworthy agent but also to implement protective measures. These measures include:

  • Detailed Instructions: Clearly outline the extent of the agent’s powers within the POA document, possibly requiring them to provide regular financial reports to a third party.
  • Communication: Inform close friends, family members, and financial advisors of the POA. Their awareness can provide additional oversight.
  • Flexibility: Understand that a POA is revocable. Should your confidence in the appointed agent waver, New Jersey law allows you to alter or rescind the POA.
  • Vigilance: Be cautious of individuals who aggressively offer to manage your finances. If their help seems implausibly favorable, it may well be a red flag.

New Jersey’s legal framework offers safeguards to minimize POA misuse, mandating that agents act in your best interest. If crafting a POA seems daunting, consulting with an experienced estate planning attorney is advised. 

POA Forms: Fees and Execution in New Jersey

The fees for filing a POA document vary depending on the county. For example, Morris County charges $30 for the first page and $10 each for each additional page. There is also a $6 indexing fee per name if there are over five names in the document. 

A New Jersey Power of Attorney is immediately effective after it has been acknowledged, signed, and notarized. It does not have to be filed with the county clerk to be effective. The principal and their attorney can distribute copies of the POA to their financial institutions to show that the agent/s may be able to act on the principal’s behalf. 

While it is possible for you to create your own power of attorney form, having an estate planning lawyer guide you in drafting these documents may be a better idea. A skilled lawyer may be able to give you important legal advice and help you avoid costly mistakes. 

Attorney Christine Matus is an experienced estate planning attorney who has years of experience in helping many families plan for their future. If you are looking to draft important documents for your future, contact the Matus Law Group in New Jersey today.

Type of Power of Attorney Description
General Power of Attorney Grants broad powers to the designated person, allowing them to act in various situations, including financial matters.
Durable Power of Attorney Similar to a general POA but remains valid even after the principal becomes incapacitated or unable to handle their affairs. Commonly used for healthcare decisions.
Limited Power of Attorney Allows the principal to specify certain rights or situations where the attorney-in-fact has authority. Can be highly tailored, covering specific property or timeframes.
Springing Power of Attorney Activates only when the principal becomes incapacitated or debilitated, requiring a doctor’s opinion to determine incapacity.

Choosing an Appropriate Power of Attorney

Deciding on the right person to designate as your power of attorney is an important decision that warrants careful deliberation. Consider these essential factors when identifying the best candidate to serve as your power of attorney:

Evaluate Their Commitment to Honor Your Choices Above Their Own

It’s crucial to confirm that the person you select as your power of attorney is ready to respect and execute your wishes, even if they conflict with their own beliefs or desires. For example, if you’re considering naming your child as your healthcare proxy, but they are hesitant about making critical health-related decisions on your behalf, they might not be the ideal candidate.

Choose a Reliable and Organized Individual

The person you grant power of attorney to will manage important future dealings, which may include financial and healthcare matters. It’s imperative to choose someone you can trust to not only carry out these tasks with precision but also to keep thorough records to avoid any mistakes.

Clarify Their Role and Responsibilities

It’s common for people to accept the role of a power of attorney without fully understanding the responsibilities it entails or the length of the commitment required. Discussing the role in detail beforehand enables an open dialogue with the potential agent, helping you to ascertain if they are equipped for the role.

Remember that while the authority of a power of attorney ends with the person’s death, the responsibilities, especially those related to financial and legal affairs, may continue if the same individual is also appointed as the executor of the estate. Comprehending the process of appointing a power of attorney and the extent of their duties is a critical aspect of estate planning.

Finding a POA that Is Right for You

An experienced estate planning attorney can help you determine which type of POA you need.  The Matus Law Group can also help you develop this written document to meet your needs or the needs of a loved one as well. Contact us at (732) 785-4453 for more information.

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