What is a Power of Attorney? How Can it Help?

What is a Power of Attorney? How Can it Help?

You make decisions each day about your finances and your healthcare. If a day comes that you are injured or incapacitated, who will make decisions on your behalf?

In New Jersey, a Durable Power of Attorney is an important tool for safeguarding your interests and your health in the event you are unable to do so yourself. While you may assume your spouse or a family member can take care of your affairs, very real problems can arise that require someone with designated legal authority to protect your concerns.

In our state, there are two documents to appoint representatives who will make decisions for you. These documents include:

• Durable Power of Attorney: A durable power of attorney authorizes your agent, or attorney-in-fact to transact financial matters on your behalf. This includes paying bills, buying and selling property, handling investments and making important financial decisions in your best interests.

• Durable Power of Attorney for Healthcare (or Living Will): Signing a proxy directive allows you to designate another person to make decisions about healthcare on your behalf. It is the responsibility of your proxy to make decisions when you are disabled, incapacitated or too ill to make decisions on your own. If you have a Living Will, a healthcare representative is charged with carrying out your wishes at end of life.

Choosing your representative

Your financial and physical health depends on the ability of the persons you appoint to represent your interests when you are incapacitated.

While you may appoint the same person to make financial and health decisions on your behalf, you need not do so. Some essential qualities of anyone you select to protect your interests in either sphere include:

• Trustworthy
• Responsible
• Understanding of your wishes and proclivities
• Desire to ensure you and your estate are protected
• Able to make difficult decisions under significant stress

In New Jersey, your durable power of attorney can be written to become effective when you are injured or unable to make decisions for yourself.  This is called a Springing Power of Attorney, which springs into existence in the event of incapacity.  We don’t generally recommend these kinds of Powers of Attorney because it’s not easy to prove incapacity.  Two (or more) doctors will have to sign off on your incapacity and it’s often time consuming when time is of the essence.

Now is the time

These essential estate planning tools are not just for the elderly. All adults over age 18 need a durable power of attorney. No one knows when a disabling accident or illness might occur. In the event you become incapacitated without a durable power of attorney, a court must put a guardianship in place.

A court-appointed guardian may not be an individual you would have chosen to represent you. Guardianship actions can be lengthy, expensive and may not serve your future, or your estate, as you would have wished.

When you have questions about creating your durable power of attorney in North or Central Jersey, speak with an experienced, local New Jersey estate planning law firm.  To learn more about how a Power of Attorney can help you, please email Alec Borenstein, Esq., a partner with the firm at alec@bmcestateplanning.com or call 908-236-6457.