Durable Power of Attorney: What is it and Why You Need One
A durable Power of Attorney is an essential legal document that grants a trusted individual (the “agent” or “attorney-in-fact”) authority to act on your behalf (the “principal”) in managing financial, legal, or healthcare decisions. A “durable” Power of Attorney is one that remains valid even if you become incapacitated.
It is important to have a Power of Attorney in place because everyone in New Jersey is presumed to be in charge of their own decision making as soon as they reach the age of 18 (the age of majority). Having a Power of Attorney in place will ensure that someone can act on your behalf in the event you ever become incapacitated. Since we never know when we might be incapacitated – even temporarily due to an accident – there is no good reason to wait to obtain your Power of Attorney.
The law regarding adult decision making applies to everyone. It even applies to individuals with intellectual disabilities, whose parents are often surprised to learn that they no longer have the legal authority to make decisions for their child as soon as they reach their 18th birthday. Parents in that situation cannot have their child sign a Power of Attorney and need to apply to the court to become appointed guardian. However, guardianship is a topic for another day.
What Is a Durable Power of Attorney?
A Power of Attorney allows the agent to make decisions and handle affairs for the principal in specific or broad areas, depending on how the document is drafted. Common powers granted under a Power of Attorney include:
- Managing bank accounts and investments,
- Paying bills and handling debts,
- Buying or selling property,
- Filing taxes,
- Making healthcare decisions (if included in the scope of authority).
The document’s durability means it remains valid even if the principal loses the capacity to make decisions due to illness, injury, or other circumstances.
Why Is Having a Durable Power of Attorney Important?
Without a Power of Attorney, your loved ones may face significant legal and financial challenges if you become incapacitated. They may need to petition a court to appoint a guardian or conservator, which can be time-consuming, costly, and emotionally draining. A Power of Attorney ensures:
- Continuity in managing your financial and legal affairs,
- Avoidance of court intervention,
- You get to choose someone you trust to act in your best interests.
In addition to financial matters, a Power of Attorney can include provisions for healthcare decisions, ensuring that your medical preferences are respected even if you cannot communicate them. However, this is often included in a separate documents such as a Healthcare Proxy, Advance Directive, or Living Will.
How to Create a Durable Power of Attorney in New Jersey
Creating a Power of Attorney in New Jersey involves several steps to ensure it is legally valid and tailored to your needs:
- Choose a Trusted Agent Select someone you trust implicitly, such as a family member, close friend, or professional advisor. Your agent should be reliable, organized, and capable of managing the responsibilities assigned to them.
- Determine the Scope of Authority Decide whether the Power of Attorney will grant broad or limited powers. For example, you may authorize your agent to handle all financial matters or restrict their authority to specific tasks, such as managing a single bank account.
- Draft the Document Work with an attorney familiar with New Jersey law to draft the Power of Attorney. While templates are available online, consulting an attorney ensures the document complies with state-specific requirements and addresses your unique needs.
- Sign the Document In New Jersey, a Power of Attorney must be signed by the principal in the presence of a notary public. Additionally, it’s recommended to have two witnesses present to strengthen the document’s validity, especially if you anticipate that it will be used out of state.
- Make Copies Accessible Provide copies of the Power of Attorney to your agent and any relevant institutions, such as banks or healthcare providers. Keep the original in a safe, accessible location and inform your agent where to find it.
- Review and Update Periodically Life circumstances change, so it’s important to review and update your Power of Attorney as needed, especially after major events like marriage, divorce, or the death of your chosen agent.
Key Considerations for New Jersey Residents
- Statutory Requirements: New Jersey law requires that a Power of Attorney document clearly state the principal’s intention for it to remain effective upon incapacity.
- Financial Institutions: Some banks and financial institutions in New Jersey may require additional documentation or their own forms, even with a valid Power of Attorney.
- Revocation: You can revoke a Power of Attorney at any time as long as you have the mental capacity to do so. In order to revoke the document you must inform your agent and any institutions of the revocation in writing.
Final Thoughts
A durable Power of Attorney is a powerful tool for ensuring your affairs are managed by someone you trust if you become unable to do so. By taking the time to create a Power of Attorney, you can protect yourself and your loved ones from unnecessary stress and uncertainty. If you’re ready to establish a durable Power of Attorney in New Jersey, consult with a qualified attorney to guide you through the process and ensure your wishes are legally documented.