One of the most important elements of a complete estate plan is a power of attorney. With this document, you grant authority to a trusted individual to handle your financial and legal matters if you should become incapacitated or unable to manage them on your own.
A power of attorney is one of several estate planning documents that can benefit you before your death. In fact, once you pass away, your powers of attorney expire, and your chosen agent no longer has authority. However, while the document is valid, you want to be certain it serves you in the best possible manner. This begins with understanding how a power of attorney works and dispelling any myths or misunderstandings you may have.
Setting the record straight
One common misunderstanding about powers of attorney is that your loved ones can seek this authority when you are no longer able to act on your own behalf. However, if you are unconscious or incapacitated, the time to execute a power of attorney has passed. You must have certain levels of competence to execute various legal documents, so your loved ones will likely have to obtain a court order to handle your finances while you are unwell.
Having to take the matter to court, along with any disputes about your wishes that may arise among your loved ones, will be expensive and time consuming. Nevertheless, you may hesitate to execute a power of attorney because of a justifiable fear that your chosen agent will take away all your personal control. However, the following facts may put your mind at ease:
- Giving someone power of attorney does not automatically grant that person the right to take action.
- Your agent’s fiduciary duties obligate him or her to act only in your best interests.
- While the law protects you from unscrupulous or overzealous agents, you can help yourself by choosing your agent carefully and without emotion.
- You can draft your power of attorney documents to limit the authority of your agent to certain powers.
- You may wish to include an advance health care directive or authorize a separate agent to handle your medical decisions if you are unable to.
If you have concerns that signing a power of attorney will place you at the mercy of your agent, you should avoid online, do-it-yourself documents. These are vague and may not comply with New Jersey law. It is just such a situation that could allow for the misinterpretation of your intentions or the abuse of authority by your agent. Instead, seeking the advice of an attorney will improve the chances that your estate plan will meet your goals and your powers of attorney will have only the authority you grant.