Summary: Powers of attorney are important estate planning documents that give individuals the legal authority to make decisions on behalf of somebody else. Power of attorneys often go into effect when the principal becomes incapacitated, but they may also be used when a principal is capable of acting on their own behalf but chooses not to.

Powers of Attorney are Important Estate Planning Documents

Powers of attorney are used by people who want to appoint a trusted individual to make important decisions on their behalf. Powers of attorney are often included in estate plans to ensure that the principal’s wishes are respected if they become physically or mentally incapacitated, but these documents may also be used by individuals who are in perfect health and have full control of their faculties. In New Jersey, powers of attorney remain in effect until they expire, are replaced by another directive, or are revoked by either party.

The person who drafts a power of attorney is known as the principal, and the individual who accepts the responsibility and agrees to make important decisions on the principal’s behalf is called the attorney-in-fact or agent. There are different types of powers of attorney for different situations, but they all work in basically the same way.

Limited Power of Attorney

This type of power of attorney grants the agent limited responsibilities. These documents are usually valid for a specified period of time, and they are often used by people who are unable to physically attend an important event like a closing. Limited powers of attorney are also used to handle tax matters and facilitate title transfers during real estate and vehicle transactions.

General Power of Attorney

Principals who wish to give their agents more sweeping responsibilities can draft general powers of attorney. These documents give agents the authority to make decisions in many situations without checking with the principal first, but they become invalid if the principal loses the ability to make decisions for themselves.

Durable Power of Attorney

These are the powers of attorney that people are most familiar with. They are called “durable” because they remain in effect even when principals are unable to handle their own affairs, and they are commonly used to give agents the authority to make medical or financial decisions when principals are incapacitated.

Springing Power of Attorney

This kind of power of attorney only goes into effect in specific circumstances, and the triggering event is usually the principal becoming incapacitated. These documents are triggered during times of great upheaval and confusion, so their language should be clear and unambiguous.

Powers of Attorney in New Jersey

The laws dealing with powers of attorney in New Jersey are straightforward. The Revised Durable Power of Attorney Act states that these documents must be in writing and signed by both parties in front of one witness and a notary. All parties signing a power of attorney in New Jersey must be of sound mind and act willingly, and video or audio recordings may be accepted as evidence of capacity.

Powers of Attorney Provide Peace of Mind

Estate planning lawyers recommend powers of attorney because they allow people to prepare for situations that are uncomfortable to even think about. Knowing that a trusted individual will be making important health care and financial decisions provides peace of mind, which is one of the primary goals of a good estate plan. If you became incapacitated without appointing an attorney-in-fact, the person making decisions on your behalf would be appointed by the court.

If you are thinking about using a power of attorney to make sure that your wishes remain the first priority no matter what the future may bring, the professionals at the Knee Law Firm are ready to answer your questions. Our experienced estate planning lawyers could help you to draft a power of attorney and assist you with any of your other estate planning needs. If you would like to discuss these matters further, you can call our Hackensack office at (201) 996-1200 or use our online form to schedule a consultation.