In the event you are incapacitated and unable to make decisions for yourself, who will manage your financial, medical, and personal affairs? What about business, real estate, tax, and related matters? Without any sort of legal instrument in place, someone would need to go to court and ask the judge to appoint a guardian. However, having a power of attorney skips this complicated and time-consuming process.
Whether you already have a comprehensive estate plan or you’ve never created one, it is essential that you draft a durable power of attorney. Retaining an experienced New York and New Jersey estate planning attorney can help you understand what this document does and ensure it is drafted and executed correctly. Count on Merlino & Gonzalez.
What Is a Power of Attorney?
A power of attorney is a legal instrument that allows one person (known as the principal) to designate another person (the attorney-in-fact or agent) to act on behalf of the principal concerning a variety of different matters. A power of attorney is useful when someone will be unavailable to make decisions for themselves. The reasons for this unavailability may include illness, diminished mental capacity, or anything else that prevents the individual from making decisions and taking certain actions like signing documents.
Powers of attorney can deal with any number of issues. There are two general categories of matters for which individuals create and execute these instruments:
- Financial: Attorneys-in-fact can be granted power to make decisions regarding banking, investments, property, taxes, business operations, and related topics on behalf of the principal.
- Medical: A medical power of attorney, also known as a healthcare proxy, allows an agent to make medical decisions for the principal.
The financial and medical power of attorney do not have to name the same individuals as agents, although many principals choose to do so.
The term “durable” refers to the fact that the instrument continues to have legal effect even if the principal becomes incapacitated. The agent’s powers can be broad or narrow in scope, depending on the principal’s preferences, and an experienced estate planning attorney can ensure it is drafted properly. The durable power of attorney remains effective until either the principal revokes it or passes away.
A power of attorney should be considered an essential part of your comprehensive estate plan. If you become incapacitated and you do not already have a valid power of attorney in place, it will be extremely difficult for someone else to take care of your obligations. Your loved ones will need to petition the court to appoint a guardian to manage your affairs. The time and complexity involved in doing so could potentially risk your money, property, and even your life.
Other Types of Powers of Attorney
The durable power of attorney should always be considered by someone at the time they devise their estate plan. There are other powers of attorney you may wish to create, depending on your personal objectives and concerns:
- General: A general power of attorney grants comprehensive powers to the agent. The agent essentially becomes the principal’s legal representative who can pay bills, conduct financial transactions, and more. Unlike a durable power of attorney, however, the general power of attorney will terminate upon death or incapacity.
- Limited: As suggested by the name, a limited power of attorney only grants authority to an agent for a limited or specified purpose. For instance, the principal may need to close a real estate or business deal on a certain date, but gets called out of town unexpectedly. A limited power of attorney may contain a start and end date or it could specify when and under what conditions it is effective (and, later, terminates).
- Springing: The springing power of attorney defines the conditions under which it becomes effective. There will be a specific event in the instrument which, if and when it occurs, causes the power of attorney to “spring” into effect. For instance, it may become effective when you leave the country.
Selecting Your Agent
Before you decide to draft your durable or other power of attorney, you should give careful consideration to the question of who will serve as your attorney-in-fact. Even though you get the right to define how broad or limited the document is, your agent will still have significant authority to make decisions that could impact your life.
To start with, the agent you select should be an adult and someone who possesses legal capacity. The individual should also be responsible, especially with respect to the decisions that he or she will be authorized to make on your behalf. It’s also a good idea to choose someone who is available if and when the power of attorney will be activated. If the individual you want to serve as your agent travels frequently, does not live close to you, or is difficult to reach, this may not be the right person for you.
How Our Law Firm Can Help You
Once you have decided who will serve as your agent(s) in your powers of attorney, we will draft the documents to reflect your specifications and in accordance with state law. These include recent updates to the law, for example the requirement that powers of attorney be witnessed by two persons who are not named as agents. We will also help you better understand the legal consequences of executing and exercising a power of attorney.
Contact Our New York & New Jersey Durable Power of Attorney Lawyer
If you have concerns about incapacity, or you simply want to make sure that everything in your personal and professional life will be properly handled regardless of your situation, it’s time to speak with our Wills & Estate Planning team. We’re available to help prepare your complete estate plan, including your powers of attorney. Give Merlino & Gonzalez a call today.