When it comes to planning one's estate, the process can seem overwhelming. There are a multitude of issues to address, and it can be difficult to know which items take priority over others. One aspect of estate planning that is often overlooked by New Jersey residents is the need to assign multiple powers of attorney (POA.) Making the necessary decisions and getting those documents in place now can save a great deal of turmoil and frustration for loved ones later.
The end of the year is a good time to review one's estate plan. It is also the time to consider if any changes need to be made in regard to the individuals assigned as POAs, or to add these important documents to an existing estate plan. For most individuals, it is a good idea to have both a POA for financial decisions and one for health decisions.
Your POA will have the legal authority to make binding decisions on your behalf, so choosing the right person for the job is essential. In regard to the structure of the POA, they can be written as either a durable POA or a springing POA. A durable POA becomes effective immediately upon signing. That means the person you authorize to act as your agent can begin making decisions immediately.
A springing POA only goes into effect when the principal is disabled or otherwise rendered incapable of acting. The provisions within the POA can be adjusted to one's particular set of circumstances, and the powers provided within such a document can be tailored to the needs and wishes of the principal. However, when drafting a POA, it is essential that the language and structure are in line with the laws of the state, and are written in a way as to be clear and binding.
While there are a number of items to consider when estate planning, including one or more POAs is a wise choice for New Jersey residents. Many of the benefits of estate planning will only come to fruition upon the death of the principal. However, a POA is a tool with which one can ensure that the proper choices are made before that time, in the event that the principal becomes unable to act on his or her own behalf.
Source: Investing Daily, "An Estate Plan Essential," Bob Carlson, Dec. 4, 2012