As we age, we have to make decisions regarding who will handle our medical decisions and finances if we become incapacitated. In creating a power of attorney (POA), you can decide who will act in your stead if you become incapacitated by illness. However, if you wait too long and lose capacity, the court will choose who will act as your guardian through guardianship proceedings.
At Rice & Quattrone, our New Jersey estate planning attorneys are dedicated to helping clients execute powers of attorney documents rather than leaving these decisions in the courts’ hands. We offer a customized approach to ensure your wishes are carried out.
Power of Attorney
A power of attorney is an estate planning document that appoints someone to act on your behalf if you become incapacitated. New Jersey has two distinct documents, including a medical power of attorney and a financial power of attorney. A power of attorney comes with several features, including:
You Choose Your Own Agent
While you have mental capacity, you have complete discretion to appoint an agent (person acting in a fiduciary role) and define what powers they have.
You Choose When the POA Takes Effect
Individuals who do not want to give over control immediately may choose to execute a springing POA. A springing POA will only take effect when a specified event occurs, not before. Without the springing clause, the POA takes effect upon signing.
It’s Created and Executed Privately
Executing a POA is a relatively simple process that can be done in your attorney’s office, not a courtroom. For a financial POA, New Jersey law generally requires your signature to be notarized and witnessed. At the same time, a medical POA (also known as a health care proxy) must be signed in the presence of two adult witnesses or a notary.
Survives Incapacity (if Durable), But Must Be Executed While Legally Competent
If you are creating a POA for long-term planning, ensure it has a “durable designation.” A durable POA survives incapacity. According to the Revised Durable Power of Attorney Act, a POA is not automatically durable under New Jersey law but must contain the verbiage “this power of attorney shall not be affected by subsequent disability or incapacity of the principal, or lapse of time.” However, a POA must be executed before you lose capacity.
It Can Be Revoked at Any Time
As long as you remain competent, you can revoke it at any time.
Scope Can Be Tailored
The scope can be broad or narrow, covering either a medical POA or a financial POA. A prime example of a limited POA is executed for a real estate transaction, allowing an agent to buy, sell, or refinance on your behalf.
Guardianship
Unlike a power of attorney, a guardianship is a court-involved process that names an agent to make decisions on a person’s behalf after that person has lost capacity. A guardianship occurs when there is either no valid POA or the existing arrangement doesn’t suffice.
A guardianship differs from a power of attorney in the following ways:
Court Chooses Your Agent, Not You
A guardian is appointed for a person who is already incapacitated, not someone who still has capacity. The court will make the final decision on who is best suited to serve.
Formal Court Proceeding is Required
New Jersey requires that a petition be filed with the court and accompanied by certifications from at least 2 physicians or psychologists. The physicians or psychologists must have examined the person within 30 days of filing the application for guardianship.
Three Distinct Types
New Jersey courts recognize three types of guardianship:
- Guardian of the person only: The guardian takes care of the person’s well-being only
- Guardian of the estate only: The guardian takes care of the person’s financial matters
- Guardian of the person and estate (or plenary guardianship): The guardian takes care of the person’s well-being and finances
Ongoing Court Supervision
Guardianship is not a one-time court order, but an ongoing legal relationship between the guardian and the court. Guardians are subject to annual reporting requirements, well-being reports, and other documentation depending on the type of guardianship. This supervision is designed to protect the individual under the court’s continuing oversight.
Avoid Court Intervention; Speak with Our New Jersey Estate Planning Lawyers Today
Although you may still be healthy, it is important to execute a durable POA now to prevent court involvement in the event you become ill. Early planning can avoid the expense of a guardianship and keep your affairs private. Deciding who should serve in this fiduciary capacity can be overwhelming, but it doesn’t have to be. At Rice & Quattrone, our team of attorneys seeks to reduce the stress that comes with estate planning. By assessing your healthcare needs and financial situation, we develop a comprehensive estate plan that meets your wishes.
To schedule your consultation with one of our New Jersey estate planning attorneys, contact our office online or by calling (856) 673-0048 today.