Estate Issues:

"Estate Planning." Sometimes this term invokes thoughts and feelings similar to tax-time -- the paperwork, the determining of what you have, and who gets it when you pass away. This isn't necessarily true however. All of us, especially those in the baby-boomer generation, should give some thought as to what would happen to their home, bank account or checkbook if they were unable to manage their "estate" for even a short period of time. For instance, what is your plan for ensuring that your mortgage is paid or your pets taken to the veterinarian if you were temporarily disabled due to a car accident or due to a medical condition?

First Step -- Planning for the Present:

A good first step is to consider the value of a "Durable Power of Attorney" or a "Power of Attorney." It's a document that has value long before you pass away. Some definitions are below, but this information should not be relied upon by any individual or corporate entity, because circumstances and facts differ greatly between persons and companies. This is not intended to be legal advice relevant to your unique needs or an agreement to represent you or your company. So, consider reading the below and thinking about the value such a simple document could have for you and your family.

Two Types of Powers of Attorney:

A Power of Attorney is a rather straight-forward legal document that allows you (the principal) to give another person (or sometimes a bank) that you choose (an "attorney-in-fact") specific powers and responsibilities to handle your personal matters. The attorney-in-fact doesn't need to be an "attorney-at-law" (a lawyer), but he or she can be if you want. When the document is drawn up, you have three choices:
(1) do you want the attorney-in-fact to only act when you are not incapacitated (like mental or physical illness),
(2) do you want the attorney-in-fact to have the powers you give him or her during any period of time in which you are incapacitated, or
(3) do you want the attorney-in-fact to be able to act only when you are incapacitated.
If you choose option 1, the document in New Jersey, and most other jurisdictions, is called a "power of attorney." If you choose option 2 or 3, then that document is called a "durable power of attorney." The difference is whether you want your attorney-in-fact to make decisions for you when you are incapacitated -- whether the powers you give continue during periods of time in which you can't make decisions for yourself.

Decision Making:

Another significant difference is the one between options 2 and 3. Notice in the durable power of attorney in option 2, the attorney-in-fact acts on your behalf during your incapacity and immediately upon execution of the durable power of attorney. This is far different than option 3, where your attorney-in-fact can only act for you during periods of incapacity. The language that is required for this option is "this power of attorney shall become effective upon the disability or incapacity of the principal," or similar words. For the most part, powers of attorney are used in real estate or other one-time financial transactions where you can't be present. After all, you found this webpage, you're reading this article . . . chances are you can make decisions pretty much on your own or with a little help from your friends.

Durable Power of Attorney Use:

It's the durable power of attorney that may have the greater use in your life --particularly during the times when you don't have the ability to make decisions on your own behalf. If you decide to use a durable power of attorney which only takes effect when you are incapacitated, then be aware that your attorney-in-fact might be required to prove that you are disabled. This is a good thing which helps protect you and your assets. For instance, assume your bank is presented with your signed durable power of attorney. The instructions you gave in the document state that your attorney-in-fact can withdraw your money in any amount, but only when you are incapable of doing this yourself. Such a provision could allow your attorney-in-fact to pay your bills, your mortgage, or transfer your money to higher interest earning accounts at a time when you aren't able to. Under New Jersey's Revised Durable Power of Attorney Act, the bank may ask your attorney-in-fact to prove that you are incapacitated (hospital records, etc.). Although this may delay the efforts of your attorney-in-fact to manage your affairs for you, it is a good safeguard for both you and the bank.

Conclusion:

So, consider the value of having things run smoothly even when you aren't by having a simple power of attorney or durable power of attorney prepared. Although New Jersey statutes do not provide a statutory power of attorney form like other states, don't let the idea of "estate planning" scare you. A power of attorney should be a simple document that states your decisions and lists your instructions -- it should make you feel comfortable that you still have control of your life . . . just like a good law firm.

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