A power of attorney grants a designated individual the right to handle one's affairs in the event that he or she is not in the position to do it for himself or herself. It is a powerful tool to have in one's estate plan and can be created with the assistance of an estate planning attorney. Here are a few things about powers of attorney, of which New Jersey residents may not be aware.
A power of attorney, just like any other legal document, cannot be signed by a person who is not in the right mindset. Any individual deemed legally incompetent cannot sign a power of attorney. If he or she does, it may be invalidated in court.
The agent designated in the power of attorney does not have unlimited power. Just because the agent has the legal right to make decisions and access financial accounts does not mean he or she can do whatever he or she wants. This individual has to act in the best interests of the principal at all times. An agent found abusing his or her position may be relieved of it.
There are three types of power of attorney. These are general, limited and durable. The difference between the three are as follows:
- General: Grants an agent all powers governed by a POA.
- Limited: Grants an agent limited powers.
- Durable: Grants an agent the right to make decisions even if the principal becomes mentally incapacitated.
Before New Jersey residents sign off on a POA, making sure that they have the right type for their needs is a must. Filling out a standard form really is not a wise way to go. An experienced estate planning attorney can prove helpful when it comes to reviewing one's specific situation and drafting the right type of POA.