What Is the Difference Between A Power Of Attorney And A Living Trust?

A power of attorney document enables what is known as an attorney in fact to do very specific things on behalf of the principal while the principal is alive. A living trust also enables the person appointed to do certain things for the maker of the trust during that person’s lifetime. This appointed party is known as a trustee. However, these powers also extend beyond death.

A power of attorney is like a living trust, in that both allow another person to manage someone else’s assets. A trustee, much like an attorney in fact agent, can manage another person’s assets like doing investments, banking transactions, and many other actions. However, the trustee only has control over those assets that are titled in the name of the living trust. There could be a potential conflict between someone’s actions as an attorney in fact and a trustee’s actions.

This typically comes up if the principle of your power of attorney also has a trust and the powers for both of you overlap. Your attorney may have to prepare a document notifying the trustee about the power of attorney. For example, maybe the home of the principal is owned by a trust, but you have been empowered by a power of attorney to sell that home.

This can create a conflict and potential problems which can be easily avoided. If you would like to learn more about establishing a living trust or a power of attorney document, set aside time to meet with an experienced and knowledgeable estate planning lawyer.

Is There a Relationship Between A Power Of Attorney and a Living Will?

A living will reflects your individual wishes as to whether or not you want certain medical procedures to terminate when you are diagnosed as in an irreversible coma or terminally ill.

A health care power of attorney and a living will are both termed advanced health care directives because you create them in advance of an incapacitating event. In the event that you are unable to communicate with your own doctors or are unable to understand the information they are sharing with you, your living will is a legally enforceable method of ensuring that your wishes are still honored.

Whether or not a person has a living will that is in effect, an attorney in fact agent on a power of attorney can make health care decisions if that power of attorney gives the exact requirements relating to the manner of execution and the agent follows them.

For this reason, you may want to create a separate advanced directive known as a durable power of attorney for health care. In all of these situations, it is very beneficial to work directly with an experienced and knowledgeable estate planning attorney.

Only an estate planning attorney can tell you more about what to expect in the planning process and can make it that much easier for you to approach your next steps. It doesn’t have to be overwhelming to move forward with an estate plan, but working directly with a dedicated estate planning attorney can increase your level of comfort overall.

A NJ estate planning lawyer can help you with this process.

What You Should Know About Power of Attorney Resignations

Your power of attorney document formally appoints another person known as a power of attorney agent to take actions on your behalf. As the creator you are referred to as the principal in this document.

There are some situations, however, in which an agent might determine that they wish to resign as your power of attorney. This can include that they do not want the responsibility of looking after someone else’s affairs, if this has caused family fighting or disagreements, or if the arrangement is no longer convenient for them due to work responsibilities or location.

Bear in mind that after appointing a power of attorney agent, they are free to resign from this position at any time, but they must notify you as the principal about this resignation. They should inform you in writing or in person. The agent should also inform you at the point in time at which the resignation takes effect. It is strongly recommended that they write a resignation letter so that there is clarity on both sides as to when the agent’s responsibilities end.

If certain documents have more than one agent listed, you will need to advise other agents about the resignation of the other person. Any financial institutions that your power of attorney agent was working with at the time of their resignation should also be informed about the updates in this plan. For more information about how to choose a new power of attorney agent once a present one has resigned, schedule a consultation with an estate planning lawyer.

Need help? Contact our NJ estate planning law offices today for help.

How Does a Medical Power of Attorney Work?

You may hear a power of attorney for health care decisions referred to in a few different ways. A medical power of attorney is very important for making sure that someone knows your wishes and is able to respond for your medical care if needed. While you hope that you never need to activate a medical power of attorney, you don’t want to put your loved ones in the difficult situation of trying to go to court to get this authority.

Depending on where you live, the person that you choose to make medical decisions for you might be called agent, proxy, surrogate, representative attorney in fact or advocate. Choosing someone who will act as your health care agent is extremely important.

You should choose a person who can be trusted to be your advocate if there are disagreements by other family members about your care, can be trusted to make decisions that adhere to your values and wishes, is not someone on your medical team, meets your state’s requirements for health care agent and is willing and able to discuss medical end of life issues with you.

You will need to trust this person to make a decision about what is best for your interests, so it should be someone that you trust and someone who you believe will hold up these important values if and when the time comes. For more information about creating a healthcare power of attorney and naming a health care proxy, it’s a good idea to meet first with an estate planning attorney. Your estate planning lawyer can help connect your values and goals with documents that address your needs.

Schedule a phone consult today for more assistance with your plan.

What Happens If My Power of Attorney Agent Just Doesn’t Act?

The selection of a power of attorney agent is an important one because this person is responsible for acting on your behalf and in your best interests, but what happens if the power of attorney agent doesn’t act at all? Sometimes an agent might be unable to handle decisions for you because they are sick themselves.

In other cases, they do not want to handle the decisions. If an agent does take the action, however, they have to act in your best interests and in line with the power of attorney for property that was drafted by you. It’s always a good idea to speak with your power of attorney agent when you begin to craft this document to make sure they clearly understand their responsibilities and what is expected of them.

This is also a good opportunity if your power of attorney agent to voice their concerns over disinterest in acting. It can be difficult to be named as someone else’s power of attorney agent when you’re unclear of this role or do not realize what it entails until you are appointed. At that point the agent is put in a difficult situation of trying to act in the best interests of their loved one.

Make sure that you schedule a time to speak with a dedicated estate planning lawyer to think carefully about who you should name as your power of attorney agent and to schedule a separate time with that agent to walk through the potential responsibilities and expectations.

 

Broad Versus Specific Language in Powers of Attorney: What to Know

You can create a general power of attorney which enables your financial power of attorney agent to make most decisions and financial transactions on your behalf or you might choose to name specific circumstances instead. Your individual considerations and concerns will come into play when consulting with an estate planning attorney about this important decision. 

You might choose to use broad language to give your agent all powers to manage your financial affairs in most cases but some powers are only given if they are specifically mentioned. It is worth specifically mentioning, for example, the power to designate beneficiaries of your insurance policies, the power to make gifts of your property or money and the power to change any community property agreements. Furthermore, some powers cannot be given to an agent, such as the power to update or create a will for you or the power to vote in public elections. 

You need to consult with an experienced attorney if you do not yet have a power of attorney document and want to create one to appoint someone else to take over and handle these important decisions for you if you become unable to do so. The support of a lawyer can help you identify a structure to this power of attorney document that meets your unique needs.       

What Kinds of Things Can My Financial Power of Attorney Agent Do?

If you’ve already taken the step to consider creating a financial power of attorney, congratulations. This is an important part of your estate plan and your incapacity plan. Without a financial power of attorney someone in your family will have to go to court to request guardianship or conservatorship of you.

In the event of an emergency, which is likely what triggered the need for a financial power of attorney in the first place, you do not want any added delays or frustrations for your loved ones. Creating a financial power of attorney names you as the principal of the document and another party that you choose as the agent. The agent is responsible for acting on your behalf if and when you need him or her to do so.

There are a variety of different kinds of tasks that a financial power of attorney agent can do, including:

  • Collect debts belonging to the principal
  • Manage the principal’s property
  • File taxes on behalf of the principal
  • Assess the principal’s financial accounts to pay for housing needs, health care and other expenses
  • Apply for public benefits for that principal

Without any limitations in the document, a general power of attorney gives the agent broad discretion over financial decisions but there are a few things that the agent cannot do, such as break their fiduciary duty, change the principal’s will or transfer the power of attorney to someone else. It’s extremely important to select the right person to serve as your power of attorney agent. Do not wait to get help. Contact an experienced attorney today to learn more.

 

What to Know About Setting Up a College Power of Attorney

Is your new college student headed off to campus this fall? If so, don’t neglect an important part of the prep process: a power of attorney. While you’re loading up on under-the-bed storage bins and notebooks for them, make sure they’ve got a place to keep important paperwork like a power of attorney. Without it, you’re not able to make any decisions for them or get access to their medical records.

Why does this matter? After all, you’re sending your child off to college to begin their life as an adult. Especially with the worldwide pandemic also a factor, but a variety of other medical issues that could pop up, there’s a chance you might need to help your college student and get access to their records.

It’s these kinds of situations that no parent wants to think about, but could become important in the event of an accident or sudden illness. If your child is unable to speak for themselves or simply needs help coordinating their care, a healthcare power of attorney naming you as their agent will make this challenging situation a little easier.

The power of attorney document should state which person or parent has decision-making ability or healthcare access in the event of an emergency. To use a power of attorney, bring the document with you to the hospital or office where it’s needed. It will usually get reviewed by the hospital’s legal department. It can also be smart to have this on file with your child’s healthcare provider at the university, too, so that they’re already advised that this is part of the medical records.

If your child doesn’t have a power of attorney document but you need to create one, we can help you get the process started so that all your bases are covered this upcoming semester.

What Can Go Wrong with a Digital Power of Attorney Download?

Yes, you can find power of attorney documents and templates online, but it is rarely in your best interest to use these in your business. The very intent of a power of attorney is to let the person of your choosing be able to act in the event of an emergency; unfortunately, digital documents don’t always protect you legally here.

The biggest reason to work with a lawyer to create a power of attorney of your own is that you might have unique needs and considerations to weave into the POA. For example, you might want it to state that the document only becomes active in certain circumstances that you define. A generic power of attorney document might not cover you based on the specific circumstances.

A digital download might seem like the easy way to go, but it’s also a way that could expose you to unnecessary problems. Remember that it will be your loved ones attempting to sort this out if you become incapacitated, and the entire reason to have a POA in place is so that your loved ones don’t have to go through additional hurdles in the event of a sudden issue.

If you find a general template or worse, pay for something that you have not had drafted or reviewed by an attorney, some of the problems you might face include:

  •  The document might not be current with regard to allowed statements/format
  • Fails to cover the legal requirements for a POA in your state
  • Is unclear
  • Doesn’t have key authorities inside it
  • Doesn’t align with your personal situation

If your power of attorney document is unclear or leaves room for interpretation, this can lead to challenges in court which will delay your appointed agent from being able to take action quickly.

This can all be easily avoided when you retain an experienced estate planning lawyer to help you create your own document.

Does a New Jersey Power of Attorney Agent Get Paid?

The principal creator of the power of attorney document sets the terms for the relationship. If the document has not been drafted, the principal is eligible to name the compensation, provide a flexible term, or specify that the agent is not to receive any compensation at all for serving in this role. The support of an experienced New Jersey estate planning lawyer can help to answer many of these questions and ensure that the paperwork is completed appropriately.

Flexible terms include statements, such as reasonable, meaning that the power of attorney agent is eligible to be paid and this is in distinction to a specified hourly rate form of compensation. Far too many people ask the question of whether or not a power of attorney agent can get paid after the fact. After the power of attorney document has been signed, this is the first source of evidence to identify whether or not the power of attorney principal created a strategy.

An agent is not entitled to a fee without the appropriate court’s approval if the principal has not specifically stated compensation for a power of attorney agent. Courts are eligible to use their discretion to award a reasonable compensation but they are not required to do so. Schedule a consultation with an experienced New Jersey estate planning lawyer to learn more about how this could affect you.

 

Why Is Defining Incapacity an Issue for a Springing Power of Attorney?

If you have a springing power of attorney document, this means that the document becomes active when you are incapacitated. One of the leading reasons why people choose a springing power of attorney is that it only becomes active in certain situations.

However, if your power of attorney document requires that you be incapacitated for your attorney in fact to take action, you’ll need to think about what incapacity means. You will have to define incapacity and then your doctor will have to agree that you meet that definition when the time comes.

How do you know when health changes could cause you to require help managing your finances and what if you need help before you reach the point of being incapacitated as defined by your document? But if your doctor believes that you do have capacity but your attorney or agent thinks you’re incapacitated, this can be very difficult for your attorney in fact agent to take the necessary action when you are unable to make decisions for yourself.

Set aside a time to sit down with an experienced estate planning lawyer to learn more about when and how to use a springing power of attorney or if a more general durable power of attorney might be more appropriate for your situation.

What Is a Durable Power of Attorney for Finances?

A durable power of attorney maintains control of the property, legal and financial matters that are spelled out in the agreement even after the principal or the creator of that document becomes mentally incapacitated. A durable power of attorney enables someone to pay medical bills on behalf of the principal but decisions related to the health of the creator of the document cannot be made by the durable agent.

A durable power of attorney for finances is a separate document. This enables the chosen agent to manage the financial and business affairs of the principal, such as mailing or depositing Social Security checks, filing tax returns, signing checks, or managing investment accounts. Institutions that are doing business with the creator of the power of attorney document will ask to see the signed document before enabling the agent to take these actions.

With so much power in the form of financial decisionmaking, who you put into this role has big implications and should be considered carefully.

The durable power of attorney for finances should be created by an estate planning attorney and should spell out the responsibilities of the agent so that the agent is equipped with the necessary information to make informed decisions on behalf of the creator of the document.

What You Need to Know About Revoking a Power of Attorney

 

If you’re no longer happy with the person you’ve named as a power of attorney or the powers you gave them in that document, it’s not enough to renounce that verbally. You need to take the extra step to clarify what this will look like by destroying the former document and creating a new one while also updating anyone who knew about the previous arrangement.

You have the right to revoke an existing power of attorney at any time, but it’s recommended that you work with an estate planning lawyer to do so. Your local estate planning lawyer can give you clarity around the action steps you took and give you peace of mind that you’ve done the necessary steps to revoke this document properly.

Make a statement in writing about your intention to formally revoke the old document so there is no confusion. When you right this, make sure to state that you are of sound mind and understand the implications of revoking this old document. You should mention the name of the original agent and the date this other document was executed.

Send a copy to the old agent and any institutions that had this on file so that you can fully protect the revocation, especially if you are executing a new POA document. More questions about crafting or revoking a POA document, sit down with your lawyer and discuss your next steps.

How Much Does an Agent Get Paid for Power of Attorney Services?

If you intend to appoint another person to serve as your attorney in fact or agent for health care, it can be confusing to determine what they should be paid. In most cases the people who are appointed in these roles are family members or friends and serve as your health care power of attorney without being expected to be paid for their services. NJ-power-of-attorney

This is true of legal and financial matters handled under durable powers of attorney as well. In certain situations, however, you might appoint a different person in the role of power of attorney, such as an accountant or a lawyer, in which case those professionals would charge for their time.

This is because these professionals would be hesitant to take on the time consuming responsibilities of a personal nature so you might be able to agree on an hourly rate or even something that seems less like employment, such as making a donation to their favorite charity if your friend or family member is interested in serving as your POA agent.

If you are serving as a power of attorney for someone else, make sure you have a conversation first about whether you will be paid for this role or not. It’s critical to understand this especially if the person that is creating the POA has a long list of tasks you’ll need to manage in the event they become incapacitated.

For more questions about who should be considered as an ideal attorney in fact or power of attorney agent, sit down with your estate planning lawyer to discuss your current documentation and to ensure it aligns with your needs.  At our NJ power of attorney client meetings, we help our clients understand what is involved in crafting this document and in choosing someone to serve as your attorney in fact.

Get an Attorney to Review Your POA Document

Has someone you know asked you to execute a power of attorney that names you as their agent? Never sign a power of attorney document without having your own estate planning lawyer view it first.

There are many different mistakes that could be made in a power of attorney document and all of them can be avoided by consulting with a trusted estate planning lawyer in your area.

Making a mistake in your POA document could be very expensive and problematic, particularly if you unintentionally give authority over you or your assets to someone who can’t be trusted. Many of the most common POA mistakes can be avoided but having a relationship with an estate planning attorney who can help spot these errors in your existing POA document or can advise you about the proper language to include in a new one.

Some of the most common POA mistakes include:

  • Using a general POA when a limited power of attorney would have been more appropriate.
  • Naming a person that you can’t truly trust as your agent.
  • Giving an agent who cannot be trusted with too much power.
  • Executing a power of attorney to someone who cannot serve in that role, such as a treating physician.

For more advice on how to minimize the possibility of a poorly executed POA or a POA that exerts unintended authority on untrustworthy people, set aside a time to consult with a knowledgeable estate planning lawyer about the documents.

Can You Ever Revoke a Power of Attorney?

Establishing a power of attorney enables another individual to make decisions on your behalf. Depending on the specifics of your unique concerns, a power of attorney can be tailored to particular situations, such as when you become incapacitated or can exist from the moment that it is signed.

Revoking a power of attorney raises unique legal questions. Many people who have established a power of attorney might be curious about whether or not they can set up a power of attorney and ultimately take it back in the future, particularly if they no longer trust the individual who is established as the agent or if that person no longer wants to serve. NJ-poa-lawyer

A power of attorney document can be revoked if the principal executes a written document identifying the power of attorney and requesting that it be revoked. The attorney in fact or agent who has been established with the power of attorney also must receive actual knowledge about the revocation. Until he or she gets that actual knowledge, the revocation does not become effective.

Sending the revocation letter via certified mail with return receipt requested is strongly recommended and it is a good idea to follow up and ask whether or not a power of attorney revocation has been received by the agent. This information is important for carrying out the full revocation of a power of attorney and verifying that you are eligible to establish a new power of attorney as soon as possible.

 

Watch Out for The Power of Attorney Trap

A power of attorney is a vital estate planning document, but you need to know how to maximize its benefits as well as the limits. In a power of attorney document, you are the principle and name one or more agents, frequently an adult child to act on your behalf. The agent can be empowered to take any action on your behalf or may be restricted to particular activities. 

You will need a power of attorney because if something happens to you and you become incapacitated, the agent can pay bills, manage your assets and make decisions for you. The alternative is for your loved ones to have to go through a court procedure in which a judge must determine that you are incompetent and then have someone appointed to act on your behalf. This is referred to as guardianship in most states.

In an ideal situation, you can make things easier for your family members during an otherwise difficult time by allowing the power of attorney to take over smoothly and manage your affairs seamlessly because you are no longer able to do so. You need to ensure that you have selected a person who is confident serving in this role and one who gives you a lot of peace of mind about the process.

A Married Couple? You Still Need a Power of Attorney

Most people fall for the impression that your estate planning starts and ends with your will because it is one of the most important and basic estate planning tools. However, incapacity can occur anytime, whether you are involved in a car accident or suddenly develop an illness. If you are in a debilitated state for an extended period of time, you may wish to name somebody else to handle your affairs during this time period. power of attorney lawyer

It is important that you have the proper documentation to ensure that your spouse can take action quickly. Bills need to be paid and decisions may need to be made immediately regarding your care when you are in the hospital.

Simply stipulating that your spouse knows what you want is not enough because the hospital staff nor the law understands the distinction. Families would benefit from having an advanced directive for health care and the financial power of attorney in place well in advance of when they are needed.

Trying to create these documents after an incident has already happened can generate unique legal concerns that can further add complications to an already stressful situation. Scheduling a consultation with an experienced estate planning attorney in New Jersey is the best way to identify all of the tools and strategies that could be used to help you and your loved ones.

 

Tips for Avoiding a Power of Attorney Dispute in The Estate Planning Stage

Drafting a power of attorney is a process often engaged in by someone who wants to protect themselves and potentially their finances or health care decisions if they were to suddenly become incapacitated and unable to make them on their own. However, many power of attorney disputes can occur because someone may argue that you were under undue influence at the time or that you did not have the appropriate mental capacity to make this decision to begin with. estate planning for family

As a result, an increasing number of people who are putting together power of attorney documents are doing so after being evaluated by their general physician or mental health professional. While this might seem silly to include what is essentially an argument testifying to the proof of your mental capacity at the time, this can help to minimize the chances of power of attorney disputes, if and when it becomes time to activate the power of attorney document.

It can be difficult to share your decision-making process with loved ones who are ultimately not selected as your power of attorney agent, yet this too can help to minimize conflicts when you explain how you arrived at your decision and which person is enabled to make these crucial choices or act on your behalf if you become unable to do so. In the event that you become incapacitated due to an accident or a disability, you will want someone to be able to step in quickly to render these decisions on your behalf.

Avoiding conflict can make things easier for your family members in an already difficult situation. Consult with an experienced New Jersey estate planning lawyer to learn more about protecting your interests.

Extra Layers of Protection in Estate Plan Provided by Durable Power of Attorney

There are two major types of durable powers of attorney that can be essential for estate planning purposes. They should always be executed as part of a comprehensive estate plan that has put together by a knowledgeable attorney.

 

First of all, you may use a durable power of attorney for asset management which gives an empowered agent the authority to make financial and legal decisions on behalf of the principal. 

You might instead choose to or in conjunction with also use a durable power of attorney for health care. This gives the designated agent the opportunity to make healthcare decisions on behalf of the principal. It is necessary to have a conversation with your designated agents about the importance of these documents and that person’s responsibility to act in your stead, if necessary.

Many people may opt to select the same agent for both documents but you can choose different people if you wish. These legal documents should be prepared well in advance before the principal individual starts facing challenges with various areas of their life. Having a conversation with the potential agents can also ensure that the agent is indeed interested in serving in such a capacity in a durable power of attorney. This can give you peace of mind for you and your family because of the protection provided for you, your heirs and the assets that you have worked so hard to develop and save.