I’ve been thinking a lot about Power of Attorney issues lately because of a variety of problems my clients have encountered. A power of attorney is a document that reflects a relationship created between one person and another person in which the principal person appoints the other person as their “Agent and attorney-in-fact” with power to carry out different kinds of transactions for the principal. This is a fiduciary relationship in which one person trusts the other to act on their behalf. The document spells out the limits of the powers given. New Jersey has a power of attorney statute, N.J.S.A. 2B:46-1 et seq. Many states have their own laws. A document signed in another state should be usable in New Jersey, but it may be met with confusion or suspicion by the business which is being asked to accept it.
One of my clients was trying to assist her family member, who at the time was a patient in New York. She found a New York power of attorney form on line. New York, unlike New Jersey, has a “statutory POA” in a prescribed form. The family member signed it in front of a notary. Later, the patient came to New Jersey. When my client took the document to the bank in NJ in order to have her name listed as “POA” to write checks, the bank refused to accept it because it turned out the form was a very old form that had been replaced by the State of New York some years ago, so it wasn’t valid on the day it was signed.
In another situation, the agent showed me a power of attorney which allowed banking transactions and sale of real estate, but that was all. He didn’t have authority to hire people for her, sign contracts, deal with her annuities and stocks, and many other tasks.
There are also cases where the principal signs a banking power of attorney on a form provided by their bank, which lists the account numbers. Well that authorization isn’t good for anything other than transactions on the listed accounts.
Other clients have brought in powers of attorney that require two agents to act together, yet one of them is out of state or is fighting with the other so now nothing can get done. Or the document isn’t notarized, which means it will not be accepted by the county clerk if the agent is selling the property. Of course, if the document doesn’t allow gift transfers, the agent cannot do gifting. Another issue is that some POAs are not “durable” — they only are usable while the principal is of sound mind. Or they may be “springing” and only become effective once the doctor certifies (to the satisfaction of the third party) that the principal is incapacitated.
If you want someone such as your child to be able to fully assist you with elder care planning when the time comes, it is vital that you sign a comprehensive general durable general power of attorney which is properly witnessed and notarized. The advice of an attorney will help ensure that you establish the POA relationship that will fully serve your needs.
Call us for advice on power of attorney, trusts, estate and elder care planning … 732-382-6070