Back on June 5, 2014 I posted a blog called Advance Directives for Lifestyle. My concept was that as we age, we have to think about how our life will be managed by a third party when we aren’t so capable any more, and we should build more instructions into our documents to guide our agents regarding our preferences. Now I have ideas on strengthening the Durable Power of Attorney to build in extra protections for the principal (the person who signs it).
You sign a Durable Power of Attorney while you are still cognizant, so that it is available should you ever become incapable. In signing a POA (or DPOA) you select someone as your agent – your fiduciary – and give them a wide range of powers. You can expand and limit those powers in the document you sign. NJ law doesn’t prescribe the form for the document (unlike some other states) but it does provide some rules. The statute is at NJSA 46:2B-8.1 to 19. For instance, a POA can only be revoked by the person who signed it (you) or by a court “for good cause.” . Also, the agent cannot give away your money (make gifts) unless the document expressly authorizes this to be done.http://law.justia.com/codes/new-jersey/2013/title-46
The POA relationship is based on trust. You select someone you trust who you feel will manage your money prudently for your benefit, and who will take necessary steps to safeguard your legal interest. You are giving them a tremendous amount of power. Since a person’s overall risk of total disability is high statistically, it is forseeable that if the principal lives long enough, there will be a need for your agent to start acting under the power you’ve given them.
Unfortunately if family members don’t get along, lack of transparency breeds suspicion even when nothing is being done improperly. In other cases, it does happen from time to time that the agent abuses their authority and leaves the principal in a bad neglected situation without support. So you may want to “hope for the best, but plan for the worst” by building in some protections. Here are my ideas:
Joint Co-Agents: This arrangement ensures joint action by your appointed agents, but can be unwieldy. Make sure your 2 agents really like each other and trust each other.
“Either or” co-agents: This arrangement is more convenient because either person can act on your behalf, but doesn’t require the knowledge of the other agent. Again, select the co-agents carefully.
I’m not a big fan of co-agency so I have other suggestions instead:
Mandatory reports: You can obligate your Agent to provide data, financial records, and other documentation to certain people either upon request or on a schedule. That in turn would enable them to keep an eye on what is going on and could provide a basis for legal action to protect you.
Require consent of a third party in writing for certain major acts: You could require the agent to confer with and obtain consent from a 3rd party for certain specified decisions such as your relocation, selection of a facility, mortgaging or selling your house, or disposal of certain prized possessions. You would also want to mandate the disclosure of annual tax returns and financial records. You can give the 3rd party the right to sue to enforce these provisions. There is also a statute in NJ called the Protective Arrangements Act which could provide your 3rd party with standing to initiate a suit in these circumstances — NJSA 3B:12-1 to 12-3. .http://law.justia.com/codes/new-jersey/2013/title-3b/section-3b-12-1/
Require that the agent give certain people access to you personally: This can prevent you from becoming isolated in the event of a dispute between your agent and other members of your family or friends.
Your estate and fiduciary planning should be customized for your preferences. Call us to discuss the planning that you need… 732-382-6070.