Estate Plan Check-Up 3: Power of Attorney

By Deirdre R. Wheatley-Liss, LL.M, CELA and Crystal West Edwards, Esq., CELA

As you do your estate plan check-up, you review your power of attorney. What do you need to focus on?

A key question is: is your power of attorney durable? Literally, is the word “durable” in your power of attorney declaration? Under New Jersey law, unless your power of attorney says that it's durable, as soon as you become incapacitated, it's no longer effective.

Given that the main reason you probably have the power of attorney in the first place is in case you become incapacitated, you want to make sure that it’s durable.

Other questions to ask:

• Does your power of attorney allow your agent to make gifts?
• Can your agent transfer your money to somebody else? If so, are there restrictions on that?

Why would you want them to make gifts? We work with a lot of older individuals, and there may be reasons to make transfers to be able to protect assets from the very expensive realities of long-term health care costs. But if a power of attorney doesn't allow somebody to make gifts, then we can’t engage in that kind of asset protection planning if somebody becomes incapacitated.

Whom have you designated as your agent in your power of attorney declaration? You want it to be someone who, realistically, can step in and make decisions in a timely manner.

A power of attorney is not a gift so much as a job, and you want to name the person who is best for the job.

Example. If your oldest child lives in Bali and is an artist, and your younger child is an accountant who lives the next town over, we would suggest that your younger child might be better suited to act as your agent under a power of attorney.

Finally, is your power of attorney notarized? If a power of attorney is not notarized in New York or New Jersey, it is not valid. You need to make sure that the document is notarized.

This post is for general informational purposes only. The information provided may or may not apply to you given the specifics of your situation. For a video presentation of this information, please visit Estate Plan Check-up. For more detailed information, please visit www.porzioplanning.com or contact us for a free 20 minute telephone consultation.