There are several situations where someone may need a power of attorney. Some of the reasons for a power of attorney include granting someone the ability to act on another person’s behalf such as in managing finances, making healthcare decisions, and conducting real estate or other transactions. At any time, an individual may choose to create a power of attorney and one of the common reasons for doing so is to allow someone else to make financial choices on one’s behalf.
A power of attorney can provide someone else with authority to take care of an individual’s finances if the person is unable to do so due to temporary illness or permanent incapacity. However, this may not allow someone to make medical decisions for an individual. In some states, like New Jersey, the power of attorney which goes into effect only when someone is incapacitated is called a springing power of attorney.
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The decision to create a power of attorney is an important one as choosing the authority you wish to grant to another person is the deciding factor on which power of attorney to use. For a New Jersey resident, the durable power of attorney can avoid having your family members struggle to manage your finances—without this document, it is likely a court proceeding will be necessary to give family members the authority to manage finances. The durable power of attorney can go into effect immediately and ends with death. However, one may revoke a durable power of attorney at any time.
For example, consider the situation of a person who suffers a stroke and then becomes incapacitated. With a durable power of attorney, someone chosen by this individual could assume control over finances to make sure resources are used for the best medical care and to continue paying for a home, car or education for family members. This individual can also collect Social Security for the incapacitated person as well as manage investments, pay taxes, operate a business, transfer property to a trust, and manage retirement accounts. However, a durable power of attorney may not allow someone to make medical decisions for an individual. This is a separate duty and as such, may not covered under the durable power of attorney.
The power of attorney also stipulates that the one acting with authority must keep his or her property separate from another person’s resources and avoid conflicts of interest arising from managing the funds.
There are many reasons for needing a power of attorney. Whether it is to manage finances or make healthcare decisions, having a power of attorney can ensure someone will act on one’s behalf. This is a safeguard practice to allow others to make sure one’s resources are managed well in many different circumstances.
To discuss your options when it comes to a power of attorney, contact the experienced estate planning lawyers at Bratton Law today.