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Power of attorney necessary in the event of incapacity

In the event of loss of mental capacity stemming from health issues or aging, people in New Jersey can benefit from assigning a power of attorney. A power of attorney appoints someone to make financial decisions for them when they are unable to do so. An experienced estate planning attorney can help you draft the appropriate documents.

A power of attorney can name an individual, such as a friend or family member, to act as an agent on your behalf if you are unable to act independently. In the alternative, a financial institution, lawyer or another unrelated person can be named as the agent.

The agent can handle all necessary financial transactions for the incapacitated individual, which can include making sure necessary bills, mortgage payments and insurance premiums are paid. They can also make decisions about managing the incapacitated person's investments and assets.

The agent appointed is able to sign your name just as you could do if available.

There are different kinds of powers of attorney, so it is essential to consult with a lawyer to determine which type is preferable for your individual situation.

A lawyer can help determine, for example, whether the power of attorney you sign should go into effect immediately, relieving the agent of having to establish your lack of capacity before being able to act on your behalf. An alternative is the type of power of attorney which is only effective after the agent presents proof of your incapacity, such as letters from physicians or a court order.

The absence of a power of attorney when incapacity occurs can result in expenses of $1,000 or more and require the court appointment of a guardian for the disabled person.

Source: CNN Money, "Why should I assign power of attorney?"

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