A power of attorney (POA) is a written document under which an individual, called the principal, appoints either another individual or legal entity as his or her agent, to perform specific and authorized acts on behalf of the principal.
The “Revised Durable Power of Attorney Act” was enacted by the New Jersey legislature in 2000 and applies to any power of attorney made pursuant to the enabling law. Although a power of attorney generally deals with financial matters, the New Jersey Supreme Court has held that the statute should be interpreted to authorize the granting of authority to make medical decisions if the document clearly describes the medical decison-making authority being given.
A power of attorney can either take effect immediately or upon the happening of a future event when described in the power of attorney. A POA can be very limited, authorizing just a few specific acts or general purpose, meaning the power of attorney conveys broad authority upon the agent to perform all acts the principal could perform. A durable power of attorney can also permit the agent to take action on behalf of the principal should the principal become disabled or incapacitated. If the power of attorney does not contain specific language allowing the agent to act in the event of a principal’s incapacity, then the power terminates once a determination is made that the principal is incapacitated.
A principal can appoint two or more individuals to act as his or her agent and provide that the agent(s) either must act jointly, requiring the agreement of all agents prior to exercising their power, or jointly and severally, allowing that any one of the agents can act independently of the others. If this independent authority is not specified then the agents must act jointly. This is an important fact that few agents realize (or their attorney).
A POA is a Fiduciary
An agent or POA owes a fiduciary duty to the principal, meaning the agent is required to exercise “that degree of care and caution, skill, and judgement, diligence, thoughtfulness, and foresight that an ordinarily prudent person would use in the same or similar circumstance(s). An attorney-in-fact is prohibited from engaging in self-dealing and must act solely for the benefit of the principal.
An agent has no authority to make gifts of a principal’s assets to himself or a third party, unless the terms of the power of attorney contain very clear and specific language authorizing such action. The fraudulent misappropriation of monies obtained by an agent pursuant to a power of attorney can constitute criminal embezzlement and civil conversion. The attorney-in-fact always has the burden of proving that the funds of the principal have always been used for the principal’s benefit.
Death Terminates a POA
The death of the principal terminates the agent’s authority to act under a power of attorney. However, if the agent had no actual knowledge of the principal’s death and continues to act under the power of attorney in good faith, then unless otherwise invalid or unenforceable, such actions will bind the principal’s successors in interest.
Sometimes, problems arise after someone has signed a Power of Attorney. The most common problem is when the Agent and the person who made the Power of Attorney disagree. This can happen when the agent insists that the person who gave the Power of Attorney must go to live in a Nursing Home because their health is failing, or wants them to make a financial decision or plan, and the person who owns the money disagrees. So what do you do?
It is important to understand that an Agent has to abide by the wishes of the person who made the power of attorney, even if they no longer have full capacity, as long as those wishes are not inherently harmful to the person who made the document.
If your Agent is giving instructions or not acting in accordance with your requests, contact Fredrick P. Niemann, Esq., to discuss your options. He can be reached toll-free at (855) 376-5291 by email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
Written by Nicole C. Tomlin, Esq. of Hanlon Niemann & Wright