Understanding a Power of Attorney and Health Care Directive in New Jersey

The Value of a Durable Power of Attorney, Healthcare Directive, and Living Will

A durable power of attorney is a powerful planning document. It is beneficial for middle-aged and older individuals.  Younger people with disabilities and those traveling abroad who are concerned about their physical health can also benefit from a well-drafted power of attorney.  Without a power of attorney in place, no person is automatically given legal authority to make decisions on behalf of anyone else.  A spouse cannot make legal decisions for his or her spouse, a parent cannot make decisions on behalf of his or her adult child(ren), and a child cannot make decisions on behalf of his or her elderly parents.

What is a “Durable Power of Attorney” and What Authority Does It Grant?

A “Power of Attorney” is a written document that legally permits a person to make authorized decisions and to act on their behalf.  We call the person who is authorized to act the “agent”.  Any competent adult (including your adult child over age 18) can be an agent.  The Power of Attorney document defines within its contents what the agent can and cannot do.

Depending on your family’s needs, a Power of Attorney can be comprehensive and general, or very limited and precise.  Suppose you want a Power of Attorney to act on your behalf immediately or only after you are incapable of making a decision(s) for yourself. In that case, the document needs to include a paragraph that says the document will remain in effect even if you become incapacitated.  This broad power is what makes it a “Durable” Power of Attorney. Some people choose to have a document drafted that allows their agent to act on their behalf only if they become disabled or incapacitated.  Even with this limitation, the document is still referred to as a “Durable” Power of Attorney.

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 essential 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. This is a contentious area of the law, and if you’re confronted with a conflict between the Power of Attorney and his or her principal, you absolutely should call me at (732) 863-9900 or email me at fniemann@hnlawfirm.com. This same advice applies if you have a family member (i.e., a sibling who is defying the instructions of an aging parent or another family member against his or her directions and freedom of choice in the absence of a judgment of incapacity.

Why Have a Durable Power of Attorney?

Should you become incapacitated in the future, a power of attorney avoids the need for family members (and others) who care about you to institute a guardianship or conservatorship proceeding in the courts of NJ on your behalf (see our guardianship page for a more detailed discussion about guardianship in NJ, click here).  A well-written power of attorney can save you literally thousands and thousands of dollars in unnecessary guardianship expenses should you become incapacitated. This is because your Power of Attorney document appoints an individual as your legal representative and specifies what legal authority he or she will have concerning your essential financial, personal, medical, and quality of life decision-making.  A Power of Attorney is often an older person’s most important legal document, together with a Living Will, Medical Directive, and Health Care Proxy.

If you already have a power of attorney, there are some considerations to ensure your document is valid and continues to reflect your wishes should something happen to you. The first thing you should check is the document’s age and the date you signed it.  If the document is more than 10 years old, banks in New Jersey are not required to recognize it. We recommend that your general durable power of attorney be updated and/or reviewed every five or so years, or whenever there is a significant change in your life’s circumstances (e.g., divorce, death, relocation). You should also ensure that your named attorney(s)-in fact, and any successors are alive, in good mental and physical health, and have current addresses on the power of attorney document.  If not, the document should be updated.

Learn More About a Power of Attorney by Reading Here

In the discussion that follows, the major highlights and benefits of a Durable Power of Attorney (DPA) or (POA) are explained by an experienced Power of Attorney attorney in New Jersey. The discussion is not intended to be exhaustive, and legal counseling may be necessary for persons interested in signing such a document. Why? Because a Power of Attorney is a powerful legal tool!

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 (N.J.S.A 46:2B-10, et seq.) Although a power of attorney generally concerns financial matters, the New Jersey Supreme Court has held that the statute also authorizes the grant of a durable power of attorney to make medical decisions if the document clearly conveys that authority.

A power of attorney can either take effect immediately or upon the happening of an event as described in the power of attorney. A power of attorney may be limited or general. Under a limited power of attorney, the agent has the authority to act only for a particular purpose or limited purposes. In contrast, a general power of attorney conveys broad authority upon the agent to perform all acts the principal (a principal is the person giving the power of attorney to the agent) could perform. A durable power of attorney can also allow an agent to exercise authority pursuant to the terms of the power of attorney when the principal is 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 may appoint two or more individuals to act as his or her agent. The power can provide that the agent(s) must act jointly, requiring the agreement of all agents before exercising the power, or jointly and severally, meaning that any one of the agents can exercise the power. If the power does not expressly provide whether the agents are to act jointly or individually, then the agents must act jointly. This is an important point that few agents realize (or their attorneys).

An agent (a/k/a) attorney-in-fact owes a fiduciary duty to the principal, meaning the agent is required to exercise “a degree of care and caution, skill and judgment, diligence, thoughtfulness and foresight that an ordinarily prudent person would use in his or her own affairs in the same or similar circumstances. 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 funds obtained by an agent pursuant to a power of attorney can constitute criminal embezzlement and a civil cause of action. 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.

A Power of Attorney is Revocable

A power of attorney is revocable by a competent principal, and the principal can override (veto) the authority or decision of the attorney-in-fact. To revoke the power of attorney, the principal can physically destroy all original instruments, execute a revocation, or sign and deliver a written notification to the agent. The execution of a new power of attorney does not automatically revoke a prior power of attorney. This is a critical point.

The death of the principal terminates the agent’s authority to act under the 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.

A POWER OF ATTORNEY IN NEW JERSEY AT A GLANCE

• A Power of Attorney is often an aging person’s most important legal document.
• A Power of Attorney avoids the need for a guardianship proceeding in Court and keeps the State of NJ out of your life.
• A Power of Attorney can potentially save you nearly $8,000 of unnecessary guardianship expenses should you become incapacitated.
• You get to choose your legal representative as your Power of Attorney to make decisions for you and in your best interests, not a judge.
• A well-written Power of Attorney addresses your financial, personal, medical, and quality of life and gives legal authority to your designated representative.

Fredrick P. Niemann, Esq., a 40+ year experienced NJ elder care and elder law lawyer, says, “You absolutely must have a Power of Attorney.  Don’t delay.”

CHECKLIST TO CONSIDER IF YOU NEED A NEW OR REVISED POWER OF ATTORNEY 

• Is your General Durable Power of Attorney more than 10 years old? If so, banks in New Jersey are not required to recognize it. We recommend that your General Durable Power of Attorney and Living Will be updated or reviewed every 5 years.
• Does your General Durable Power of Attorney continue to name the appropriate representative for you? You can name one or more attorney(s)-in-fact to act in your place with reference to your financial matters if you are unable to do so. You should verify that your named attorney(s)-in-fact, and any successors have current addresses.
• Does your General Durable Power of Attorney allow for Medicaid and estate tax planning or gifting? Many people want the ability to engage in asset protection planning to shelter assets from the costs of nursing home care, income taxes, and estate taxes. Your General Durable Power of Attorney should specifically grant your attorney(s)-in-fact, the power to engage in this type of planning. We are recommending that all of our clients update their General Durable Power of Attorney to specifically authorize this type of asset and income protection planning in the future.
• Does your Health Care Power of Attorney reference the Health Insurance Portability and Accountability Act (“HIPAA”)? The HIPAA privacy rules have created a new category of private information called “Protected Health Information” (PHI) or “Protected Medical Information” (PMI). To avoid any issues about the persons to whom your health care provider may divulge your PHI, you should specifically state who has the right to receive your PHI. We are recommending that all our clients update their Health Care Powers of Attorney to include a HIPAA provision to avoid a Health Care Representative’s inability to receive information in the event of a medical emergency.

A DURABLE POWER OF ATTORNEY IN NEW JERSEY CAN GREATLY ASSIST IN ASSET PROTECTION PLANNING AND LIFE CARE PLANNING

There is specific language that the attorneys at Hanlon Niemann & Wright often recommend putting into a power of attorney.  First, the document should contain a clause granting your attorney(s)-in-fact, the power to engage in asset protection, estate tax planning, and/or gifting. Many people want the ability to engage in asset protection planning to shelter assets from the cost of nursing home care and death taxes.

If you have questions about a Power of Attorney, Health Care Directive, and Living Will under NJ law, contact Fredrick P. Niemann, Esq. at (732) 863-9900 or e-mail him at fniemann@hnlawfirm.com.  He’ll set up an office or video consultation, or conference call at your convenience. He is easy to talk to and will answer your questions in plain, simple English.

Help! My child has developed a dangerous and extreme mental condition.

If you have kids in college, please watch this video about a concerning increase we have been seeing in college-age kids with psychosis, emotional, and cognitive problems. Hanlon Niemann & Wright can help NJ families find resources to address these issues. We know where to go and how to get your child the help and resources he/she need during this challenging period. Call Mr. Niemann today at (732) 863-9900 or email him at fniemann@hnlawfirm.com.

If you have questions about a Power of Attorney, Health Care Directive, Living Will, release of protected medical information, guardianship, or elder law matter in New Jersey, please get in touch with Fredrick P. Niemann, Esq. at (732) 863-9900 or e-mail him at fniemann@hnlawfirm.com.

Set up an office consultation at your convenience. He is easy to talk to and will answer your questions in plain, simple English.

 

Recent Speaking Events by Fredrick P. Niemann, Esq.
You Can View Fred’s Current Schedule by Clicking Here

Fredrick P. Niemann, Esq. was invited by the Office of Elder Rights and Adult Protective Services of the Department of Health and Senior Services, Division of Aging and Community Services, to make comments on existing Adult Protective Services Programs on August 25th at the State Capitol located in Trenton, New Jersey.

On March 6th, Fredrick P. Niemann, Esq. addressed the Monmouth County NJ Bar Association Family Law Committee on Special Needs Trusts, Supplemental Needs Trusts for adult and minor incapacitated children and aged parents, and their use in asset planning and eligibility for government benefit programs, including Medicaid, SSI, and SSD.

 

Written by New Jersey Power of Attorney Lawyer Fredrick P. Niemann, Esq. of the Hanlon Niemann & Wright Law Firm in New Jersey