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					           POWERS OF ATTORNEYS: PROTECTING YOUR DIGNITY
              AND FINANCES IN THE EVENT OF INCAPACITY

        As the population in this country continues to grow older, most people have engaged in
some estate planning. A thorough estate plan, however, generally consist of four documents. It
includes a Power of Attorney, a Last Will and Testament, a Living Will and a Health Care Proxy.
This article, the first in a series, will highlight some of the advantages and practical
considerations associated with Powers of Attorney.
        The prospect of becoming incompetent and no longer able to make decisions and care for
one's self is extremely troubling. Yet most people are more concerned about how their assets will
be distributed at the time of their death. This is reflected by the fact that more people have
properly executed Last Will and Testaments in place or have purchased Life Insurance policies,
than they do Powers of Attorneys. However, long-term incapacity can be and often is even more
devastating than death. To that end everybody, young and old, must be prepared.
        A Power of Attorney is a document in which one person, the principal, gives another
person, the agent or attorney-in fact, the legal authority and power to act on his behalf. The grant
of authority can be limited to particular acts, such as dealing with a certain bank or securities
account. Or it can be broader in scope to allow your agent to sign checks, pay bills, transfer
funds, deal with the Internal Revenue Service, and handle other legal and financial matters. Thus,
there is a great advantage in being able to appoint the person who will act on your behalf if you
become incompetent and being able to spell out the instructions that your agent is to follow in
managing your personal care or property.
        The Power of Attorney is a fairly simple, private and inexpensive way to protect your
finances and dignity in the event of incompentency. If a Power is not properly executed, then
often the family members, with the assistance of a lawyer, will petition the court in a
guardianship action. This process, in which the senior is declared a legal incompetent, is very
lengthy, expensive and humiliating.
        There are generally two types of Powers of Attorney. A "durable" Power of Attorney
takes effect the moment the document is executed and continues even if the principal
subsequently becomes disabled or incompetent due to sickness, accident or age. It is critical that
the document include language that "This power of attorney will remain effective despite the
subsequent disability of the principal. The grant of authority terminates at the time of the
principal's death, but can be revoked by the principal at any time during capacity. Thus it is
imperative that you select a trusting individual to serve as agent, since the authority is effective
during your capacity.
        The second type is known as a "springing" Power of Attorney. This means that the
document will become effective only in the event the principal becomes disabled. There are
many problems attached to this type of power, i.e. when has the power "sprung", proving with
doctors help that the principal has in fact become incapacitated. To avoid this issues, it is better
to execute a durable Power of Attorney.
        Some practical considerations that must be taken into account when preparing the
document is who to appoint as the agent. Since your agent is responsible for your financial
affairs during your periods of incapacity, it is important to select an agent who is trustworthy.
This often is a spouse, a child, or a long time friend. Additionally, what happens if your
appointed agent is unable or unwilling to serve. To prevent this situation, it is best to appoint
alternate agents who will fill in and act if the first named agent declines to act.
         Furthermore, it is important that the document be properly drafted to include language
allowing the agent to make gifts. Many incapacitated individuals find themselves in a nursing
facility. Their family members or agent consult with an attorney to qualify the individual for
governmental assistance programs such as Medicaid. However, if the Power does not include the
right to make gifts, the agent does not have authority to act. Instead, a guardianship proceeding
must be brought to allow the guardian to act and make gifts for the individual's benefit. Thus, it
is critical that before one executes a Power of Attorney, he discusses it with an attorney
competent in the area of Elder Law and Estate planning.

Benjamin D. Eckman, Esq. concentrates his practice on Elder Law & Estate
Planning. Elder law is intended to broadly assist “extended living”. An elder law
practitioner provides the legal information necessary for persons whose lives will
extend or have already extended beyond the time when all children are usually
out of the house and when regular employment ceases. After the elder law
attorney and client complete their work, legal documents have been drafted, tax
considerations have been analyzed, and a plan to protect the elder's estate has
been implemented.

Benjamin D. Eckman's practice focuses on Estate Planning & Elder Law - legal
issues facing senior citizens. Benjamin D. Eckman received his Bachelor's
Degree in Business/Accounting from Touro College and his law degree from
Seton Hall University School of Law. He is a member of the New York State Bar
Association, the New Jersey State Bar Association, the National Academy of
Elder Law Attorneys, the Elder Law Section and Real Property, Probate and Trust
Section of the New Jersey State Bar Association, the Union County Bar
Association, Passaic County Bar Association and the Bergen County Bar
Association. He can be reached at (973) 709-0909, (908) 206-1000 or (201) 263-
9161.

				
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posted:10/10/2011
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