Assigning power of attorney to a trusted loved one is serious business. It is one that older New Jersey residents feel the need to do on a regular basis, and often for very good reason.
Without a POA or other suitable instrument, if a person becomes disabled, his or her family cannot pay the person’s bills or otherwise care for the person’s assets.
What is a POA?
A person must be mentally competent at the time he or she executes the POA appointing another person to act on his or her behalf. The POA may be general, giving the person the power to perform any legal act the elderly person has a right to do. Alternatively, it may be narrower, confining the power to a particular act, such as selling a particular piece of real estate. It is also revocable.
It can be a springing POA, one that does not start until a future event, such as the onset of mental incapacity. The power may be durable, beginning immediately and continuing even after the competent elderly person is no longer mentally competent.
Guardianship is a more difficult alternative
Without a carefully considered and properly drafted POA in place, upon disability and particularly mental incompetence, the loved ones will have to seek guardianship from a court. They will need this guardianship to gain the power to take legal actions on behalf of the elderly person. This can be a lengthy and expensive process.
POAs have their risks
Although necessary and very helpful, POAs can be subject to abuse. Just how exploitative a person given power of attorney can be is likely only limited by the imagination.
As reported in USA Today, a recent case in the headlines illustrates how a POA appointment may allow the person with the power to clear out a bank account owned by the subject of the POA of all its cash. As a result, it can permanently impoverish the elderly person of his or her cash assets, which can significantly affect his or her ability to live life as intended.
A person with POA can potentially sell the real property owned by the elderly person, causing much irreparable harm. Or, the agent can fail to pay the bills, such as a mortgage payment, which can cause a foreclosure that the elderly person had been able to avoid before the POA came into effect. These kinds of abuses are illegal, even criminal if the agent is using the POA outside of the interests of the elderly person.