Power of attorney in New Jersey: financial POA vs. health care proxy

What a power of attorney actually does

A power of attorney is a written document in which you (the principal) give another person (your attorney-in-fact, often called your agent) the authority to act for you. In New Jersey that usually means money and legal matters: paying bills, managing bank and investment accounts, dealing with insurance and government benefits, filing taxes, and buying or selling property.

People tend to think of it as something for old age, but it matters at any age. A car accident, a stroke or a sudden illness can leave anyone unable to sign a check or talk to the bank. If you have a valid durable power of attorney in place, the person you trust can step in right away. If you don't, your family may have to go to court for a guardianship, which takes longer, costs more and puts a judge in charge of the choice.

Durable vs. springing, and why the wording matters

New Jersey's Revised Durable Power of Attorney Act defines a durable power of attorney as one that keeps working even after you become disabled or incapacitated. The catch is that the document has to say so. The statute (N.J.S.A. 46:2B-8.2) gives sample wording, such as a statement that the power "shall not be affected by subsequent disability or incapacity of the principal," or similar words showing that intent. A power of attorney without that kind of language may stop working at exactly the moment your family needs it.

You can also write a springing power of attorney, one that only becomes effective upon your disability or incapacity. Some people like the idea of keeping control until something happens. The practical downside is that banks and others may want proof that the triggering event has occurred, which can slow things down. An immediately effective durable power, given to someone you trust, avoids that step.

How a New Jersey power of attorney must be signed

Under N.J.S.A. 46:2B-8.9, a power of attorney must be in writing, duly signed, and acknowledged in the manner set out in New Jersey's acknowledgment law. In plain terms, you sign it in front of an officer who can take acknowledgments. New Jersey law lists attorneys-at-law, notaries public, county clerks and deputy clerks, registers of deeds, and surrogates and deputy surrogates among those officers (N.J.S.A. 46:14-6.1).

Online forms are easy to find, but a generic form may leave out powers you need (for example, dealing with retirement accounts, digital assets or real estate) or include powers you never meant to give. It is worth reading every page before you sign.

Gifting powers: the clause people overlook

One of the most important New Jersey rules is about gifts. Under N.J.S.A. 46:2B-8.13a, a power of attorney does not allow your agent to give away your property, to themselves or anyone else, unless the document expressly and specifically says so. A broad clause saying the agent can do anything you could do is not enough.

This cuts both ways. A specific gifting clause can be essential for long-term care and Medicaid planning, where moving assets may be part of a legitimate plan. But it also gives your agent real power over your wealth. Many people set limits, such as allowing gifts only to certain family members or only for certain purposes.

Health care decisions: the proxy directive

A financial power of attorney does not cover medical decisions. In New Jersey those are handled by an advance directive. A proxy directive (sometimes called a health care power of attorney) names your health care representative, the person who decides about treatment, including life-sustaining treatment, if you can't decide for yourself. An instruction directive, often called a living will, records your own wishes about treatment. Many people sign both, or a combined form.

Under N.J.S.A. 26:2H-56, an advance directive is signed and dated in front of two adult witnesses who attest that you appear to be of sound mind and free of duress and undue influence, or it can be acknowledged before a notary public, attorney at law or other person authorized to administer oaths. The person you name as your health care representative cannot act as a witness. The New Jersey Department of Health publishes a proxy directive form, and it takes effect when the doctor responsible for your care determines you can no longer make your own health care decisions.

• Financial power of attorney: money, property, bills, benefits, taxes
• Proxy directive: who makes medical decisions for you
• Instruction directive (living will): what treatment you do or don't want

What happens if there is no power of attorney

If someone loses capacity without a valid durable power of attorney, nobody automatically has the right to manage their money, not even a spouse or adult child. Joint accounts may keep working, but accounts in the person's sole name, retirement accounts, real estate and tax matters can get stuck.

The usual fix is a guardianship case in the Superior Court, Chancery Division, Probate Part. That generally means affidavits from two physicians (or a physician and a licensed psychologist), a court-appointed attorney for the person, a hearing, and ongoing reports to the court once a guardian is appointed. A power of attorney signed while you are healthy lets your family skip most of that.

Choosing an agent and keeping control

The best agent is someone honest, organized and willing to keep records, not necessarily the oldest child or the person closest by. You can name a backup in case your first choice can't serve. You can also use the document to nominate the person you'd want as your guardian if a court proceeding ever happens, and New Jersey law lets the court consider that choice.

While you have capacity, you can revoke a power of attorney. New Jersey law says no one other than the principal may revoke a durable power of attorney except by court order for good cause (N.J.S.A. 46:2B-8.4). If a court later appoints a guardian, your agent becomes accountable to that guardian as well as to you. If you revoke, put it in writing and tell your old agent and the banks and other institutions that have a copy.