With a Power of Attorney, you are able to appoint an agent to act on your behalf. For example, if something should happen to you and you are unable to sign checks to pay your bills, sign a consent form at a hospital, or sign a deed to transfer your real property, your agent will be able to act on your behalf. Because of the breadth of power you may grant under a Power of Attorney, it is important that you understand the different types of Powers of Attorney.
Without a Power of Attorney, if you become incapacitated or unable to make decisions for yourself, your loved ones will have to bring a Guardianship action with the court to obtain the power to act on your behalf. A Guardianship action can be very costly, with the necessary involvement of at least two evaluating doctors, attorneys, court costs, and sometimes most importantly, time. If you do not execute a Power of Attorney while you have the requisite capacity and are unable to act for yourself, you will be responsible for these costs which will ultimately reduce the amount of money you are able to pass on to your loved ones.
There is a general misconception that spouses can always sign documents for each other. Surely, if you and your spouse own a joint bank account, you could sign checks on the account to pay your spouse’s bills. Spouses may, however, lack the right to make medical decisions for each other. Spouses also do not have the right to transfer real property out of each other’s name.
For example, if you and your spouse own real estate as husband and wife, each of your signatures will be required to sell or transfer the property. If something happens to one of you and you have not executed Powers of Attorney, the other would not be able to sell the property without bringing either a guardianship or partition action. Not only is this a hassle, but it can lead to the unintended consequence of liens, such as Medicaid liens, being placed on the property if your spouse receives Medicaid assistance. Even if you and your spouse own all of your assets jointly, it is a good idea to execute Powers of Attorney to prevent the potential expense of a Guardianship action or other issues in the future.
If you would like to execute a Power of Attorney or have additional questions about how a Power of Attorney can help you, please contact our Toms River estate planning and elder law attorneys.