POWER OF
ATTORNEY AND ESTATE PLANNING FOR GAY AND LESBIAN COUPLES
"Provide
for Your Loved Ones"
By Kenneth
A. Vercammen
As
average Americans, we work 80,000 hours in a lifetime, or 45 to 55 years. In spite of all the resources and assets we
earn, the vast majority do not take the time to create a Power of Attorney.
National
statistics indicate that 80% of Americans die without leaving a Will. Even more do not have a Power of
Attorney. There are several reasons for
this: fear of death; procrastination; and misinformation (people presume that
only the terminally ill, rich or married with children need to have Living Wills). Whatever the excuse, it is clear that people
would benefit from having a Power of Attorney.
In the
absence of a Power of Attorney or other legal arrangement to distribute
property if you become disabled, your partner cannot pay your bills or access
your assets. The result can be lengthy
delays.
Reasons to have a Power of Attorney
What are
these powers of attorney?
A
Power of Attorney is a written document
in which a competent adult individual (the "principal") appoints
another competent adult individual (the "attorney-in-fact") to act on
the principal's behalf. In general, an attorney-in-fact may perform any legal
function or task which the principal has a legal right to do for him/herself.
You may wish to sign a Power of Attorney giving your partner the power to
handle your affairs if you become ill or disabled.
In the absence of a Power of Attorney
or other legal arrangement to distribute property if you become disabled, your
partner cannot pay your bills or access your assets. The result can be lengthy
delays.
The
term "durable" in
reference to a power of attorney means that the power remains in force for the
lifetime of the principal, even if he/she becomes mentally incapacitated. A principal may cancel a power of attorney at
any time for any reason. Powers granted
on a power of attorney document can be very broad or very narrow in accordance
with the needs of the principal.
Why is
Power of Attorney so important?
Every
adult has day-to-day affairs to manage, such as paying the bills. Many people are under the impression that, in
the event of catastrophic illness or injury, a live-in partner, or child can
automatically act for them.
Unfortunately, this is often wrong, even when joint ownership situations
exist. Even under the new New Jersey
Domestic Partner Act, you cannot act on behalf of a partner if they become
disabled. A Power of Attorney allows
your partner or another person to administer your assets during your lifetime,
either upon disability or now.
The
lack of a properly prepared and executed Power of Attorney can cause extreme
difficulties when an individual is stricken with severe illness or injury
rendering him/her unable to make decisions or manage financial and medical
affairs. New Jersey has a detailed,
expensive legal procedures, called Guardianships or conservatorships, to provide
for appointment of a Guardian. These
normally require lengthy, formal proceedings and are expensive in court. This
means involvement of lawyers to prepare and file the necessary papers and
doctors to provide medical testimony regarding the mental incapacity of the
subject of the action. The procedures
also require the involvement of a temporary guardian to investigate, even
intercede, in surrogate proceedings. This can be slow, costly, and very
frustrating. In addition, the domestic partner can be challenged in a
guardianship by the incapacitated person's family members.
Advance
preparation of the Power of Attorney could avoid the inconvenience and expense
of guardianship proceedings. This needs
to be done while the principal is competent, alert and aware of the
consequences of his / her decision. Once
a serious problem occurs, it is usually too late.
The
Power of Attorney can be effective immediately upon signing or only upon
disability. Some examples of legal
powers contained in the Power of Attorney are the following:
1. REAL ESTATE: To execute all contracts, deeds, bonds,
mortgages, notes, checks, drafts, money orders, and to lease, collect rents,
grant, bargain, sell, or borrow and mortgage, and to manage, compromise,
settle, and adjust all matters pertaining to real estate.
2. ENDORSEMENT OF NOTES, ETC.: To make, execute, endorse, accept, and
deliver any and all bills of exchange, checks, drafts, notes and trade
acceptances.
3. PAYMENT OF NOTES, ETC.: To pay all sums of money, at any time, or
times, that may hereafter be owing by me upon any bill of exchange, check,
draft, note, or trade acceptance, made, executed, endorsed, accepted, and
delivered by me, or for me, and in my name, by my Agent.
4. STOCKS, BONDS, AND SECURITIES: To sell any and all shares of stocks, bonds,
or other securities now or hereafter, belonging to me, that may be issued by an
association, trust, or corporation whether private or public, and to make,
execute, and deliver any assignment, or assignments, of any such shares of
stock, bonds, or other securities.
5. CONTRACTS, AGREEMENTS, ETC.: To
enter into safe deposit boxes, and to make, sign, execute, and deliver,
acknowledge, and perform any contract, agreement, writing, or thing that may,
in the opinion of my Agent, be necessary or proper to be entered into, made or
signed, sealed, executed, delivered, acknowledged or performed.
6. BANK ACCOUNTS, CERTIFICATES OF DEPOSIT,
MONEY MARKET ACCOUNTS, ETC.: To
add to or withdraw any amounts from any of my bank accounts, Certificates of
Deposit, Money Market Accounts, etc. on my behalf or for my benefit. To make, execute, endorse, accept and deliver
any and all checks and drafts, deposit and withdraw funds, acquire and redeem
certificates of deposit, in banks, savings and loan associations and other
institutions, execute or release such deeds of trust or other security
agreements as may be necessary or proper in the exercise of the rights and
powers herein granted; Without in any way being limited by or limiting the
foregoing, to conduct banking transactions.
7. TAX RETURNS, INSURANCE AND OTHER
DOCUMENTS: To sign all Federal,
State, and municipal tax returns, insurance forms and any other documents and
to represent me in all matters concerning the foregoing.
You
should contact your attorney to have a Power of Attorney Prepared, together
with a Will, Living Will and other vital Estate Planning documents.
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If you
haven't yet updated your Living Will power of attorney to reflect current
federal privacy rules, it's time to do so. If you don't have a POA, you
should think about obtaining one, especially if you're getting up there in
years. According to the Home News Tribune "Update Health Care POA"
January 17, 2003, page 5, Health Care Powers of Attorney (Living Wills) are
directives that appoint a relative, friend or some other party, known as an
"agent", to make medical decisions on your behalf if you can't do
so, for reasons ranging from injuries sustained in a car crash to incapacity
resulting from dementia. Health care POAs can be written as stand-alone
documents but typically are included along with a living trust, a more
comprehensive estate-planning tool. It's best to have a lawyer write a POA
for you, and it's wise to have an attorney insert any changes. The Federal
Health Insurance Portability and Accountability Act (HIPAA), which took
effect in 2001, makes it wise to prepare a Living Will and Power of Attorney.
These Federal HIPAA regulations aim to safeguard patient medical records by imposing
privacy rules on doctors, pharmacists, other medical staff, insurance
companies and so on. HIPAA calls for fines - in some cases, stiff ones- and
even prison terms for disclosure violations, thus making health care
providers think twice about giving out a patient's information to others.
"Powers
of Attorney need to be adjusted to allow our clients immediate and
hassle-free access to the medical records of the parents and other loved ones
on whose behalf they are acting", wrote Arizona attorney Thomas Murphy
in this months issue of Arizona Attorney, a publication of the State Bar. We
recommend new health care POA Living Wills that would cover the following
points: A statement directing physicians, hospitals, pharmacies, insurers and
others to release a patient's health records to the agent. Murphy emphasized
these directives should be updated to include specific references to HIPAA.
The biggest problem is that many insurers will not honor any pre-April POAs,
yet agents often must confer with insurance companies before the firms will
pay a patient's medical bills.
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A Power of Attorney is an appointment of another person as one's agent.
A Power of Attorney creates a principal-agent relationship. You, the grantor of
the Power of Attorney, are the principal. The person to whom you grant the
Power of Attorney is your agent. The agent is normally called an
"attorney-in-fact." The attorney-in-fact does not become the owner of
your property, but is merely permitted to deal with it within the terms set out
in the Power of Attorney. Since an attorney-in-fact has the power to deal with
your property, you, naturally, must be careful to give such a power only to a
trustworthy person. You have entrusted to your attorney-in-fact those powers
which are stated in your Power of Attorney.
The Power of Attorney if effective
upon signing is a "durable power." This means that if you should
become incompetent and be unable physically or mentally to handle your own
affairs, the Power of Attorney, nevertheless, will continue to be as good as it
was on the day that you signed it. If you become incompetent, the Power of
Attorney will terminate only upon 1) a Court's declaring you to be incompetent
or 2) upon your death. The attorney-in-fact may continue to use the Power of
Attorney and acts performed under the Power of Attorney will be valid until
either of those two events occurs, after which time acts performed by the
attorney-in-fact will no longer be valid. Consequently, even if you become
incompetent but no Court declares you to be so the Power of Attorney will still
be effective.
Most people who give a Power of Attorney to someone else do it with the
thought that if they should become ill or incapacitated or if they should
travel, the Power of Attorney will permit the holder of it to pay their bills
and to handle all of their affairs for them as limited in the Power of
Attorney. This is what your attorney-in-fact may do for you under the Power of
Attorney which I have prepared for you.
The granting of a Power of Attorney is not like the creation of a joint
tenancy in property. Under a joint tenancy, each of the joint tenants has a
property interest in the property so held, whereas, a person holding a Power of
Attorney, while having the power to deal with the property, does not own any
part of it nor can that person become the owner of it under the Power of
Attorney by virtue of the Power of Attorney itself. This, however, does not
prevent the holder of the Power of Attorney from transferring the property to
himself or herself. This is another reason for giving such a power only to one
whom you can trust.
Whenever your attorney-in-fact exercises any of the powers granted under
the Power of Attorney, your attorney-in-fact must be prepared to show the Power
of Attorney to anyone who questions the right to use it. If your
attorney-in-fact deals with the title to real estate, it will be necessary for
the Power of Attorney to be recorded. I see no reason to record the Power of
Attorney until such time as property may be conveyed unless there is fear that
the document might be lost.
Occasionally when real estate is dealt with by an
attorney-in-fact, an abstractor or a title insurance company will raise a
question regarding the use of the Power of Attorney. Unfortunately, there is no
way that we can control this. This is indeed unfortunate, but you have no other
inexpensive recourse when you use a Power of Attorney.
Kenneth
A. Vercammen is an Edison,
Middlesex County, NJ trial attorney who has published125 articles in national
and New Jersey publications on business and litigation topics. He often
lectures to trial lawyers of the American Bar Association, New Jersey State Bar
Association and Middlesex County Bar Association.
He is a highly regarded lecturer on
litigation issues for the American Bar Association, ICLE, New Jersey State Bar
Association and Middlesex County Bar Association. His articles have been
published by New Jersey Law Journal, ABA Law Practice Management Magazine, and
New Jersey Lawyer. He is the Editor in
Chief of the New Jersey Municipal Court Law Review. Mr. Vercammen is a
recipient of the NJSBA- YLD Service to the Bar Award.
He has served
as a Special Acting Prosecutor in nine different cities and towns in New Jersey
and also successfully handled over One thousand Municipal Court and Superior
Court matters in the past 18 years.
In his private practice, he has
devoted a substantial portion of his professional time to the preparation and
trial of litigated matters. He has
appeared in Courts throughout New Jersey several times each week on Criminal
personal injury matters, Municipal Court trials, and contested Probate
hearings. He serves as the Editor of the
popular legal website www.njlaws.com
KENNETH
VERCAMMEN & ASSOCIATES, PC
ATTORNEY AT LAW
2053 Woodbridge Ave.
Edison, NJ 08817
(Phone) 732-572-0500
(Fax)
732-572-0030
www.CentralJerseyElderLaw.com
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