Estate planning is planning for the unknown. Giving someone power of attorney, to make a decision when you cannot, is part of that plan. They can do things or make decisions on your behalf if you are unable to for some reason.
There are two types of power of attorney:
- Durable: This takes effect from when you sign it, and lasts until death or until revoked.
- Springing: This does not spring into action until you become mentally incapacitated. When you need it, the person must prove that you are incapacitated before they can use the power.
Then two ways to classify the scope of their power:
- General: They can do anything that you can, on your behalf.
- Limited: You narrow the scope of their powers to certain things, perhaps signing contracts when you are out of the country.
So you could have a general durable power of attorney, or a limited durable, a general springing, or a limited springing power of attorney. Under New Jersey law, you need to clearly define the extent of the power you give to anyone.
You can give different people a power of attorney for separate things. Consult an estate planning attorney when making these decisions to avoid clashes. For example, you allocate a person x power to make health care decisions for you, and they choose a nursing home for you. Person y, whom you gave financial power of attorney, thinks it is too expensive and does not release the money, leaving you in limbo.