Disabilities and Elder Law

April 23, 2012 by Rebecca Esmi

Selection of an Attorney in Fact and risk-mitigation

An Attorney in fact has power over the principal’s assets and life. A principal will be wise therefore to select an Attorney in Fact who is absolutely trustworthy, or as trustworthy as is humanly possible. As a means of mitigating the rather substantial risks involved, some select blood relatives or the closest of friends.

Another way to reduce risk is to select joint attorneys in fact:

(1) “AND” Attorneys in fact. The principal appoints “A” and “B” as joint Attorneys in fact. The use of the conjunctive “AND” means that both A and B must approve any decision made on the Principal’s behalf; and

(2) “OR” Attorneys in fact. The principal appoints “C” or “D” as joint Attorneys in fact. Use of the disjunctive “OR” requires that only one – C or D – approves any given decision.

Best practices and contingency planning suggest that designating successor Attorneys in fact is prudent, in the event the first – or second – is unable or unwilling to serve.

Attorneys in fact are entitled by statute to compensation, pursuant to N.J. S.A. 46:2B-8.12. A principal will be wise to set forth the mechanism for calculating and paying this compensation in the POA itself. If no mechanism is stated, it will be up to the Courts, something proper drafting should preclude.

April 23, 2012 by Rebecca Esmi

All about “springing” — pro’s and con’s of general and springing durable powers of attorney

The rule under common law is that a POA is extinguished upon the incapacity of the principal. There is, however, an important exception to this rule: the durable POA. There are two types of durable POA, the general durable and springing durable, and each has distinctive features. The general durable POA takes effect immediately upon signing and stays in force even should the principal becomes incapacitated. Yet typically the principal has no need for the attorney in fact to take actions immediately upon execution, but rather only upon the principal’s incapacity – overkill in a sense. Incapacity may never occur, but nevertheless the attorney in fact’s power to act exists from inception. The need for a trustworthy attorney in fact cannot be understated, yet with proper care in selection, such a risk may be rather low. In any event, should the principal in fact become incapacitated, the general durable POA simply remains in full force.

Conversely, the springing POA comes into force only upon the principal’s incapacity. The “pro” is that there is no period of risk during which a misguided attorney in fact can act prior to incapacity. However, it is critical that the POA set forth the process by which the incapacity will be established such as by written certification by an attending physician or the opinion of “my family physician Dr. Johns or a physician in her practice.” Whatever the process, an extra step is required in comparison to a general POA. On the off-chance that incapacity cannot be proven, the attorney in fact would need to seek court intervention giving rise to unwanted delay and cost. This risk is probably rather low, but it still needs to be considered.

NB: Disability is defined pursuant to N.J.S.A. 46:2B-8, when the principal is “unable to manage his property and affairs effectively for reasons such as mental illness, mental deficiency, physical illness or disability, advanced age, chronic use of drugs, chronic intoxication, confinement detention by a foreign power, or disappearance.”

April 23, 2012 by Rebecca Esmi

Power of attorney: powerful alternative to court-imposed surrogate decision-making

A Power of Attorney (“POA”) is a legal document whereby one person, the principal, designates another – the attorney in fact or agent — to act one his or her behalf. The POA provides proof to third parties, such as banks, of the attorney in fact’s authority to act. The principal, in order to create the POA, must have the capacity to contract; as a legal standard, this means the principal must understand the nature and effect of his or her act (See Estate of Joseph J. Zaolino, 1998 WL 34001287 (N.J. App. Div. 1998), unpublished opinion).

There are several varieties of POA. For example, the principal can either limit or expand the power delegated to the attorney in fact. Unsurprisingly, the former variety is deemed a limited POA while the latter expansive type is a general POA.

There are also general durable and springing POAs. Before giving a definition of these two POA varieties, it is important to understand that under common law, a POA became ineffective upon the incapacity of the principal. This is counter-intuitive, as one would expect that a POA is most essential at the principal’s incapacity.

Importantly, there are exceptions: the general durable and springing POAs. A general durable POA is effective despite the principal’s incapacity. As to the springing variety, a general springing POA is effective only if the principal becomes incapacitated.

In order for these POAs to survive incapacity, specific legal language must be employed. If this verbiage is omitted from the POA, the attorney in fact’s authority will not survive the principal’s incapacity.

A general durable POA should state that “this power of attorney shall not be affected by the disability of the principal” so as to survive the principal’s incapacity. The springing variety must state something along the lines of: “This power of attorney shall become effective upon the disability of the principal.” Then, it waits passively until and if the principal becomes incapacitated, only then springing into force.

March 16, 2012 by Rebecca Esmi

Who may become a Guardian and how?

Inter-meddlers and strangers need not apply! The law holds that such parties may not institute proceedings. Instead, the court requires “standing”: a relationship based upon blood, marriage, civil union, trust or contract. It should be noted that a social service agency that is providing services to the incapacitated person may file a Guardianship action; in proceedings for a person 60 years or older, for example, the Office of the Public Guardian for Elderly Adults (OPG) may file. Standing is considered to be the best way to ensure an incapacitated person is protected from unwarranted charges.

To begin the Guardianship proceeding, the relative/petitioner files a Complaint in the county Chancery Court, Probate Part. R. 4:86-1. The Complaint must be accompanied by two affidavits of professionals. R. 4:86-2(b). The professionals must have personally examined the alleged incapacitated person, must not be related, and concur that the person is unfit and unable to govern him or herself. A third affidavit may be required with details of the alleged incapacitated person’s assets (R. 4:82-2(a)), which will in part control the amount of bond required – if at all.

An order is also required for the filing. It sets the date for the upcoming key milestone: the hearing. In order to properly set the date of the hearing, it must be scheduled at least 20 days from service of the hearing notice on the alleged incapacitated person. That brings us to another key requirement: timely notice of the hearing must be served on the alleged incapacitated person as well as others.

The Court will also appoint counsel for the alleged incapacitated person. Court-appointed counsel represents the interests of the alleged incapacitated person, and will take on such tasks as interviewing the client, petitioner, professionals, school and perhaps others. The Court may also, with or without advice of court-appointed counsel, appoint a Guardian Ad Litem (GAL). The GAL objectively seeks to identify what is in the best interests of the alleged incapacitated person. Each party is responsible for gathering, evaluating, and reporting on essential evidence.

March 16, 2012 by Rebecca Esmi

Ongoing Guardianship obligations

Guardians have ongoing and recurring obligations to meet upon being appointed. First, there are reporting requirements. There is also a second set of obligations and considerations that arise by virtue of the human condition; Guardians, of course, are not exempt from life’s vagaries that arise during the passage of time.

As years pass after the initial proceeding, upon occasion a Guardian may become incapacitated, unable to serve, or pass away. In this event, a substitute Guardian should be added in a subsequent proceeding, and a temporary guardianship appointment may be requested during the proceeding’s pendency to minimize decision-making gaps. In the alternative, if there are co-guardians in place, the second Guardian ensures that there is no gap. The Office of the Public Guardian for Elderly Adults will step in and apply as Guardian of a person 60 years or older, if there are no other relatives able or willing to serve. Another alternative is a suitable nonprofit agency.

Guardians must also file annual reports with the county Surrogate Court. The annual report provides the Court with assurance that the Guardian is meeting all obligations and serving the Ward’s best interests.