Home Compliance Topics Accounts
View/Print All Return

Power of Attorney (New Jersey)

Last Reviewed: June 2020

Power of Attorney (POA) is a written agreement that appoints and authorizes a person to act on behalf of another person in order to assist that person in handling his or her business and/or personal affairs.

Print Summary

Power of Attorney (New Jersey): Summary

The person who creates a POA is called a principal. The person who is granted the power of attorney is referred to as being the principal’s attorney in fact.

There are two primary reasons that a principal creates and appoints an attorney in fact/agent to act under a POA on behalf of the principal:

  1. To assist the principal with his or her business and/or personal affairs because the principal is physically and/or mentally incapable of transacting those business and personal affairs for himself or herself, or
  2. To allow the attorney in fact to attend to specific transactions on behalf of the principal, which the principal wants to delegate to the attorney in fact.

Types of Powers of Attorney: General & Special
There are essentially two different types of powers of attorney:

  1. General, or complete, Powers of Attorney. Under a General Power of Attorney, the attorney in fact is granted the authority to act on behalf of the principal generally in any manner that the principal could (i.e., there are no limitations on the attorney in facts power to act on behalf of his or her principal).
  2. Special, or limited, Powers of Attorney. Under a Special Power of Attorney, the attorney in fact’s authority is specifically designated (and thus limited) to authority expressly stated in the POA.

Furthermore, complete and limited POAs can be either durable or non-durable:

  1. Durable Powers of Attorney means that the attorney in fact’s authority is not terminated by the principal’s disability or incompetence, or is triggered by the principals disability or incompetence; or
  2. Non-durable Powers of Attorney means that the attorney in fact’s authority is terminated by the principal’s disability or incompetence. powers of attorney means that the attorney in fact’s authority is not erminated by the principal’s disability or incompetence, or is triggered by the principals disability or incompetence.

How does Power of Attorney work?
A credit union that is presented with a Power of Attorney must read it to make sure that it authorizes financial transactions at the credit union. If it is a General Power of Attorney, it may state only that it authorizes the agent to act in all matter as if he or she were the principal. That broad authority includes the power to conduct financial transactions. It is important that the Power of Attorney be examined carefully.

Sometimes the principal will only give the agent the right to act if the principal becomes disabled. If the Power of Attorney contains such language, the credit union may not allow the agent to perform the financial transaction unless it is provided, with proof, to the credit union’s satisfaction, that the principal is then under a disability. In this case, it would be prudent to obtain proof each time the agent wants to deal with the account. It is also recommended that if an agent is to deal with a member’s account through a Power of Attorney, that the agent provide evidence satisfactory to the credit union of his identity and execute a signature card. If the credit union refuses to permit an agent to perform an act pursuant to a Power of Attorney, then it must notify the agent, in writing, that the Power of Attorney has been rejected and provide a reason for the rejection.

A credit union should only rely on a Power of Attorney which is signed and acknowledged by its member and which contains an actual original signature of the principal. Alternatively, if the credit union receives an affidavit of the agent stating that an original is not available, then the credit union may accept a photocopy of the Power of Attorney provided it is certified to be a true copy of the original by either:

  1. Another banking institution; or
  2. The county recording office of the county in which the original was recorded (Powers of Attorney are generally only recorded if they are going to effect real estate)

A credit union does not have to rely on the Power of Attorney if it believes in good faith (under New Jersey law, the concept of good faith means that something was done honestly, regardless of whether it was done negligently):

  1. That it is not genuine;
  2. That the principal is dead;
  3. That the Power of Attorney has been revoked; or
  4. That the principal was under a disability at the time of the execution of the Power of Attorney.

What should the credit union be considered with?
The Power of Attorney must:

  1. Be in writing;
  2. Be signed and dated by the principal;
  3. Appoint a person to deal with the account;
  4. Be notarized;
  5. Specify an effective date;
  6. Designate the property the attorney-in-fact (agent) has the right to control.

Specific matters of concern to the credit union include:

  1. Whether the agent has the authority to deposit and withdraw from accounts in the name of the principal at the credit union; and
  2. Whether the agent has the authority to enter the principal’s safe deposit box and whether there are any contrary provisions to this authority in the safe deposit box agreement.

Has the Power of Attorney been terminated by:

  1. Revocation by the principal;
  2. Occurrence of an express condition within the document;
  3. Incapacity of the principal; or
  4. Death of the principal.

The credit union must read the document carefully in order to determine that no condition or event has occurred that terminates the agent’s authority to act under the specified conditions enumerated in the Power of Attorney.

If the credit union is ensured whether the agent’s appointment has been revoked or terminated by the principal’s incapacity or death, it can request the agent to sign a written statement before a notary that the appointment has not been revoked or terminated by the principal’s incapacity or death.

The credit union must see an original, signed copy of the Power of Attorney and keep a photocopy in its files. The person at the credit union who examined the original should so state on the copy. Also, check the grantor’s signature against the signature card.

Whenever the credit union decides not to honor a Power of Attorney, it should make a copy of the document for its files and attach a written explanation of why it rejected the Power of Attorney.

Print Additional State Considerations

Power of Attorney (New Jersey): Additional State Considerations

The New Jersey Revised Durable Power of Attorney Act is found at NJSA 46:2B-8.1 et seq.

Obligation Upon Receipt of a POA

Any third party may rely upon the authority granted in a durable power of attorney until the third party has received actual notice of the revocation of the power of attorney, the termination or suspension of the authority of the attorney-in-fact, or the death of the principal. NJSA 46:2B-8.6(a). A third party who has not received such actual notice may, but need not, require that the attorney-in-fact execute an affidavit stating that the attorney-in-fact did not have at the time of exercise of the power actual knowledge of the termination of the power by revocation, the termination or suspension of the authority of the attorney-in-fact, or the principal's death, disability, or incapacity. Such affidavit is conclusive proof of the nonrevocation or nontermination of the power at that time. NJSA 46:2B-8.6(b).

No banking institution acting in reliance on a power of attorney, nor any person acting on behalf of such an institution, shall be held liable for injury for any act or omission if it is performed in good faith and within the scope of the institution's or person's duties, unless the act or omission constitutes a crime, actual fraud, actual malice or willful misconduct. NJSA 46:2B-14.

“Durable” Power of Attorney
In New Jersey, a power of attorney is durable when it contains the words "this power of attorney shall not be affected by subsequent disability or incapacity of the principal, or lapse of time," or " this power of attorney shall become effective upon the disability or incapacity of the principal," or similar words showing the intent of the principal that the authority conferred shall be exercisable notwithstanding the principal's subsequent disability or incapacity, and unless it states a time of termination, notwithstanding the lapse of time since the execution of the instrument. NJSA 46:2B-8.2(b).

Termination/Revocation

A power of attorney is revoked when the principal has caused all executed originals of the power of attorney to be physically destroyed; or when the principal has signed and caused to be acknowledged a written instrument of revocation; or when the principal has delivered to the attorney-in-fact a written revocation. Unless expressly so provided, the subsequent execution of another power of attorney does not revoke a power of attorney. NJSA 46:2B-8.10.

Print Laws & Regulations

Power of Attorney (New Jersey): Laws & Regulations

Go to main navigation