Having the right power of attorney in place can be one of the most important things a family can do to plan ahead for incapacity. Every chance we can, we stress the importance of having a Power of Attorney. This month’s newsletter explains the difference between a Durable General Power of Attorney and a Guardianship.
What is a Power of Attorney?
A power of attorney is a legal document where one person (the principal) authorizes another (the agent) to act on their behalf. There are financial powers of attorney which allow your agent to make decisions regarding your property and healthcare powers of attorney which allow your agent to make decisions regarding your health care needs.
Your power of attorney can be broad in scope, giving your agent the ability to make any and all financial and personal decisions for you (a General Power of Attorney) or you can limit your agents authority by specifying the types of decisions you would like them to make on your behalf (a Limited Power of Attorney).
You also have a choice whether you would like your agent to have the ability to make decisions both now and if you become incompetent (a Durable Power of Attorney) or your agent can be limited to make decisions only when you become incompetent (a Springing Power of Attorney).
What is a Guardianship?
Guardianship is a legal relationship whereby the Clerk of Court gives a person (the guardian) the power to make personal and/or financial decisions for another (the ward).
The first step in a Guardianship is the determination of incompetency. A family member or friend initiates the proceedings by filing a petition with the Clerk of Court in the county where the individual resides. Generally a medical examination by a licensed physician is necessary to establish the condition of the individual. The Clerk appoints a guardian ad litem (who is a local lawyer that will represent the rights of the alleged incompetent) at a hearing before the Clerk. If the Clerk determines that the individual is unable to meet the essential requirements for his or her health and safety and manage his or her financial affairs, the Clerk then appoints a guardian and the process moves to step two, to select and appoint the guardian.
A guardian of the person can make personal decisions for the individual. Unless limited by the Clerk, the guardian has the same rights, powers and duties over his ward as parents have over their minor children. A guardian of the estate has the power to make financial decisions for the ward. Often the Clerk appoints the same person to act guardian of both the estate and the person. That person would be a general guardian.
The guardian must file written reports with the court, annually. A guardian of the estate or a general guardian must keep detailed financial records and must comply with rigid requirements regarding investments and expenditures.
A power of attorney is a relatively low cost and private way to decide which family member or trusted friend will have the legal authority to carry out your wishes if you can no longer speak or act for yourself. If you do not have a power of attorney or if your power of attorney is not drafted properly, and something happens that results in your inability to make decisions, your family/friends may later face court proceedings and court supervised Guardianship. A court proceeding is not only costly, but the person appointed as your Guardian may not be the person whom you would have chosen yourself. Contact an attorney to see which is most appropriate in your situation.