A power of attorney and a guardianship are two similar methods for assuming the role of looking after a person’s affairs while they are alive by making decisions on their behalf. However, each method has its particularities. It’s necessary to understand these when establishing an estate plan or taking steps to help someone incapable of caring for themself due to disability or incapacitation.
We explain the similarities and differences between a power of attorney vs guardianship below and address other common questions individuals have when using these essential legal tools.
Key Takeaways
- A power of attorney is a written delegation of authority for a named attorney-in-fact to make decisions and manage personal affairs on behalf of the grantor.
- A guardianship is a court-appointed title given to a person to manage the personal affairs of someone who has become incapacitated.
- Both guardianships and powers of attorney are fiduciary relationships where the person given authority over the affairs of another must act with that person’s best interests in mind.
Power of Attorney: Definition and Overview
A power of attorney is the delegation of authority from an individual (the principal) to another person (the attorney-in-fact) to make financial and legal decisions on the principal’s behalf.
The general purpose of a power of attorney is to allow the principal to maintain control over who has decision-making authority for them by appointing an attorney-in-fact. It’s most common when someone becomes incapacitated and cannot make important decisions independently, but it could also be useful in additional situations.
For example, a power of attorney may be valuable in cases where a person is not necessarily incapacitated but unreachable or unable to make decisions due to location or other constraints.
Roles and Responsibilities of an Attorney-in-Fact
The advantage of a power of attorney is that the principal has great control over the powers granted to the attorney-in-fact. As a result, their roles and responsibilities could be limited in scope or broad enough to encompass all non-medical affairs of the principal.
However, the attorney-in-fact is a fiduciary, which means they have a legal obligation to serve in the principal’s best interest when exercising granted powers.
When and How to Establish a Power of Attorney
You typically designate a power of attorney in writing, subject to the requirements of the state where the principal resides. Each state may have specific requirements and steps for establishing a legally enforceable power of attorney. Examples may include notarization, witness signatures, and more. The grantor must also generally have the legal capacity to execute the power of attorney at the time of signing.
Appointing an attorney-in-fact is a major decision because of the power given to them. Consider people you trust to have your best interests in mind and who can serve in the role, such as a spouse, close relative, or friend.
Guardianship: Definition and Overview
Guardianship is a legal arrangement where a court appoints a person, known as a guardian, to manage the personal affairs of another individual who is deemed incapable of making decisions for themselves due to mental or physical incapacity. Common situations where guardianship may be necessary include persons diagnosed with mental conditions, such as dementia or schizophrenia, or who are in a coma.
Appointment of a guardian is standard in cases where an incapacitated person (ward) does not have a durable power of attorney in place. Guardianship is typically established through a legal process that involves a court hearing and evaluation of the ward’s mental or physical condition. The appointed guardian is then granted legal authority to act on behalf of the ward.
Roles and Responsibilities of a Guardian
Guardians have similar roles to attorneys-in-fact in that they manage the ward’s personal affairs, including where they live and how they spend their money. In some states, a guardian and conservatorship may be necessary to manage personal and financial choices on behalf of someone else. Unlike a power of attorney, a guardianship also grants medical decision-making authority.
Guardians often have reporting obligations to the court or any separately appointed conservator. They must keep these parties informed about choices made for the ward. Guardians are another fiduciary relationship with a legal obligation to serve and make choices in the ward’s interest.
Legal Process for Establishing Guardianship
Guardianship appointment is a legal process that takes place in the state court where the ward resides. The person seeking appointment as the guardian generally has to file their request with the court, provide notice to other potential guardians, and explain why they are the best candidate.
The court has complete discretion to appoint the person it thinks will best serve the ward.
Power of Attorney vs Guardianship: Which One to Choose?
| Specifics | Power of Attorney | Guardianship |
|---|---|---|
| Scope of Authority | Can be broad or limited depending on the powers delegated by the grantor. | A guardian has broad authority over all personal affairs of the ward, including legal, financial, and medical. |
| Initiation Process and Legal Requirements | State requirements may vary but generally involve the grantor signing a written document appointing the agent and powers. Notarization and witness signatures may also be necessary. | Guardians are appointed at the discretion of the court. |
| Duration and Termination | May last in perpetuity unless the grantor revokes it or stipulates conditions upon which the power should terminate. | Guardianships are generally for the life of the ward or until the court determines it is no longer in the best interest of the ward. |
| Cost and Time Considerations | Usually includes any fees to obtain a working form and possible attorney consultation if necessary. | More costly because of attorney fees and also take longer because of the court process. |
Examples of POA and Guardianship
Power of Attorney in Action
Consider the case of a woman in Arizona who had a power of attorney granted to her son, but he abused it by making decisions over her assets and amending her will.
The case ended in her son’s conviction on several charges, including grand larceny and falsifying business reports.
When Guardianship Was Necessary
For example, the CEO of a tech company was placed under guardianship several years ago after a diagnosis of primary progressive aphasia.
His business and care team was responsible for pursuing the guardianship, but reports say the process has left his family members in the dark and with limited contact.
Lessons Learned
Sometimes, a close family member is not the best choice for a power of attorney, depending on the potential for abuse and the likelihood of conflict with other family members.
Likewise, not having a power of attorney in place before incapacitation occurs can risk control being granted to someone against the ward’s wishes, as the court has great discretion in guardianship appointments.
Conclusion
Understanding the key differences between a power of attorney and guardianship is essential for developing an estate plan that meets your or your loved one’s needs. Consider consulting with an estate attorney licensed in your state for specific guidance on how these legal processes may apply to your situation. Review your documents regularly to ensure they remain up-to-date and reflect your current wishes.
By carefully considering the scope of authority, legal requirements, and potential consequences, you can make informed decisions about which option is most suitable.
Frequently Asked Questions
Does guardianship override a power of attorney?
Yes, a court-appointed guardianship may override an existing power of attorney.
What happens if someone doesn’t want or need a guardian?
A court determines if guardianship is necessary based on the individual’s mental capacity and may make an appointment despite the protests of the ward.
What if multiple people want to be named as a guardian?
Contested guardianship appointments may require additional court filings and hearings where the judge will determine the best candidate to serve as guardian.
Can guardianship be ended if the person’s condition improves?
Yes, a court may terminate a guardianship if the person’s condition improves and they have sufficient capacity to make their own care decisions.
