Guardianship versus Power of Attorney

Guardianship versus Power of Attorney

Guardianship versus Power of Attorney

I am often asked about the difference between a guardianship and a power of attorney. Or, a parent has told me that they do not need a guardianship for their intellectually disabled child because they already have a power of attorney. Hopefully the following will clarify the difference.

What is a guardianship? A guardian is appointed by the probate court to make personal or financial decisions for another (the ward), who is unable to care for themselves due to age or incapacity. Normally, a family member will petition the court to appoint themselves as guardian, based on a doctor’s letter of incapacity.

What is a power of attorney? A power of attorney is a legal document whereby an individual (the principal) authorizes another party (an agent) to act on their behalf. The principal must be competent to consent to the agreement for power of attorney to take effect.  A power of attorney can be broad in scope, giving the agent the ability to make any and all financial and personal decisions (a General Power of Attorney) or it can limit the agent’s authority by specifying the types of decisions (a Limited Power of Attorney).

Differences

• A power of attorney is limited in its authority to the scope of the document. Financial institutions sometimes refuse to honor powers of attorney for assets, due in part to their fraudulent use by agents. In contrast, a guardian has broad legal authority which is recognized by medical providers and financial institutions. A guardian is subject to court supervision for protection.

• A guardianship is obtained through a court order. A ward cannot terminate their guardianship. An agent can only obtain power of attorney through the willful agreement of the principal, which can be revoked at any time.
• Power of attorney limits the agent’s power to what the agreement contains. Guardianship, however, allows the guardian to make all decisions for the ward as they see fit.

Who should not use a power of attorney? Only competent individuals may sign a power of attorney. Also, if there are any family members who have the potential to fight, second guess, or sue for the actions and decisions made by the agent, a power of attorney should not be used. Never appoint someone as your agent that you do not completely trust.

What is incapacity? Whether or not someone is incapacitated is decided on a case by case basis. The court looks at all the actions that make up daily living, such as cooking for themselves, following doctor’s orders, remembering to take their medications, driving, dressing themselves appropriately, bathing, keeping their home reasonably clean, shopping for necessities, remembering to pay their bills, and handling their basic finances. The person’s doctor can determine if incapacity exists. If someone is incapacitated, they cannot sign a power of attorney.

How is the court involved? In a guardianship, the court will appoint the guardian (usually a family member) who will have to report back to the court. With a power of attorney, the court will not become involved unless there is a dispute over the actions of the agent. The level of court involvement is an important difference between guardianship and powers of attorney. Since major decisions made by a guardian are done with the authority of the court, the guardian is protected from future lawsuits and from the family members second guessing the guardian’s action. An agent acts first and then is open to second guessing by the other family members and to potential lawsuits from people who disagree with the agent’s actions.

 

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