What is the Differences Between Guardianship and Power of Attorney?

Different levels of decision-making authority one person can have over another. Understanding the distinctions between a Power of Attorney (POA) and guardianship is crucial. Both legal mechanisms grant someone the authority to make decisions on behalf of another individual, but they serve different purposes and are established through different processes.

Definitions and Requirements

Power of Attorney (POA): A POA is a legal document that allows an individual (the "principal") to appoint another person (the "agent" or "attorney-in-fact") to make decisions on their behalf. The scope of this authority can be broad or limited to specific tasks or for a specific period of time. For example, a principal could only give their agent power to sell real estate and nothing else while the principal is overseas for six months. The principal must have the mental capacity to execute the POA, meaning they understand the implications of the document at the time of signing. A POA can be durable, meaning it remains in effect if the principal becomes incapacitated, or non-durable, meaning it is voided if the principal loses mental capacity. When the power is effective, the principal still has the ability to make their own decisions (unless declared incompetent) and the agent can also make decisions. The principal can revoke the POA at any time, provided they are of sound mind.

Guardianship: Guardianship is a legal status granted by a court where an individual (the "guardian") is given the authority to make decisions for another person (the "ward") who is deemed incapable of making decisions for themselves due to a variety of reasons, such as age, mental incapacity, or physical disability. The process involves a court hearing where the need for guardianship is evaluated, and if established, the guardian's powers are subject to ongoing court supervision. The ward does not have the ability to revoke the guardianship without a court order.

Powers and Limitations

Power of Attorney: The powers of an agent under a POA can include managing the principal's financial affairs, making healthcare decisions (if specified in a healthcare POA), and conducting transactions on their behalf. However, an agent cannot make decisions after the principal's death (unless also named as the executor of the principal's will) and is obligated to act in the principal's best interest, avoiding conflicts of interest.

Guardianship: A guardian has the authority to make personal, financial, and medical decisions for the ward. The extent of this authority can be full or limited to specific areas of the ward's life, depending on what the court deems necessary. Unlike a POA, guardianship removes the decision-making rights from the ward and transfers them to the guardian, with the guardian's actions being monitored by the court to ensure they are in the best interest of the ward.

Process for Establishing

Power of Attorney: Establishing a POA involves the principal choosing an agent and executing the POA document in accordance with state laws, which may require notarization and/or witnesses. The process does not involve a court unless the validity of the POA is later contested. There are two types of POA: healthcare and financial (often called statutory).

Guardianship: Establishing guardianship requires filing a petition in court, notifying potential wards and their close relatives, and a court hearing to assess the necessity of guardianship. Medical and/or psychological evaluations of the ward are often required to establish incapacity. If guardianship is granted, the court issues an order defining the guardian's powers and duties. For more information on obtaining guardianship, visit your county’s Probate Court website; most have extremely helpful guides on guardianship.

Distinct Purposes and Use Cases

Power of Attorney: A POA is often used as a proactive measure, allowing individuals to plan how their affairs will be managed if they become incapacitated or unable to make decisions. It is a flexible tool that can be tailored to the principal's specific needs and preferences.

Guardianship: Guardianship is typically pursued as a last resort when an individual has not established a POA and is no longer capable of doing so due to incapacity. It is a protective measure for those who cannot make decisions for themselves and do not have an appointed agent under a POA.

When One May Be More Appropriate Than the Other

Choosing between a POA and guardianship depends on the individual's circumstances. A POA is generally preferable for those who wish to plan for the future and maintain control over who will make decisions on their behalf. Guardianship may be necessary when no POA exists or if an individual is incapable of making or expressing decisions due to incapacity.

Conclusion

While both POA and guardianship grant authority to make decisions on behalf of another, they differ significantly in definitions, requirements, powers, limitations, and establishment processes. Understanding these differences is crucial for making informed decisions about managing affairs and ensuring the well-being of loved ones. If you're considering which option is best for your situation, Contact us now for a free consultation.

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