At first glance, Power of Attorney and Guardianship may seem to be the same thing. However, there are quite a few differences between power of attorney vs guardianship. To know which option is best for you, read on.
What is a Power of Attorney?
Power of Attorney (POA) is the ability to act on behalf of an incapacitated individual. Usually, this authority is granted through legal documentation for Durable Power of Attorney.
This document gives someone the power to make all non-medical decisions for someone who can no longer make decisions for themselves. Other types of POA grant health care decision-making authority on behalf of someone who cannot.
A Durable Power of Attorney has the authority to handle the individual’s finances. This can include making payments, opening bank accounts, and paying taxes on the incapacitated’s behalf. For a Durable Power of Attorney to be legally binding, the individual must have signed the document before they became incapacitated.
What is a Guardianship?
Guardianship, or conservatorship, is similar to Power of Attorney. The guardian has the authority to make decisions on behalf of an incapacitated person. This can include financial matters and medical decisions, depending on the type of guardianship.
To be granted guardianship, the court will need to determine that the individual does not have the mental capacity to make their own decisions.
Differences Between a Power of Attorney vs Guardianship
The most significant difference between guardianship and Power of Attorney is that guardians are appointed after the individual can no longer make decisions for themselves. Guardians are appointed by the court whereas Power of Attorney is decided by the individual before they are incapacitated.
If you believe the individual is unfit to make their own decisions, you can petition the court for guardianship. The court will determine if a guardian is needed and, if so, who will serve as a guardian.
There are several different levels of decision-making authority a guardian can have. The court will determine what powers are granted to the guardian.
Considering All the Pros and Cons of Each Option
Power of Attorney Can Be Set Up in Advance
Power of Attorney is a contingency plan that can be set up in advance. Doing so gives you the power to choose who you want to be in charge of your decisions.
Planning a POA in advance will often make guardianship unnecessary. It designates who you intend to fill the role, so the court will not have to make this determination. However, if your Power of Attorney is unable to fill the role when the time comes, guardianship may become necessary.
Power of Attorney Allows for More Flexibility Than a Guardianship
Designating a Power of Attorney in your estate plan also allows you to choose how much decision-making authority you want to give. If you wish to designate certain decision-making powers beyond your financials, you can do so with POA documents.
You can also choose to give financial Power of Attorney and Medical Power of Attorney to two different individuals.
Power of Attorney is More Cost-Effective Than a Guardianship
The process of designating a Power of Attorney is far less involved than a guardianship. Usually, a single legal document needs to be drafted and notarized. If you wish to designate other powers, such as medical decision-making authority, you might need other documents as well.
Appointing guardianship is far less cost-effective. There is a courtroom process that involves both doctors and lawyers. You’ll need a doctor to certify that the individual is incapacitated, a lawyer to navigate the courtroom proceedings, and a judge to sign off on your guardianship. Petitioning for guardianship can become expensive.
Problems With a Power of Attorney
Power of Attorney may have less authority than guardianship. Some institutional policies, such as banks, may have regulations for what you can and cannot do with extended POA. Some banks will not allow Power of Attorneys to open or close accounts if the documents are more than 10 years old.
You Don’t Choose the Person in Charge of a Guardianship
If you do not have a designated Power of Attorney, you may not have much say in who takes over your decisions if you cannot. If needed, the court will determine who controls your assets and medical decisions.
Sometimes, more than one person will petition for guardianship. When this is the case, the process becomes more complicated and expensive.
What is the Least Restrictive Alternative?
Assigning a Power of Attorney is your least restrictive option. In doing so, you’ll have the authority to decide who to grant POA to and what their responsibilities will be. POA allows you to plan your future your way.
The Common Thread
Both POA and guardians have very similar responsibilities. Knowing which avenue to pursue depends more on how much mental competency the individual has. If you are no longer able to designate a POA, a loved one might need to pursue guardianship to help you navigate your medical and financial affairs.
The best way to know which option is right for you is to consult a legal expert. Both POA and guardianship are determined by the situation. Talk to an estate planning attorney to learn more about the ins and outs of Power of Attorney and guardianship.
Have questions? If you’re still unsure about whether Power of Attorney or guardianship is the right avenue to pursue, call us at 800-840-1998. Give us a call or schedule a free consultation to get advice for your estate planning.