GUARDIANSHIP AND POWERS OF ATTORNEY
No one ever plans to reach a point in their life when they may need or want to have help in
carrying out their daily affairs. For some families though, there comes a difficult time when a
loved one needs help. In deciding the best way to help a family member, some basic
differences between a guardianship and a power of attorney need to be understood.
Both guardianship and powers of attorney are created by statute. They both create a fiduciary
duty for the guardian or the attorney-in-fact to act in the best interest of the person they are
taking care of. But some important differences also exist between the two.
FREQUENTLY ASKED QUESTIONS
What is a guardianship? A guardian is appointed by the probate court. Normally, family member will have an attorney petition the court to appoint him or her as guardian based on a doctor’s letter of incapacity.
What is a power of attorney? A power of attorney is a legal document signed by an individual that gives guardianship type powers to an attorney-in-fact.
What kinds of power of attorneys are there? The most common type of power of attorney allows someone to take care of financial matters for you. There is another kind of power of attorney called a health care power of attorney. A power of attorney can give the attorney-in-fact broad powers or more limited power, depending on what is needed.
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 attorney-in-fact, a power of attorney should not be used. Never appoint someone as your attorney-in-fact that you do not completely trust.
What is incapacity? Incapacity is just the legal term used by attorneys and the courts for competency. Whether or not someone is incapacitated has to be decided on a case by case basis since it depends on the person. To decide if someone is incapacitated, you need to look at all the actions that make up daily living. Can the person cook for themselves, follow doctors orders, remember to take their medications, drive, dress themselves appropriately, bathe, keep their home reasonably clean, shop for necessities, remember to pay their bills, and handle their basic finances. The person’s doctor can determine if incapacity exists. If someone is incapacitated, then 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) and the guardian 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 attorney-in-fact. The level of court involvement is an important difference between guardianships 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 attorney-in-fact acts first and then is open to second guessing by the other family members and to potential lawsuits from people who disagree with the attorney-in-fact’s actions. One of the drawbacks to powers of attorney and the benefit of court involvement can be seen in what happened in this actual case. The attorney-in-fact fixed up the house of the incapacitated person for the purpose of selling it. Once the house was sold, one of the family members decided that the attorney-in-fact did not sell the house for enough money considering the repairs that were done. The family member sued the attorney-in-fact and won. This result would not have happened in a guardianship.
Are my assets safe with a power of attorney? A power of attorney is only as safe as the individual you have named to act as your attorney-in-fact. The power of attorney is not supervised by the court. If the attorney-in-fact takes advantage there may be nothing that can be done. They do carry this risk. Our office is recently was involved in a case where an elderly woman gave power of attorney to someone she thought was a friend. The attorney-in-fact took all of the elderly woman’s life savings, gambled it away, and left her in debt. No money was ever recovered from the attorney-in-fact.