When planning for the future, ensuring that your wishes are respected if you’re unable to make decisions for yourself is essential. Two common tools that help achieve this are a Power of Attorney (POA) and guardianship. While both address decision-making on behalf of another person, they are fundamentally different in terms of how they’re established, when they come into play, and the level of control they provide.
What Is a Power of Attorney?
A Power of Attorney (POA) is a legal document that allows you to appoint someone (known as an agent or attorney-in-fact) to make decisions on your behalf. There are different types of POAs, each designed for specific needs:
Durable Power of Attorney: Remains effective even if you become incapacitated.
Financial Power of Attorney: Grants authority over financial matters such as paying bills, managing investments, or filing taxes.
Healthcare Power of Attorney: Authorizes someone to make medical decisions if you cannot communicate your wishes.
A POA is proactive—it’s established by you when you’re still of sound mind and can decide who will act on your behalf. It’s also customizable, allowing you to specify the scope of authority and any limitations.
What Is Guardianship?
Guardianship, on the other hand, is a legal relationship created by a court when someone is deemed unable to make decisions for themselves due to incapacity, such as illness, disability, or injury. The court appoints a guardian to act in the best interests of the incapacitated person, who is referred to as the ward.
Unlike a POA, guardianship involves:
Court Intervention: A judge determines if guardianship is necessary and who should serve as the guardian.
Loss of Control: The ward typically loses the ability to make legal, financial, or medical decisions, which are transferred to the guardian.
Ongoing Oversight: Guardianships are often subject to court monitoring to ensure the guardian acts in the ward’s best interests.
Key Differences Between POA and Guardianship
How They Are Established
POA: Created voluntarily by an individual while they are competent.
Guardianship: Ordered by a court when an individual is no longer able to make decisions.
Control and Flexibility
POA: Allows you to choose your agent and define their authority.
Guardianship: The court selects the guardian, and the ward has little to no say.
Cost and Complexity
POA: Relatively simple and inexpensive to execute with an attorney’s assistance.
Guardianship: Involves court proceedings, legal fees, and potentially ongoing costs for court supervision.
Timing
POA: Effective as soon as it’s signed (or under specific conditions outlined in the document).
Guardianship: Comes into effect only after the court finds the individual incapacitated.
Purpose
POA: A preventive tool to avoid court intervention.
Guardianship: A reactive measure when no advance planning is in place.
Why Is a POA Preferable to Guardianship?
Establishing a POA while you’re competent allows you to control who makes decisions on your behalf, reducing the likelihood of disputes among family members. It also avoids the stress, cost, and delays associated with guardianship proceedings.
Without a POA, your loved ones may face the time-consuming and expensive process of petitioning the court for guardianship—a scenario that’s easily preventable with proactive estate planning.
Do You Need Both a POA and Guardianship?
In most cases, having a valid POA eliminates the need for guardianship. However, if a POA is not in place or the appointed agent is unable or unwilling to serve, guardianship may be necessary. This underscores the importance of keeping your POA documents up to date and ensuring your chosen agents are willing to serve.
Planning for incapacity is a critical aspect of estate planning. By understanding the differences between Power of Attorney and guardianship, you can make informed decisions about protecting your future and easing the burden on your loved ones.
If you have questions about establishing a POA or preparing for the possibility of guardianship, contact our experienced team of estate planning attorneys at TrustCounsel. We can help you create a plan tailored to your needs and ensure your wishes are respected. Visit our contact page to find the office closest to you, or fill out our online form, and we’ll be in touch to set up a consultation that works for you.