Did you know that a survey from 2011 showed most seniors and family members had put off estate planning because they were overwhelmed with the various legal terms? It’s human nature; we tend to avoid those things we don’t quite understand. Proof of that was revealed recently when my sweet husband kept “forgetting” to pick up baking powder at the grocery store. When he finally owned up to it and said he’d found baking powder and baking soda, instead of a quick text to me, he just opted to conveniently “forget” it. Of course, estate planning is more complicated with much more at stake than a red velvet cake. Still, getting those bases covered is absolutely crucial and the right attorney can help you move right through those murky waters. This week, we explore powers of attorney and guardianship. Their purposes may seem similar, but once you delve into it, you see they’re not created to serve the same purposes.
Defining the Legalities
A quick definition of these documents –
A guardianship is an order signed by a judge that allows an otherwise incapacitated person the benefit of someone else to help make those important decisions.
There are typically two kinds of powers of attorney. One is a financial power of attorney and it is a document that allows someone to make financial decisions on behalf of one who is incapacitated. This leaves the medical power of attorney, which accomplishes the same goal, but for medical decisions versus financial decisions.
A durable power of attorney may be classified as either limited or general. With a limited power of attorney, financial or medical, you can limit the the powers given to your named agent and when he can make decisions for you – such as if you were to become incapacitated. A general power of attorney allows someone to basically mirror your own rights. This person can make the same decisions for you at any time. Naturally, finding the right person, or “agent”, is crucial. It must be someone you trust.
Powers of attorney are typically cost efficient, especially when compared to the costs associated with a guardianship.
It doesn’t require any type of courtroom appearance, either. You simply memorialize the one you wish to make your decisions. You can revoke, provided you have the capacity to do so, at any time.
On the other hand, a judge must either choose the guardian or approve the guardian one has named. The ward (or the person whose well-being is being protected) must be incapacitated. In most instances, it’s the court that determines when a guardianship no longer serves its purpose.
Also, guardianships usually require medical reports and whomever is chosen as the guardian must be willing to provide answers to the courts about his or her charge. They must attend all of the hearings, and usually, they must obtain a bond. It’s up to the guardian to ensure applicable inventories are filed and they must provide accounting and receipts for any expenditures paid out each month for the ward. It’s easy to understand why the courts want to have a bit more say in making those decisions. Usually, it’s the elderly or young children who these legal dynamics affect most.
It is a bit confusing, but working with a trusted estate planning lawyer can ease the anxiety associated with most legal proceedings. Once you’ve covered those bases, you can get back to the business of living your life.