Posted on: 10 December 2014
When it comes to estate planning, it can be very easy for people to be confused whether it is in their best interest to create a power of attorney or a guardianship. While these two documents are similar in that both give another individual the power to act on a person's behalf, there are several important differences.
Here are a few of the ways in which a power of attorney is different from a guardianship:
- A power of attorney usually has much lower costs involved than a guardianship
- In order for a power of attorney to take effect, the principal needs to be cognizant and mentally competent, but the ward—the person for whom a guardian is appointed—needs to be incapacitated
- The principal selects the agent in a power of attorney, but a court must name a guardian
- A power of attorney grants very limited authority to the agent or attorney-in-fact (the person who is given permission to act on behalf of the principal, or person granting authority), but a guardianship's authority is much wider ranging
- A principal has the power to revoke a power of attorney, but a court needs to terminate a guardianship
- An agent may be liable if he or she does not act in accordance with the wishes of principal in a power of attorney, but a guardian generally cannot be held liable unless he or she takes particularly egregious illegal actions
It is also important to understand that there are multiple types of power of attorney documents. Some of the versions can include:
- General Power of Attorney — This will give the agent authority to do anything that the principal would do as soon as the principal signs the document. However, this power ends when the principal becomes incapacitated or dies.
- Health Care Power of Attorney or Medical Power of Attorney — Also known as a living will, this allows an agent to make medical decisions on behalf of the principal if he or she becomes incapacitated.
- Durable Power of Attorney — This document grants the same authority as a general power of attorney, but it will remain effective even if the principal becomes incapacitated. In fact, a durable power of attorney will often incorporate a living will so an agent can make end-of-life decisions or other medical decisions.
- Springing Power of Attorney — Unlike a general power of attorney, this document will only go into effect in the event that the principal becomes incapacitated.
- Limited Power of Attorney — This is a document that gives the agent the power to act on behalf of the principal for a specified time frame.
It is important to work with an experienced estate planning attorney who can make sure that your own power of attorney or guardianship is tailored to carry out your specific wishes. A knowledgeable lawyer can determine the best ways for you to protect your assets and properly file all legal documents. To learn more, contact a company such as the Law Office of Tara L. Wolff with any questions you have.Share