Protecting yourself or a loved one can take many different forms, since aging takes a toll on the ability to handle financial and medical decisions. In most situations, guardianship or a power of attorney does the trick, says the article “Guardianships vs. Powers of Attorney” from the Pittsburgh Post-Gazette. But what’s the difference between a Guardianship and a Power of Attorney, and how do you know which is the best one to use?
A guardianship is a court-authorized assignment of surrogate decision-making power for the benefit of a person who has lost the ability to make informed decisions on their own, often described as a person who has become incapacitated. The decisions that another person can make on their behalf can be very broad, or they can be very specific.
If a person becomes incapacitated, either through a slowly progressing illness like dementia or quickly, as the result of an accident, a judge will appoint a person or sometimes an organization to handle health care and financial decisions. The court-appointed guardian or organization could be a person or agency you have never heard of and would not know your family or anything about you.
Yes, that is scary. However, guardianship takes place when families do not plan in advance to appoint a surrogate decision maker, also known as an “agent.”
Here’s even more scary news: once the court has appointed a guardian, that relationship may continue for the rest of the incapacitated person’s life. That means annual accountings and involvement with the court, legal fees and other professional fees the guardian or court deems necessary.
There are some guardians who have made headlines for stealing money and making care decisions that the individual and their families did not want.
Meeting with an estate planning attorney to prepare for incapacity as part of an overall estate plan is a far better way. Why don’t more people do it?
- They aren’t aware of the importance of power of attorney.
- They don’t want to spend the money.
- They don’t know who to choose as their power of attorney
- They don’t want to think about incapacity or death.
In contrast to a court-supervised lifetime guardianship, a properly drafted power of attorney can provide for an agent to make a variety of financial and medical decisions. The person named as a power of attorney (the agent) can serve for the person’s lifetime, just like a guardian.
This is the most fundamental estate planning document, after the last will and testament. Once it’s prepared, you can always change your mind and you or your agent never need to go to court. Understanding the differences between Guardianship and a Power of Attorney can help you make informed decisions with input from your family and your Chicagoland estate planning attorney.
Reference: Pittsburgh Post-Gazette (Feb. 24, 2020) “Guardianships vs. Powers of Attorney”