In a document called a Durable General Power of Attorney (“Power of Attorney”), an individual (the “Principal”) designates a person (the “Agent”) to act on the Principal’s behalf and to manage the Principal’s financial matters in accordance with the provisions of the Power of Attorney. This Agent’s authority is immediately effective unless there are provisions for “springing” powers. If “springing” powers are provided, then the Agent can only act if the Principal has been deemed incapacitated by one or more doctors.
If an individual fails to execute a Power of Attorney and becomes incapacitated, then a family member of the individual or an interested party, will likely be required to bring a guardianship proceeding to have a Court appoint a person (the “Guardian”) to make life decisions for the incapacitated individual and manage the financial affairs of that individual
While an Agent or a Guardian may ultimately be doing similar tasks for an incapacitated person, there are many differences between an Agent and a Guardian. Below is a comparison of an Agent under a Power of Attorney and a Guardian for an incapacitated person.
Agent / Guardian
Agent under Power of Attorney: An individual appoints his or her agent in a document called a Power of Attorney
Guardian for Incapacitated Person: A Guardian of a person or of his or her estate (financial affairs) is appointed by Court Order
Capacity
Agent under Power of Attorney: Individual must have capacity to appoint his or her Agent
Guardian for Incapacitated Person: Individual must be adjudicated an incapacitated person by a Court prior to a Guardian being appointed by a Court
Effectiveness
Agent under Power of Attorney: Durable General Power of Attorney is effective upon signing; Springing Power of Attorney is not effective until doctors provide opinion of lack of capacity
Guardian for Incapacitated Person: Following a hearing and the Court’s determination of incapacity, the Court will issue an Order of Incapacitation and Guardian Appointment
How to Change
Agent under Power of Attorney: The Principal, if competent, can always revoke a Power of Attorney and appoint a different Agent by signing a new Power of Attorney
Guardian for Incapacitated Person: Can only be changed by Petition and Order of the Court
Duration
Agent under Power of Attorney: Until death or revocation by the Principal
Guardian for Incapacitated Person: Until death unless modified by the Court
Reporting Agent
Agent under Power of Attorney: No reporting unless required by the Principal or as ordered by a Court
Guardian for Incapacitated Person: Initial Inventory and Annual reports filed with the Court. The Court can also order an accounting.
Cost
Agent under Power of Attorney: Minimal amount to have an attorney prepare a Power of Attorney
Guardian for Incapacitated Person: Estimated $3,000 – $5,000 to seek uncontested Court approved Guardianship
If you would like more information on Powers of Attorney or Guardianships, the estate planning attorneys of HRMM&L would be happy to meet and assist with your or a family member’s needs.
