Guardianship vs Power Of Attorney

Our office has been handling a lot of guardianship work over the past few years, and we have written some articles of interest on the topic. However, one legal tool that deserves its own article of introduction is the Power of Attorney (“POA”).

When people think about seeing a lawyer to plan for the future, they usually think about doing a Last Will and Testament and planning for their death. But planning for what happens in the years before you pass away is equally important. In Indiana, two important tools are the General Durable Power of Attorney and the Health Care Representative Appointment. These are two distinct documents found in separate titles of the Indiana Code. But both can be important to have in place. For the sake of simplicity, our office refers to them as the “financial power of attorney” and the “medical power of attorney.”

A power of attorney is a written document for the formal appointment of a designated agent to act on your behalf while you are still alive. The appointment is made by you at a time when you have the mental capacity to do so, and it can be revoked by you as long as you still have the required mental capacity. You don’t relinquish rights; you simply designate someone else who can also make decisions and take action on your behalf in certain areas. This comes in handy if ever you are in the hospital, out of town, or are bedridden. You will already have someone in place to make sure bills are paid and who can deal with insurance matters.

With a Power of Attorney, the courts are not involved. By contrast, a guardianship is a formal court proceeding where the judge (rather than you) will appoint someone to oversee your personal care (guardianship of the person) and your assets and finances (guardianship of the estate). While there are some circumstances that may be an exception, by designating someone to oversee your financial and medical affairs in advance, you may be able to avoid the need for guardianship if you have both powers of attorney in place before you lose your capacity to take care of these things yourself.

To highlight some differences between guardianship and powers of attorney, note that guardianships:

1. Are generally more expensive than powers of attorney
2. Require a delay for the court proceedings to take place, whereas POA’s can act immediately when needed.
3. Allow the judge, rather than you, to decide who is in charge
4. Have ongoing reporting/accounting requirements that POA’s don’t have
5. Require a finding that you are at least partially “incapacitated,” which means you will lose power to act in the areas where the guardian has been placed in charge. By contrast, with a power of attorney, you retain the power over your assets and medical care as long as you still have that capacity to make those decisions.
6. Are generally public record, whereas POA’s generally are not.
7. Require a judge to terminate the guardianship, while you can terminate a POA.

A commonality of guardianship and POA is that the person in charge (the “guardian” for guardianships, and the “attorney-in-fact” for POA’s) has a fiduciary duty to act in YOUR best interests. The appointment of someone under either procedure does NOT give that person the right to utilize your assets in a way that benefits them. To do so would be a violation of their duty and grounds for their removal.

While the use of powers of attorney to act on your behalf cannot guarantee that guardianship will never be required for you, having them in place while you are still healthy can go a long way to providing peace of mind because: (a) you got to pick who was in charge; (b) that person can be given the power to act immediately, so there will be no delays; (c) the need for guardianship will be at least delayed – if not avoided altogether.