In the United States, Social Security acts as a support system for the elderly. It…
Powers of attorney, guardianship, limited power of attorney… What are the differences, and which one does a client or their relative need?
While the terminology used in each state can be different, each of these tools allows a person to make decisions for another individual who may or may not be able to make decisions for themselves. Here, we’ll take a look at the distinctions between each of these elder care tools.
Guardian of Property
A guardian of property is a person appointed by a Court to control the financial and personal affairs of an adult who cannot adequately do so for themselves.
An adult may voluntarily allow someone to act as guardian of property. In the alternative, a guardian of property may be appointed by the court if an incapacitated adult cannot or refuses to agree. The court may designate a relative or friend to act as guardian of property, but in cases of family strife or in the absence of a suitable person, a disinterested party like an attorney may be appointed.
Guardian of Person
A guardian of a person is someone appointed by a Court to control the healthcare matters of an adult who cannot adequately do so for themselves.
Power of Attorney (POA)
A power of attorney grants an adult representative or agent the ability to act on the principal’s behalf. Powers of attorney are often limited to legal or financial actions. The power is “durable” because it lasts until the principal takes specific action to revoke the power. Most states have a statutory POA which covers many common financial and legal transactions.
Limited Power of Attorney
A limited power of attorney is a written document with clear terms that only extend power to the agent or representative for:
- A limited time period, or
- For limited actions or functions (e.g. limited POAs are often used in real estate closings where a party cannot attend).
Which does your client need?
The important difference between the two options is that a POA must be signed while the principal still has the proper capacity to grant such powers. They must fully understand the nature of the representative or agent’s powers and how the powers may be revoked.
It’s also very important for clients to understand that signing a POA that becomes effective immediately means that their appointed agent may be able to act on their behalf while they still have capacity. Someone holding a POA may legally access funds and investments. If your client does not want this to be the case, you may consider writing a “springing” POA, which only goes into effect when the principal becomes incapacitated. If you use this type of conditional POA, you must be sure to give clear cut instructions on how incapacity is defined. Usually, the opinion of one or two doctors is the standard.
A guardian, on the other hand, is appointed after an elderly or disabled adult has become incapacitated. Your clients may want to choose a person to name as their guardian, as long as a few successors for situations where the initial nominee cannot or will not accept the duty (voluntary guardianship). Otherwise, the Court will appoint a suitable representative to act.
When clients have a good elder care plan in place, they can be sure that they will have the right tools in place to have trustworthy people in charge of their affairs when the time comes. For more information, contact our office by calling (212) 920-6371.