Guardianships vs. Power of Attorney: Which is Best for You?
What Is Guardianship?
Guardianship is a legal relationship in which a person or agency is appointed by the court to make decisions and act on behalf of a person who has been deemed and adjudicated incompetent by the court. Legal incompetence is defined as the lack of mental capacity and the inability to make or communicate decisions regarding personal, property, and/or business affairs. Court involvement is required to create the guardianship relationship.
North Carolina recognizes five types of guardianships. They are:
- Guardian of the Person
- Guardian of the Estate
- General Guardian
- Limited Guardian
- Joint /Co-Guardians
A Guardian of the Person is appointed to make all decisions regarding medical, residential, personal safety, and any decision that affects the respondent’s way of life, except financial decisions.
A Guardian of the Estate is appointed to make financial decisions and/or represent the respondent in any legal actions or lawsuits that arise against or on behalf of the respondent.
In many instances the Guardian of the Person and Guardian of the Estate can be same person. If this is the case, a General Guardian is created.
A Limited Guardian of the Person is appointed when the respondent has some capacity and can make decisions in certain areas. In this case, the court will appoint a guardian to make decisions only in specific areas where the respondent is not able to do so.
Co-Guardians/Joint Guardians occur when two or more people are appointed to act in the same guardianship capacity.
Any adult individual, a corporation, or a public agency can be appointed to serve as a guardian. The role of the guardian is to make decisions for a person who cannot make decisions for himself/herself due to some form of cognitive deficit.
What Is Power of Attorney?
A power of attorney is a document that gives legal authority to another person to make decisions on your behalf. This document can be as broad or as specific as you like. You have the right to limit a power of attorney in scope and duration. When you execute a power of attorney, you are designating someone to make decisions on your behalf concerning a myriad of matters including legal, financial, or health-related issues.
A durable power of attorney allows you the choice of whether you would like your designee to have the ability to make decisions both now and if you become incompetent. A springing power of attorney allows your designee to make decisions only when or if you become incompetent. No court action is required.
The difference between a power of attorney and a guardianship is that under a power of attorney, YOU decide and designate who you want to make decisions on your behalf. Under a guardianship, the court makes that decision. The court could appoint family members or non-family members. It could appoint a state agency or corporation to act in the guardianship role.
If a guardianship is required, the respondent has lost his/her capacity to contract. Therefore, he/she cannot execute a power of attorney. A legally executed power of attorney requires that you have retained your cognitive capacity and understand that nature of executing the power of attorney.
The power of attorney is often used as a planning tool in the event you are unable to make your own decision. It is imperative that you classify your power of attorney as a regular power of attorney, a durable power of attorney, or a springing power of attorney. If it is durable or springing, it remains valid or becomes valid and in effect if you become incapacitated and unable to make decisions for yourself. If a power of attorney document does not explicitly say that the power is durable or springing, it ends if you become incapacitated. The termination of a power of attorney during incapacity will trigger the guardianship and court process.