Power of attorney and guardianship both serve as legal tools that can give someone else the authority to make decisions for you if you cannot make them for yourself. But while there are many similarities between these two vehicles, there are some crucial differences to be aware of when it comes to using a power of attorney vs guardianship. In contrast with a power of attorney, which you create independently, a guardianship involves a legal proceeding and court oversight. The proper vehicle used in your situation will depend upon your level of capacity and whether a valid power of attorney was executed before you became incapacitated.
A power of attorney is a legal document that allows you to designate an agent who can make decisions on your behalf. Specifically, there are two types of power of attorney in Michigan: a healthcare power of attorney and a financial power of attorney. Both are considered durable under Michigan law, which means they remain in effect in the event of incapacity. While a power of attorney can become effective immediately, the document can also specify that the agent’s authority will go into effect upon disability or on a future date.
Each type of power of attorney is a separate legal document. You can select one agent to serve in both roles, or appoint separate individuals. You may also select co-agents who can share responsibility.
A healthcare power of attorney authorizes another person to make medical decisions on your behalf when you are unable to communicate your wishes. It can allow your agent to:
In addition, you can draft an advance healthcare directive to provide specific instructions to your agent about the types of medical treatment you would like to receive (or not receive). This document can include your preferences regarding life-sustaining treatment and end-of-life care. The agent you select as your healthcare power of attorney would be required to ensure the wishes outlined in the directive are followed.
A financial power of attorney gives another person the authority to make financial, legal, and business decisions on your behalf. It can be used in the event of incapacity, or it can authorize your agent to manage your affairs during a period of unavailability. The authority granted to your agent can be broad and include a wide range of powers or limited to specific transactions.
A valid financial power of attorney can allow your agent to:
By designating a trusted individual and specifying their duties, a financial power of attorney can also help prevent elder financial exploitation.
A guardianship is a legal arrangement that grants another person the authority to make decisions for you in the event you become legally incapacitated. Unlike a power of attorney, this is an arrangement that is put into place by a judge and may result in a person being appointed to serve in the role you had not intended to act on your behalf. While a guardianship can significantly restrict your civil liberties, a judge would consider whether less restrictive means are available, such as a power of attorney.
Not to be confused with a guardianship (which deals with an individual’s welfare and day-to-day needs), a conservatorship is meant to protect a person’s financial interests if they cannot manage their financial affairs on their own. If the court deems a conservatorship is necessary, and no financial power of attorney is in place, the court would appoint someone to deal with your finances, property, assets, and investments.
It’s best to ensure you have valid powers of attorney in place, rather than rely on the court ordering a guardianship. A power of attorney is a proactive tool that can ensure you remain in control of your medical decisions and financial affairs if you cannot handle these matters on your own. A guardianship is a reactive process that is initiated by others once you are already incapacitated. This can result in the court appointing a person to act on your behalf who may not have been your preferred choice.
Emotions can run high among your loved ones if you suddenly become incapacitated and there is no plan in place. By drafting valid powers of attorney, you can prevent family disputes and save your loved ones from initiating lengthy court proceedings. Since powers of attorney do not require court oversight, they can also ensure more privacy regarding your healthcare and financial matters.
Importantly, powers of attorney are less restrictive than guardianships and can be tailored to meet your specific needs. One of the biggest advantages that can come with a power of attorney vs. a guardianship is the flexibility and control a power of attorney can provide you. When you have a power of attorney in place, you can have the peace of mind knowing that your wishes will be carried out, even if you are unable to speak them.
A comprehensive estate plan shouldn’t only address how your assets will be distributed upon your passing. It should also specify who will handle your affairs and make decisions for you in the event of incapacity. At Suzanne R. Fanning, PLLC, our estate planning attorneys are committed to advising clients regarding the advantages of a power of attorney vs guardianship and can help you determine which path is right for you. Contact us today to schedule a consultation to learn how we can help.
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